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Bitcoin Crime Encryption The Almighty Buck

Study Suggests Link Between Dread Pirate Roberts and Satoshi Nakamoto 172

Posted by timothy
from the now-he's-gonna-get-you-too dept.
wabrandsma writes "Two Israeli computer scientists say they may have uncovered a puzzling financial link between Ross William Ulbricht, the recently arrested operator of the Internet black market known as the Silk Road, and the secretive inventor of bitcoin, the anonymous online currency, used to make Silk Road purchases."
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Study Suggests Link Between Dread Pirate Roberts and Satoshi Nakamoto

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  • Weasel Words: (Score:5, Interesting)

    by Zanadou (1043400) on Sunday November 24, 2013 @05:13PM (#45509857)
    "Suggest(s)" = you could fit the whole universe into that.
    • Re:Weasel Words: (Score:5, Insightful)

      by billstewart (78916) on Monday November 25, 2013 @12:53AM (#45512295) Journal

      Unfortunately, the US government will probably try to find a way to do just that. If they can allege a link between Satoshi and DPR-or-Ulbrich, that gives them a better excuse to try to pry information out of anybody involved with Bitcoin, either through legal process in the US or through possibly-illegal wiretapping overseas.

      • Unfortunately, the US government will probably try to find a way to do just that.

        ... and if they do that, it will be VERY GOOD FOR THE REST OF US because the REAL IDENTITY of Satoshi Nakamoto will forever be a mystery.

        And that, will be a BOON to Bitcoin as a whole.

      • Yeah, because who would imagine the creator of an anonymous payment method would ever use it for drug purchases, that seems so far-fetched
    • Re:Weasel Words: (Score:5, Informative)

      by Vintermann (400722) on Monday November 25, 2013 @05:55AM (#45513141) Homepage

      No, the evidence is really pretty clear. You can trace the history of any coin. Here's what they show:

      * some extremely early coin, from parts of the block that virtually never has exchanged hands, found its way into Silk Road.

      * It was a considerable amount, too.

      This might be just the slip-up that unmasks the inventor(s) of the currency.

      I'm not sure it was an investment, though, as the article suggests. I think Silk Road was profitable enough that they wouldn't really need an investment, at least not in the form of bitcoin.

      • Re:Weasel Words: (Score:5, Informative)

        by IamTheRealMike (537420) <mike@plan99.net> on Monday November 25, 2013 @11:54AM (#45515781) Homepage

        The guy who owned that transaction was already located. His name is Dustin and he is not Satoshi [reddit.com]. What's more, these transactions had aroused interest before, been researched, the guy who owned them was not really trying to hide his identity and publicly confirmed they were his. And all this was available just by doing a google search on the address in question.

        This is the second time Shamir has associated his name with research which contains elementary mistakes, makes wild claims and is funded by the Citi Foundation (as in, Citibank). What is going on?

  • by Anonymous Coward on Sunday November 24, 2013 @05:15PM (#45509861)

    "You keep using that word. I do not think it means what you think it means."

    When a person attempts to steal notorieity by using a famous name as a pseudonym, don't feed their ego (and ruin a good movie) by calling them the name they chose. Pick an unused name that implies disrepect to the person, and call them that. e.g. Inept Pirate Doofus.

  • by Agent ME (1411269) <agentme49@@@gmail...com> on Sunday November 24, 2013 @05:16PM (#45509871)

    tl;dr: At least one person who used Bitcoin in the first month also used Silk Road, so we made a news story about it. Could be DPR himself, who knows.

    • Re: (Score:2, Informative)

      by Anonymous Coward

      From the article, that one person made a BTC transfer of an equivalent 60,000 USD (at the time of the transfer being made).

      It's not likely just a case of an early bitcoin user buying some drugs on silk road.

      • by Anonymous Coward
        Silk road was, among other things, a coin mixing service. If you wanted to make it much harder to trace a thousand BTC or so to whereever you got them from originally, sending them to SR and withdrawing later was probably not the worst option for it.
    • by simonbp (412489) on Sunday November 24, 2013 @05:34PM (#45509985) Homepage

      Regardless if there was an official link, it is probably true that Bitcoin really took off when illegal/quasi-legal enterprises like Silk Road started using them. That's not to say Silk Road created Bitcoin or that all Bitcoin commerce is illegal, just that it would never have grown to real prominence without it.

      • That was always going to be true.

        Persecution increases pressure, which drives evolution. Criminals are under a survival-pressure to avoid detection, which means they will actively be looking for/experimenting with ways to avoid detection. The general population is under no such pressure, and so adopts more slowly. I'm willing to bet that child pornographers, or other criminals whose crime is generally one of communication, adopted encryption before the rest of the general population, too, for the same reaso

      • Re: (Score:3, Insightful)

        by rtb61 (674572)

        However it is a pretty sure sign that the US government is working on generating a publicly acceptable reason to launch an all out attack on bitcoin. Now might well be the opportune time to cash in those bitcoins before an NSA/CIA/SS (secret service) attack nullifies their value.

      • Pretty much any kind of hard to track payment service has been used for illegal means. Western Union was the staple of bank fraud money exit a while ago, does that mean that WU supports it? Far from it.

        Criminals simply want to use means that are easy to use and hard to track. Whatever fits that bill will be used. If the salvation army ran such a service, it would be used by criminals.

      • The Silk Road indictment reveals that their sales only amounted to 4.5% of the total bitcoin transactions over the period it operated. That is about the same ratio as paper US dollars used for drug purchases worldwide vs. total spending of paper dollars for all kinds of purchases.

        The indictment also mis-values the total Silk Road sales by taking the total number of bitcoin sales (the only currency they accepted) x the market price at the time they seized the site. Bitcoins were worth much less on average

    • Re: (Score:2, Interesting)

      by Anonymous Coward

      There's a comment on TFA that says:
                "It is well documented in the bitcoin blockchain that Satoshi Nakamoto famously gave away most of the early bitcoins to encourage adaptation."

      • > "It is well documented in the bitcoin blockchain that Satoshi Nakamoto famously gave away most of the early bitcoins to encourage adaptation."

        Actually, it is easy to prove this is false. Look up any random block number below 25,000, which is in the first 6 months of bitcoin's existence. For example:

        https://blockchain.info/block-index/20000 [blockchain.info] (vary the number 20000 up and down to see other blocks)

        Follow the "newly generated coins" transaction (the first one in the block) to the destination address, and

    • by Coryoth (254751) on Sunday November 24, 2013 @05:58PM (#45510155) Homepage Journal

      I think the more interesting part is the fact that we have some decent mathematicians (in this case Adi Shamir among others) are setting about pulling the entire bitcoin transaction graph and doing some serious data-mining on it. The reported result sounds like a mildly interesting result that happened to pop up in the first pass.

      Given the advanced tools available these days for graph mining (largely developed for social network analysis among other things) I suspect some rather more interesting results may start coming out soon. What may seem hard to track on an individual basis may fall somewhat more easily to powerful analysis tools that get to make use of the big picture. I bet there's some interesting info on cliques and exchanges that could be teased out by serious researchers with some decent compute power at their disposal. Pseudonymity may be even weaker than you might think.

      • by Anonymous Coward

        Unfortunately their paper was mostly fail and confusion: https://gist.github.com/jgarzik/3901921 [github.com], since academia has mostly been steadfastly ignoring Bitcoin there is not any really competent peer review yet and you can basically make anything up you want and get it published, especial if you have a name like Shamir on the paper.

      • I think the more interesting part is the fact that we have some decent mathematicians (in this case Adi Shamir among others) are setting about pulling the entire bitcoin transaction graph and doing some serious data-mining on it.

        The more disturbing fact is that bitcoin makes this kind of analysis possible in the first place.

        A currency where every transaction can be analyzed and data-mined! Yow.

        NSA must love this.

        • Zerocoin (Score:5, Informative)

          by Mathinker (909784) on Monday November 25, 2013 @12:49AM (#45512283) Journal

          Zerocoin should be launched soon. It uses zero-knowledge proofs to add in a lot of anonymity that bitcoin lacks.

          • The net result of zerocoin is only that of a distributed mixing service. Since mixing services have fundamental problems of a non-technical nature, it just won't work.

            But it's true to the bitcoin dream. Krugman accused bitcoin fans of trying to divorce the concept of economic value from the mess of human society. I expect zerocoin will just make it even clearer how nonsensical that dream is.

            • by Mathinker (909784)

              > Since mixing services have fundamental problems of a non-technical nature, it just won't work.

              OK, interesting. What are these problems? Isn't Tor just a "mixing service", yet the documents from the NSA which have been revealed up to now claim that even that bastion of binary processing power is capable of de-anonymizing only a small fraction of the Tor network's throughput?

              • No, Tor is not a mixing service, there's a big difference between anonymizing communication and anonymizing payment tokens.

                The fundamental problem with mixing services is that no matter how it works, some people need to put clean coin in. What's in it for them?

                Also, if the mixing service can be identified by the authorities as a mixing service, you have a problem. You can be charged with helping to "disguise the source, ownership, location or control of proceeds of a serious crime" - the definition of money

        • by Bert64 (520050) <bert@s[ ]hdot.fi ... m ['las' in gap]> on Monday November 25, 2013 @03:35AM (#45512771) Homepage

          A currency where every transaction can be analyzez and data mined by anyone... That puts everyone on a level playing field.
          With traditional currency only a small group of organisations can get access to transaction data, which includes the NSA but doesn't include you.

          • With traditional currency only a small group of organizations can get access to transaction data, which includes the NSA but doesn't include you.

            I didn't know that where's george [wheresgeorge.com] was some secrete conspiracy. Oh your meant those silly electronic record updates not real currency. If you are really paranoid about people tracking your use of money use cash. It is hard to trace and hangs around in anonymous circulation for a while (bills smaller than a $20) before getting deposited at a bank. Also if you are really paranoid filter your cash through a casino, put it into a slot machine, cash out (don't play) and get your tokens or pay ticket and then rede

    • As you wish.
  • by Anonymous Coward on Sunday November 24, 2013 @05:16PM (#45509873)

    and you'll have found Satoshi Nakamoto.

  • by jones_supa (887896) on Sunday November 24, 2013 @05:17PM (#45509881)
    We still do not surely know who is Satoshi Nakamoto.
    • by Anonymous Coward on Sunday November 24, 2013 @05:23PM (#45509907)

      Keyser Soze

      • Re: (Score:2, Interesting)

        by Zaelath (2588189)

        seems an apt guess given the greatest trick he ever pulled was to convince the world that his hard to find digital apples were worth money (after picking all the low hanging fruit for himself first).

        • by uvajed_ekil (914487) on Sunday November 24, 2013 @06:24PM (#45510325)
          Hmm, no, I think. While a fair number of the numerous other digital "alt" coins (bitcoin competitors and copycats) are known or suspected to have been "pre-mined," no one credible has ever accused Satoshi of cheating. Sure he was likely the first to mine BTC, but he was not a scammer developing the network merely to cash in himself. And I doubt many earl adopters are still holding their first coins.

          Personally, I cashed out several times, like when it hit $6, then again at $20, then again at $110, a few at $210, then more at $140ish a couple months ago, at which time I gave up on mining and mostly stopped trading. We were all optimistic but few of us were patient enough to really amass huge wallets for the long term, nor did most of us really see the huge recent price spike coming, unfortunately. If there is any evidence that Satoshi somehow took advantage of BTC in a secretive, underhanded way, please enlighten us.

          Just for shits and giggles, what if DPR and Satoshi were indeed in cahoots at the beginning, with DPR having the balls and skills to build a huge black market and Satoshi providing him with the means to make it work? Sounds unlikely to me, but it is conceivable that Satoshi created bitcoin not only knowing that it would be abused for illegal transactions, but also intending it to be used as such. Hmm...
          • by Zaelath (2588189)

            I'm not suggesting it was pre-mined, I'm suggesting that the exponential difficulty curve is a gold rush, and when you establish what constitutes gold you have a significant advantage over "the world".

            It reeks of both insider trading and tulips.

            • by Opportunist (166417) on Monday November 25, 2013 @12:54AM (#45512303)

              Mostly tulips. I still wait for the day when someone tries to cash in a sensible amount of money. Not some 100s but rather some 100,000s. If that holds, the currency will hold water. If that doesn't go down well and causes the price to plummet, it's a tulip.

              Well, as long as the FBI keeps taking money out of circulation in busts, it just might work out too...

              • by ultranova (717540) on Monday November 25, 2013 @08:41AM (#45513761)

                Mostly tulips. I still wait for the day when someone tries to cash in a sensible amount of money. Not some 100s but rather some 100,000s. If that holds, the currency will hold water. If that doesn't go down well and causes the price to plummet, it's a tulip.

                Hasn't this happened several times already? Someone sells a large number of Bitcoins, the market crashes, then recovers in hours or days.

                The thing is, unlike tulips Bitcoins have utility (easy value transfer over long distances), so the "natural" price tends to go slowly up as the market and with it that utility grow. With tulips that never happened, so once the bubble burst the price plummeted back to "pretty decorative flower" level.

                Compare with gold, which is basically a 10,000 year bubble: people hoard it because they expect other people to hoard it too. Most of the utility comes from this speculation; while there's some utility beyond that, it accounts for a tiny fraction of the price. Yet gold is usually considered a safe investment, and that very belief makes it so.

          • by PCM2 (4486) on Sunday November 24, 2013 @09:05PM (#45511201) Homepage

            Just for shits and giggles, what if DPR and Satoshi were indeed in cahoots at the beginning, with DPR having the balls and skills to build a huge black market and Satoshi providing him with the means to make it work?

            Have you read the details of how DPR got caught? Satoshi may be some kind of genius, but if Ross Ulbricht really is DPR then he definitely does not have the skills to run any kind of criminal enterprise. As for balls, stupidity can convince a person to do all kinds of things.

          • Does anyone profit anymore with GPU rigs, or do you have to shell out $10K and then wait a year for a Butterfly Labs box.

            • GPU's won't make you any money now. Butterfly labs is terrible about shipping their product so it's probably best to get something that is shipping like asicminer blades. Still, with the price of the hardware and difficulty increases it's unlikely you can make any money now
            • Trying mining other cyrptocurrents. They should have a lower barrier of entry than something as "over"-mined as Bitcoin. The trick, however, is to know which can be traded for a profit or not too great a loss with Bitcoin or maybe even directly to the fiat currency of your choice (dollars, yens, etc.). Litecoin seems attractive at the moment.

              Also be careful of very, very recently forked Bitcoin alternatives. They might be fly-by-night operations designed simply to suck-er in users who want to buy their way

          • by nospam007 (722110) *

            "Sounds unlikely to me, but it is conceivable that..."

            Actually with Dread Pirate Roberts, it's inconceivable.

        • by tepples (727027)

          the greatest trick he ever pulled was to convince the world that his hard to find digital apples were worth money

          Are you talking about Mr. Nakamoto or Mr. Jobs?

    • by msauve (701917) on Sunday November 24, 2013 @05:37PM (#45510015)
      Well, we do know that the Walrus was Paul.
    • But we know who this Satoshi [bulbagarden.net] is.
    • by rwyoder (759998)

      We still do not surely know who is Satoshi Nakamoto.

      Who is Satoshi Nakamoto? He is supposed to be Turkish. Some say his father was German. Nobody believed he was real. Nobody ever saw him or knew anybody that ever worked directly for him, but to hear DPR tell it, anybody could have been Nakamoto. You never knew. That was his power. The greatest trick the Devil ever pulled was convincing the world he didn't exist. And like that, poof. He's gone.

    • We still do not surely know who is Satoshi Nakamoto.

      Clearly he's Jean-Baptiste Mardelle.

  • by Anonymous Coward

    Bitcoin is not anonymous. Bitcoin has never bean anonymous. Bitcoin has never been intended to be anonymous.

    Stop pretending that anything otherwise is or has ever been true.

    • Bitcoin itself is of course not anonymous, otherwise its name would have not been known.

      Its use on the other hand...

      • by Anonymous Coward

        Its use on the other hand...

        It's use leaves an indelible trail of A paid B paid C paid D ... from the creation of every BTC to it's current holder. The exact counterpoint to anonymous.

        While there is bitcoin services that provide money laundering services, the use of those money laundering services also ends up in the indelible history of your BTC. So while it might no longer be clear who you received your BTC from, it is now irrevocably known that your BTC came from a money laundering service, which is illegal under US law.

        Also, as in

  • by Anonymous Coward

    Or was it a CIA front operation???

    Bitcoin is US government.

  • by Anonymous Coward on Sunday November 24, 2013 @06:35PM (#45510407)

    Here is yet another attempt at spreading FUD around bitcoin for it is not a government regulated currency.

    FTA:

    "Although the authors state that they cannot prove that that account belongs to the person who created the bitcoin currency, it is widely believed that the first accounts belong to a person who identifies himself as “Satoshi Nakamoto,” but who has remained anonymous and has not been publicly heard from since 2010."

    Weak and suggestive... but a perfect opportunity for the powers that be to try to stop Bitcoin from becoming a success.

    Obviously these people have not understood that the the true value of Bitcoin lies not in it's function as a currency but in the validation mathematics of the blockchain that wrestles validation control out of the hands of the few and creates a distributed validation system...

    The powers that be have much to gain from this FUD

    • by jythie (914043)
      The powers that be do not really care.
    • Not weak and suggestive. "Satoshi Nakamoto" is by definition the person or group of people who invented bitcoin. If you had bitcoin in the first month, you were either that person/in that group or very close to them - which is exactly what Shamir & co says.

      Anyway, I don't think Shamir is revealing anything NSA doesn't already know. DPR left very obvious traces before starting SR, but NSA could probably find far more subtle traces, and I'm sure SN left those. There are only a handful of people with the c

    • by jimicus (737525)

      I've been saying something very similar for a few weeks.

      Governments have a habit of disliking things that involve vast amounts of money flowing around that they can neither control nor tax. Yet Bitcoin is the perfect currency for allowing uncontrolled, untaxed transactions worth billions. The instability might be a bit of a problem, but if I'm going to top up a Bitcoin wallet now and use it to pay for goods within the hour, I don't really care what it's doing a week next Tuesday.

      How it'll ultimately play o

  • by RandomUsername99 (574692) on Sunday November 24, 2013 @06:43PM (#45510445)

    On the off-chance that they were in cahoots, and this guy helped start an international currency, in large part, to make silk road a reality... he totally just won drug-dealing.

  • bitcoin was invented solely for buying and selling drugs on the internet. It is evil and must be stopped. queue the ridiculous headlines

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