Bubble Chronicles. Mystery Solved: Meet Satoshi Nakamoto - The Face Behind Bitcoin

 

  One mystery is solved: Satoshi Nakamoto is found and another one: when this bubble will be finally over will be found soon. Warren Buffet has discussed it recently and dismissed Bitcoin as a currency, as a store of value it is not working very well for the latest buyers from the last Fall. It will be more and more difficult "to find another fool" to buy it at a higher price after all recent news about Mt. Gox bankruptcy, millions of lost Bitcoins and crucial technical fault in Bitcoin architecture allowing it to happen. Constant attacks from the  Central Banks around the world will only add to the pressure on FIAT alternative. There is no "Gold 2.0" - there is only one real Gold and not so much of it left now.

  After these revelations about Satoshi Nakamoto pedigree and his long history of working on highly classified projects  you can think for yourself from what point in time NSA has been really involved in this project and what will be the implications on Bitcoin crowd of "freedom fighters" with further investigation reports coming out. The destiny of Bitcoin speculators we can learn from the history.

"I am no longer involved in that and I cannot discuss it," he says, dismissing all further queries with a swat of his left hand. "It's been turned over to other people. They are in charge of it now. I no longer have any connection."

The Future Of Money: Gold, CIA And Bitcoin

Bubble Chronicles: Drug Site Silk Road Wiped Out By Bitcoin Glitch

Bitcoin plunges 50% on Mt. Gox to hit USD230 as troubles continue

  So much for the store of value and "Gold 2.0": Bitcoin continues its troubles now related not only to the herd mentality chasing the bubbles, but to the fatal flaw in the core of it praised crypto-currency architecture. Meanwhile the real and one only Gold is breaking out with topping $1,322 intraday. Realisation that there is no substitutes for Gold will be another factor to ignite this new Gold Bull leg. China was first here again and bought record amount of 247 tons of Gold in January.

Bubble Chronicles: Bitcoin Crashed Down Fast to $500 at Mt. Gox and $102 at BTC-e today.

"After all the news about the Mt. Gox and Russia making any transactions with Bitcoin illegal, Bitcoin is crashing fast now with Mt. Gox  quoting below any other exchanges at $530 and Litecoin is down to $15.

  Bitcoin has printed low $500 on Mt Gox and fell as low as $102 at BTC-e today! So much for the crypto-currency reliability as exchange, the "value" of vapour currency can literally evaporate at any moment.  Time is for Gold to shine again, it does not need any substitutes and is breaking out to the upside today clearing $1270 level."

 

Newsweek:

The Face Behind Bitcoin

By Leah McGrath Goodman

Satoshi Nakamoto stands at the end of his sunbaked driveway looking timorous. And annoyed.

He's wearing a rumpled T-shirt, old blue jeans and white gym socks, without shoes, like he has left the house in a hurry. His hair is unkempt, and he has the thousand-mile stare of someone who has gone weeks without sleep.

He stands not with defiance, but with the slackness of a person who has waged battle for a long time and now faces a grave loss.

Two police officers from the Temple City, Calif., sheriff's department flank him, looking puzzled. "So, what is it you want to ask this man about?" one of them asks me. "He thinks if he talks to you he's going to get into trouble."

"I don't think he's in any trouble," I say. "I would like to ask him about Bitcoin. This man is Satoshi Nakamoto."

"What?" The police officer balks. "This is the guy who created Bitcoin? It looks like he's living a pretty humble life."

I'd come here to try to find out more about Nakamoto and his humble life. It seemed ludicrous that the man credited with inventing Bitcoin - the world's most wildly successful digital currency, with transactions of nearly $500 million a day at its peak - would retreat to Los Angeles's San Bernardino foothills, hole up in the family home and leave his estimated $400 million of Bitcoin riches untouched. It seemed similarly implausible that Nakamoto's first response to my knocking at his door would be to call the cops. Now face to face, with two police officers as witnesses, Nakamoto's responses to my questions about Bitcoin were careful but revealing.  More"

Bubble Chronicles: Drug Site Silk Road Wiped Out By Bitcoin Glitch

  Update: Feb 16th, 2014

Bitcoin plunges 50% on Mt. Gox to hit USD230 as troubles continue

  So much for the store of value and "Gold 2.0": Bitcoin continues its troubles now related not only to the herd mentality chasing the bubbles, but to the fatal flaw in the core of it praised crypto-currency architecture. Meanwhile the real and one only Gold is breaking out with topping $1,322 intraday. Realisation that there is no substitutes for Gold will be another factor to ignite this new Gold Bull leg. China was first here again and bought record amount of 247 tons of Gold in January.

Bubble Chronicles: Bitcoin Crashed Down Fast to $500 at Mt. Gox and $102 at BTC-e today.

"After all the news about the Mt. Gox and Russia making any transactions with Bitcoin illegal, Bitcoin is crashing fast now with Mt. Gox  quoting below any other exchanges at $530 and Litecoin is down to $15.

  Bitcoin has printed low $500 on Mt Gox and fell as low as $102 at BTC-e today! So much for the crypto-currency reliability as exchange, the "value" of vapour currency can literally evaporate at any moment.  Time is for Gold to shine again, it does not need any substitutes and is breaking out to the upside today clearing $1270 level."

CNN:

Drug site Silk Road wiped out by Bitcoin glitch

By Jose Pagliery  @Jose_Pagliery February 14, 2014

NEW YORK (CNNMoney)

The revived online black market Silk Road says hackers took advantage of an ongoing Bitcoin glitch to steal $2.7 million from its customers.

The underground website's anonymous administrator told users Thursday evening that attackers had made off with all of the funds it held in escrow. Silk Road serves as a middleman between buyers and sellers, temporarily holding on to funds in its own accounts during a deal. Buyers put their money into Silk Road's accounts, and sellers withdraw it.

At the time of the attack, here were about 4,440 bitcoins in Silk Road's escrow account, according to computer security researcher Nicholas Weaver.

The news has shaken confidence in Bitcoin. Prices dropped sharply overnight, though they've since bounced back to about $660.

Related story: What is Bitcoin?

Silk Road can only be accessed on the deep Web using Tor, a special program that hides your physical location. The FBI shut down Silk Road and arrested its alleged founder in October, but shortly thereafter, tech-savvy outlaws started Silk Road 2.0 in its place.

It is primarily used to buy and sell drugs. Bitcoins are the only kind of currency accepted on the site, because they are traded electronically and are difficult to trace to individuals. But Bitcoin accounts also lack protections that most bank accounts have, including government-backed insurance.

That means the bitcoins stolen from the Silk Road users are gone forever.

 

A look at rebuilt drug bazaar Silk Road

The new site's administrator, a faceless persona known only as Defcon, posted a nerve-racking message Thursday night that began with, "I am sweating as I write this."

He said hackers took advantage of the same flaw in Bitcoin that knocked major exchanges Bitstamp and Mt.Gox offline over the past two weeks. That glitch allowed Silk Road hackers to repeatedly withdraw bitcoins from the site's accounts until they were empty.

In detailing the alleged hack, Defcon listed the online identities of the three supposed attackers and shared records of the transactions. And in an example of the kind of dark, dangerous world of illegal drug trade, Defcon called on the public to "stop at nothing to bring this person to your own definition of justice."

"I failed you as a leader and am completely devastated by today's discoveries," Defcon wrote, adding that the website should have followed the approach of other major Bitcoin exchanges and halted withdrawals due to the Bitcoin system flaw. Silk Road has since temporarily shut down.

Many have accused the site's administrators of faking the hack and stealing the money themselves. But in a world where drugs are outright illegal -- and there's little to noregulation of Bitcoin transactions -- it's difficult to prove anything.

It's just his kind of bad news that smears Bitcoin's credibility and keeps the currency from going mainstream.

Computer developers around the world have been working on software updates that allow exchanges to make up for the security hole in Bitcoin. The largest exchange, the Slovenia-based Bitstamp, said it was implementing a fix as early as Friday. "

The US Crackdown On Bitcoin - The End Of The Amazing Bubble

  

  The only Bubble from 2013 left untouched so far is Bitcoin: after its crash post Chinese ban and coordinated attack by the Central Banks Bitcoin has recovered its grounds and was trading close to $1000 range again. These days, with closing window for currency withdrawals from Bitcoin exchanges in China, DOJ has made its move. The most sexy attribution of Bitcoin - its supposed anonymity, will be used against it. As we have discussed before this anonymity is widely misunderstood and as Silk Road case demonstrates: All Transactions can be Reconstituted As An Evidence.

   China bans Bitcoin and encourages its citizens to accumulate Gold. Central Banks all over the world are warning about the speculation danger related to Bitcoin. FED keeps very suspicious silence about its real stance about the FIAT alternative and after fighting Gold for 100 years it is a given that Bitcoin will be taken out once NSA will complete its job. Now Robert J. Shiller has joined our small crowd and called Bitcoin as it is:

"It is a bubble, there is no question about it.... It's just an amazing example of a bubble," the Business Insider quotes Shiller, talking to the World Economic Forum in Davos, Switzerland.

“I’m amazed by how people are so excited about it and I tell my students ‘no, it's not such a great idea’,"the economist said.

WSJ:

Bitcoin is a bubble - Nobel Laureate in Economics

RiaNovosti:

Russia’s Central Bank: Bitcoin Users Can Face Jail Time

  

Bitcoin vs Gold Debate With James G. Rickards And Roman Skaskiw

Bitcoin Is a High-Tech Dinosaur Soon to Be Extinct

Here is another very sobering view from China on Bitcoin:

Bitcoin bubble won't last without Beijing's approval

"Bitcoin is a bubble that foreigners cooked up and, by all appearances, is designed to rob the credulous Chinese masses. When the bubble bursts, the Chinese government won't be able to arrest these foreigners and get the money back. The bubble is not under Chinese government control. Hence, it cannot be tolerated."

  Stephen Mihn provides very interesting historical perspective on Bitcoin. If you study the history you can know the future. Currencies come and go and some was even thought to be better than Gold for a while, but only for a while. Once you can "print" or "create new Gold" - it is not Gold any more.

"Gold 3.0": Want to create the next Bitcoin? This website makes it easy – too easy

 "So much for the "Gold 2.0" and new store of value - Bitcoin's value proposition is fading away by the day. It is not so anonymous as a lot of people think, it is not so easy to transfer, scams around Bitcoin are happening daily in more and more forms. Banksters are entering the game if they were not there already from the very beginning. And NSA prints are all over Bitcoin according to some reports on SHA256. But now you can have your own Gold 3.0 - just chose the name. OK, maybe for you it will be difficult to compete with pumpers of Bitcoin, but JPMorgan or FED can easily do so. It is very interesting to note that China has effectively banned Bitcoin from any authorised financial transactions, but FED is not so restrictive at least now - so who is really behind it now?
  With Bitcoin crossing $1000 mark again at Mt.Gox today we issue our Warning like we did last time. Bitcoin is building a Double Top potentially and level of $1240 will be crucial. It is the great present to Chinese holders - we guess that they will be happy to sell into this strength with restrictions for FIAT withdrawals from Exchanges coming in place by end of this month."

Christopher Mims: The existential threat to Bitcoin its boosters said was impossible is now at hand

 "Another day and another blow to Bitcoin, as we have written before: people will be able to corrupt everything in time. Cristopher Mims investigates the technical threat to Bitcoin's decentralised infrastructure from the coordinated attacks. Risk of Double Spending is the real issue now."

ZeroHedge:

DOJ Finally Going After The Criminal Masterminds With Arrest Of 24 Year-Old Bitcoin Exchange Founder

The US crackdown on Bitcoin has been long in coming, with ebbs and flows of enforcement as regulators have been unsure exactly how to proceed with dismantling the digital fiat alternative. This morning the ebb became a rising tide, after U.S. prosecutors announced charges against two men operating Bitcoin exchange businesses for attempting to sell $1 million worth of Bitcoin to users of the underground black market website Silk Road, which was shut down by authorities in September.

Reuters reports that the U.S. Attorney's office in Manhattan said in a statement that authorities arrested Charlie Schrem, chief executive officer of the exchange BitInstant.com, on Sunday and Robert Faiella, who ran an underground Bitcoin exchange called BTCKing, on Monday. The two were charged with conspiring to commit money laundering and operating an unlicensed money transmitting business. Schrem is also vice president of the main Bitcoin-focused trade group, the Bitcoin Foundation, according to the foundation's website and Schrem's LinkedIn profile.

More:"

Bitcoin Rises Over $500 - Its Collapse Will Start The New Gold Leg Up GLD, SLV, GDX, MUX, TNR.v

  

  ZeroHedge reports another amazing development with Bitcoin. While Janet Yellen can not see "Any Bubbles Around" the cryptocurrency is in a parabolic rise and crossing $500 valuation now. Our take is that it is the classic Bubble Ponzi Scheme in the development now and the higher it goes the harder it will fall from the sky. It does not mean that you can not make money or that Bitcoin is bad, just be very careful comparing Tulips to Gold. Everybody who is cashing out their Bitcoins at these or higher levels can receive our congratulations. Everybody who is providing cash for this should be careful.

  We have all classic signs of the Bubble in Bitcoin growing very fast and its collapse will ignite another Bull Leg in Gold. Here where we take Bitcoin as the very serious and positive groundbreaking development in the modern financial history. Nothing less than that. The magnitude and speed of its appreciation are showing that this moment of the real FIAT currencies alternatives can be very close now. 

  Bitcoin appreciation demonstrates in part the level of the real hunger for the alternatives to FIAT currencies now and how high Gold and Silver will go later once they can not be suppressed any more. Bitcoin has given to the Web generation the idea of  the Gold 2.0 and it has exploited it with meme speed of going viral. Its collapse will leave all the driving factors - apart from the pure Buble ones like chasing new buyers buying only because it is going up - in place and exodus from the FIAT based monetary system will continue, but will find its way to the time proven Gold based standard. 

  If you think that Bitcoin will go straight up to the sky and undermine all FIAT monetary system, please consider to make a research on its origins and how it could be manipulated as well. The simple act making its illegal with numerous real and fabricated concerns about its "limited amount" and "security" will do the trick at any time.

  We will throw a joke here as well: how can we be sure that it is not NSA with The FED - who are really behind it now? Who has the real picture of its full code and infrastructure? Who can guarantee that it is not compromised already or will not be in the future? Once we see the headlines that China is accepting US Treasuries redemption in Bitcoins, we will take our joke part out of this statement. Don't you think that it is too easy to get out from 17 Trillion of U.S. Debt?
  And another curve ball to your consideration, with Gold and Silver subject to the ongoing FED's 100-year War and all manipulations, how can you be sure that Bitcoin is not manipulated already? What will be better for the undermined authorities than the success of Bitcoin which will Kill the idea itself? Just run it up to $2000 and crash it to $50 - you can put your own numbers here. Is it possible? We will see very soon.

  Stefan Molyneux provides very good summary on the Bitcoin, his examples about the cost of transfers in the banking system in percentages are wrong, but other material gives very good intro for the subject. Please note the history of e-gold and Libery Dollars - this is where we see the highest regulatory risk: the more successful Bitcoin becomes the more will be the desire of the System to compromise it by all means.
  The video was done at Bitcoin level of 100 dollars. Story about the Pizza sold for 10,000 Bitcoins is particularly amazing with Bitcoin crossing today 500 dollars. This parabolic rise actually is the highest risk for Bitcoin believers to overcome. Will they stay after the run to $2000 and collapse to $50 or just switch to "the new and better" cryptocurrency? Just look what has happened to Gold after its run to $1900 - it is almost a dirty word now, but it is Gold and China is buying record amounts of it at this levels. Who will support Bitcoin after its bust?

Bitcoin Heist And Jim Rickards On Taper, Janet Yellen and Gold GLD, MUX, TNR.v, GDX

   "In this very interesting episode RT is reporting about the hunger for the FIAT Currencies alternatives and how it is driving the Bitcoin Bubble, but it is not The New Gold or even close to it - as we have written before. New security concerns are reported with the cryptocurremcy and Jim Rickards dissects the Currency War situation in the ECB, BOJ and FED race to the bottom. You will find out why Janet Yellen can not Taper and what is behind the Gold and why Gold Standard is still valuable option even today. 

  After our yesterday US dollar chart observations it has fallen out of bed so far today - maybe somebody already has received Janet Yellen's testimony for tomorrow's nomination hearing."

Claims: "Bitcoin Is Broken", "Security Vulnerability" - Bitcoin site is hacked, with $1million of the virtual currency stolen.

"Bitcoin potential fair value is of 700 ounces of Gold" - Not So Fast - it is Not Gold or even close to it. There will be a lot of opinions about Bitcoin and its stratospheric rise. Its wild gyrations of valuation show the appetite for the alternatives to FIAT currencies and ... another Ponzi Scheme in the making fuelled by speculators. Do not be too alert on this one thou: as FED's issued US Dollars are maybe even worse. Everything will be ended in a bubble one day - before it you can play and make some money.
  But we definitely have a very big problem when somebody is coming out - as ZeroHedge reports - with valuations for Bitcoin based on comparing Gold vs Monetary Supply in existence and then compares the potential "Bitcoin fair value" to 700 of ounces of Gold!?"

US Dollar And Gold This Week - Janet Yellen: "There Are No Bubbles And More To Be Done." GLD, MUX, TNR.v, GDX, SLV

 "In all normal circumstances Gold will be flying over $2000 long time ago, but we do not have the luxury of free markets with "The FED's 100-Year War Against Gold." Market can not be manipulated forever, particularly when underlining Demand is growing with the suppressed Gold price. China and other Asian countries are more than happy to accumulate cheap Gold and it is flowing from The West To The East at the disturbing record rate. COMEX is running on fumes now and LBMA banks are exposed to the Gold Bank Run with all-time-high leverage of 69 owners per ounce of deliverable Gold."

ZeroHedge:

Bitcoin Rises Over $500

One day before the Senate's digital currency hearing titled "Beyond Silk Road: Potential Risks, Threats, and Promises of Virtual Currencies", Bitcoin is largely oblivious to any potential regulatory threats, either at the legislative or the city level, where as reported previously the New York superintendent is in a rush to enforce BitLicenses on businesses that accept BitCoin, and moments ago crossed $500 for the first time ever. Instead, it appears that as we also reported previously, the Chinese Bitcoin craze has reached the parabolic threshold, going so far as making Bitcoin an acceptable payment for real estate, which means that while for the time being Bitcoin becomes the alternative inflation protection medium for hundreds of millions of Chinese, all bets on how high it can get are off.

Intraday chart:

1 Year Chart:

1 Year log chart:

Curious where the demand is coming from? A week ago we showed a handy utility, FiatLeak, which shows where the BitCoin transactions are taking place:

Finally, for those curious what a "fair value" on Bitcoin may be, here is what we presenteda week ago, courtesy of Global Macro Investor's Raoul Pal:

So yes: Bitcoin is volatile. Very. That much is clear. But what is not so clear, and perhaps a key reason for this volatility, is just what the fundamental, or intrinsic value of BitCoins is when one strips away the pure euphoric momentum to the upside or downside.

To answer that question, we go to Raoul Pal, head of the Global Macro Investor, and his November 1st recommendation to "Buy Bitcoins"(when BTC was $210 so nearly a 100% return in 1 week) which among other things attempts to "value BTC using a macro framework" or, in other words, the first supply-demand driven fair value assessment of BTC."