Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Contents
1 Overview 1
1.1 Bitcoin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1.1 Terminology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1.2 Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1.3 History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.1.4 Economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.1.5 Legal status, tax and regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.1.6 Criminal activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.1.7 In academia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.1.8 In art, entertainment, and media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.1.9 See also . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.1.10 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.1.11 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.2 History of Bitcoin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.2.1 Pre-history . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.2.2 Creation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.2.3 Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.2.4 Prices and value history . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.2.5 Satoshi Nakamoto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.2.6 The fork of March 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.2.7 Regulatory issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.2.8 Theft and exchange shutdowns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
1.2.9 Taxation and regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.2.10 Sports sponsorship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.2.11 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.2.12 External links . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
1.3 Legality of bitcoin by country . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
1.3.1 Detail by union . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
1.3.2 Detail by country or territory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
1.3.3 Footnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
1.3.4 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
1.3.5 External links . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
i
ii CONTENTS
1.3.6 Websites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2 People 32
2.1 Satoshi Nakamoto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.1.1 Development of bitcoin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.1.2 Characteristics and identity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.1.3 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.1.4 External links . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.2 Hal Finney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.2.1 Early life and education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.2.2 Career . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.2.3 Bitcoin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.2.4 Private life, illness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.2.5 Death . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.2.6 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.2.7 External links . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
2.3 Gavin Andresen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
2.3.1 Career . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
2.3.2 See also . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
2.3.3 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
2.3.4 External links . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2.4 Nick Szabo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2.4.1 Bit gold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2.4.2 Bitcoin speculation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2.4.3 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
2.4.4 External links . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
2.5 Winklevoss twins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
2.5.1 Early life and education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
2.5.2 ConnectU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
2.5.3 Bitcoin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
2.5.4 Popular culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
2.5.5 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
2.6 Mark Karpels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
2.6.1 Early life and education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
2.6.2 Career . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
2.6.3 Arrest and prosecution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
2.6.4 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
2.6.5 External links . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
3 Organizations 45
3.1 Bitcoin Foundation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
3.1.1 History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
CONTENTS iii
3.1.2 Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
3.1.3 Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
3.1.4 Criticism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
3.1.5 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
3.1.6 External links . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4 Technologies 48
4.1 Bitcoin network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
4.1.1 Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
4.1.2 Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
4.1.3 Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
4.1.4 Payment verication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
4.1.5 Data in the blockchain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
4.1.6 Criminal activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
4.1.7 See also . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
4.1.8 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
4.2 Cryptocurrency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
4.2.1 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
4.2.2 History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
4.2.3 Legality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
4.2.4 Timestamping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
4.2.5 Economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
4.2.6 List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
4.2.7 Academic studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
4.2.8 Criticism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
4.2.9 See also . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
4.2.10 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
4.2.11 Further reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
4.2.12 External links . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
4.3 Elliptic Curve Digital Signature Algorithm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
4.3.1 Key and signature-size comparison to DSA . . . . . . . . . . . . . . . . . . . . . . . . . . 65
4.3.2 Signature generation algorithm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
4.3.3 Signature verication algorithm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
4.3.4 Correctness of the algorithm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
4.3.5 Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
4.3.6 See also . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
4.3.7 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
4.3.8 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
4.3.9 External links . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
4.4 Peer-to-peer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
4.4.1 Historical development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
4.4.2 Architecture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
iv CONTENTS
4.4.3 Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
4.4.4 Social implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
4.4.5 Political implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
4.4.6 Current research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
4.4.7 See also . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
4.4.8 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
4.4.9 External links . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
4.5 Proof-of-work system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
4.5.1 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
4.5.2 Variants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
4.5.3 List of proof-of-work functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
4.5.4 Reusable proof-of-work as e-money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
4.5.5 Useful proof-of-work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
4.5.6 See also . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
4.5.7 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
4.5.8 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
4.5.9 External links . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
4.6 SHA-2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
4.6.1 Hash standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
4.6.2 Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
4.6.3 Cryptanalysis and validation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
4.6.4 Test vectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
4.6.5 Pseudocode . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
4.6.6 Comparison of SHA functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
4.6.7 See also . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
4.6.8 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
4.6.9 External links . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
5 Exchanges 85
5.1 ANX (Hong Kong company) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
5.1.1 Company Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
5.1.2 Major Products and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
5.1.3 Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
5.1.4 Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
5.1.5 Awards and Recognitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
5.1.6 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
5.2 BitInstant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
5.2.1 History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
5.2.2 Criticism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
5.2.3 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
5.3 Bitstamp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
5.3.1 History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
CONTENTS v
Overview
1.1 Bitcoin Small amounts of bitcoin used as alternative units are mil-
libitcoin (mBTC),[1] microbitcoin (BTC, sometimes re-
Bitcoin is a worldwide cryptocurrency and digital ferred to as bit), and satoshi. Named in homage to bit-
payment system[13]:3 invented by an unknown program- coins creator, a satoshi is the smallest amount within bit-
mer, or a group of programmers, under the name Satoshi coin representing 0.00000001 bitcoin, one hundred mil-
Nakamoto.[14] It was released as open-source software in lionth of a bitcoin.[3] A millibitcoin equals to 0.001 bit-
2009.[15] coin, one thousandth of a bitcoin.[29] One microbitcoin
equals to 0.000001 bitcoin, one millionth of a bitcoin.
The system is peer-to-peer, and transactions take place
between users directly, without an intermediary.[13]:4
These transactions are veried by network nodes 1.1.2 Design
and recorded in a public distributed ledger called a
blockchain. Since the system works without a central Blockchain
repository or single administrator, bitcoin is called the
rst decentralized digital currency.[13]:1[16] For a broader coverage related to this topic, see
Besides being created as a reward for mining, bitcoin can Blockchain.
be exchanged for other currencies,[17] products, and ser- The blockchain is a public ledger that records bit-
vices in legal or black markets.[18][19]
50,500,000
35,500,000
search produced by Cambridge University in 2017, there
30,500,000
are 2.9 to 5.8 million unique users using a cryptocurrency 25,500,000
wallet, most of them using bitcoin.[21] 20,500,000
15,500,000
10,500,000
500,000
2011 2012 2013 2014 2015 2016 2017
[22]
The word bitcoin occurred in the white paper that de-
ned bitcoin published on 31 October 2008.[23] It is a Number of unspent transaction outputs
compound of the words bit and coin.[24] The white paper
frequently uses the shorter coin.[22] coin transactions.[30] A novel solution accomplishes this
There is no uniform convention for bitcoin capitalization. without any trusted central authority: maintenance of
Some sources use Bitcoin, capitalized, to refer to the tech- the blockchain is performed by a network of communi-
[13]
nology and network and bitcoin, lowercase, to refer to cating nodes running bitcoin software. Transactions
the unit of account. [25]
The Wall Street Journal, [26]
The of the form payer X sends Y bitcoins to payee Z are
Chronicle of Higher Education, [27]
and the Oxford En- broadcast to this network using readily available software
[31]
glish Dictionary [24]
advocate use of lowercase bitcoin in applications. Network nodes can validate transactions,
all cases, a convention which this article follows. add them to their copy of the ledger, and then broadcast
these ledger additions to other nodes. The blockchain is
a distributed database to achieve independent verica-
Units tion of the chain of ownership of any and every bitcoin
amount, each network node stores its own copy of the
The unit of account of the bitcoin system is bitcoin. blockchain.[32] Approximately six times per hour, a new
As of 2014, symbols used to represent bitcoin are group of accepted transactions, a block, is created, added
BTC,[note 1] XBT,[note 2] and (U+20BF, ).[note 3][28]:2 to the blockchain, and quickly published to all nodes.
1
2 CHAPTER 1. OVERVIEW
that exist apart from it, the blockchain is the only place 10,000
that bitcoins can be said to exist in the form of unspent
outputs of transactions.[9]:ch. 5 100
1
2009 2010 2011 2012 2013 2014 2015 2016 2017
Transactions
Semi-log plot of relative mining diculty.[note 4][33]
See also: Bitcoin network
Transactions are dened using a Forth-like scripting
Each block contains a cryptographic hash of the previous
block,[30] using the SHA-256 hashing algorithm,[9]:ch. 7
which links it to the previous block,[30] thus giving the
blockchain its name.
In order to be accepted by the rest of the network, a
new block must contain a so-called proof-of-work.[30] The
proof-of-work requires miners to nd a number called a
nonce, such that when the block content is hashed along
with the nonce, the result is numerically smaller than the
networks diculty target.[9]:ch. 8 This proof is easy for
any node in the network to verify, but extremely time-
Number of bitcoin transactions per month (logarithmic scale) [33] consuming to generate, as for a secure cryptographic
hash, miners must try many dierent nonce values (usu-
[9]:ch. 8
language. [9]:ch. 5
A valid transaction must have one or ally the sequence of tested values is 0, 1, 2, 3, ... )
more inputs. [34]
Every input must be an unspent output before meeting the diculty target.
of a previous transaction. The transaction must carry the Every 2016 blocks (approximately 14 days at roughly 10
digital signature of every input owner. The use of mul- min per block), the diculty target is adjusted based on
tiple inputs corresponds to the use of multiple coins in the networks recent performance, with the aim of keep-
a cash transaction. A transaction can also have multi- ing the average time between new blocks at ten minutes.
ple outputs, allowing one to make multiple payments in In this way the system automatically adapts to the total
one go. A transaction output can be specied as an ar- amount of mining power on the network.[9]:ch. 8
bitrary multiple of satoshi. As in a cash transaction, the
Between 1 March 2014 and 1 March 2015, the aver-
sum of inputs (coins used to pay) can exceed the intended
age number of nonces miners had to try before creat-
sum of payments. In such a case, an additional output is
ing a new block increased from 16.4 quintillion to 200.5
used, returning the change back to the payer.[34] Any in-
quintillion.[36]
put satoshis not accounted for in the transaction outputs
become the transaction fee.[34] The proof-of-work system, alongside the chaining of
blocks, makes modications of the blockchain extremely
hard, as an attacker must modify all subsequent blocks
Transaction fees in order for the modications of one block to be
accepted.[37] As new blocks are mined all the time, the
Paying a transaction fee is optional.[34] Miners can choose diculty of modifying a block increases as time passes
which transactions to process[34] and prioritize those that and the number of subsequent blocks (also called conr-
pay higher fees. Fees are based on the storage size of the mations of the given block) increases.[30]
transaction generated, which in turn is dependent on the
number of inputs used to create the transaction. Further-
more, priority is given to older unspent inputs.[9]:ch. 8
Supply
18,000,000
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0
2009 2010 2011 2012 2013 2014 2015 2016 2017
Simplied chain of ownership.[22] In reality, a transaction can Wallets and similar software technically handle all bit-
have more than one input and more than one output. coins as equivalent, establishing the basic level of
fungibility. Researchers have pointed out that the his-
Ownership of bitcoins implies that a user can spend bit- tory of each bitcoin is registered and publicly available in
coins associated with a specic address. To do so, a payer the blockchain ledger, and that some users may refuse to
must digitally sign the transaction using the correspond- accept bitcoins coming from controversial transactions,
ing private key. Without knowledge of the private key, which would harm bitcoins fungibility.[69] Projects such
the transaction cannot be signed and bitcoins cannot be as CryptoNote, Zerocoin, and Dark Wallet aim to address
spent. The network veries the signature using the public these privacy and fungibility issues.[70][71]
key.[9]:ch. 5
If the private key is lost, the bitcoin network will not rec- Governance
ognize any other evidence of ownership;[13] the coins are
then unusable, and eectively lost. For example, in 2013 Bitcoin was initially led by Satoshi Nakamoto. Nakamoto
one user claimed to have lost 7,500 bitcoins, worth $7.5 stepped back in 2010 and handed the network alert key
million at the time, when he accidentally discarded a hard to Gavin Andresen.[72] Andresen stated he subsequently
drive containing his private key.[59] sought to decentralize control stating: As soon as Satoshi
1.1. BITCOIN 5
stepped back and threw the project onto my shoulders, the reins to developer Gavin Andresen, who then became
one of the rst things I did was try to decentralize that. the bitcoin lead developer at the Bitcoin Foundation, the
So, if I get hit by a bus, it would be clear that the project 'anarchic' bitcoin communitys closest thing to an ocial
would go on.[72] This left opportunity for controversy to public face.[88]
develop over the future development path of bitcoin. The The value of the rst bitcoin transactions were negotiated
reference implementation of the bitcoin protocol called by individuals on the bitcointalk forums with one notable
Bitcoin Core obtained competing versions that propose transaction of 10,000 BTC used to indirectly purchase
to solve various governance and blocksize debates; as of two pizzas delivered by Papa Johns.[80]
July 2016, the alternatives were called Bitcoin XT, Bit-
coin Classic, and Bitcoin Unlimited.[73] On 6 August 2010, a major vulnerability in the bitcoin
protocol was spotted. Transactions were not properly ver-
ied before they were included in the blockchain, which
Scalability let users bypass bitcoins economic restrictions and create
an indenite number of bitcoins.[89][90] On 15 August,
Main article: Bitcoin scalability problem the vulnerability was exploited; over 184 billion bitcoins
were generated in a transaction, and sent to two addresses
The blocks in the blockchain are limited to one megabyte on the network. Within hours, the transaction was spot-
in size, which has created problems for bitcoin transac- ted and erased from the transaction log after the bug was
tion processing, such as increasing transaction fees and xed and the network forked to an updated version of the
delayed processing of transactions that cannot be t into a bitcoin protocol.[91][89][90]
block.[74] Contenders to solve the scalability problem are Per Fortune, on 1 August 2017 bitcoin split into two dig-
referred to as Bitcoin Cash,[75] Bitcoin Classic,[76] Bitcoin ital currencies, the classic bitcoin (BTC) and the Bitcoin
Unlimited,[77] and SegWit2x.[78] On 21 July 2017 miners Cash (BCH).[75]
locked-in a software upgrade referred to as Bitcoin Im-
provement Proposal (BIP) 91, meaning that the contro-
versial Segregated Witness upgrade will activate at block 1.1.4 Economics
# 477,120.[79]
Main article: Economics of bitcoin
1.1.3 History
Main article: History of bitcoin Classication
Bitcoin was created[15] by Satoshi Nakamoto,[14] who Bitcoin is a digital asset[92] designed by its inven-
published the invention[15] on 31 October 2008 to a tor, Satoshi Nakamoto, to work as a currency.[22][93]
cryptography mailing list[23] in a research paper called It is commonly referred to with terms like digi-
Bitcoin: A Peer-to-Peer Electronic Cash System.[22] tal currency,[13]:1 digital cash,[94] virtual currency,[3]
Nakamoto implemented bitcoin as open source code and electronic currency,[25] or cryptocurrency.[95]
released in January 2009.[15] The identity of Nakamoto The question whether bitcoin is a currency or not is still
remains unknown, though many have claimed to know disputed.[95] Bitcoins have three useful qualities in a cur-
it.[14] rency, according to The Economist in January 2015: they
In January 2009, the bitcoin network came into existence are hard to earn, limited in supply and easy to verify.[96]
with the release of the rst open source bitcoin client and Economists dene money as a store of value, a medium
the issuance of the rst bitcoins,[80][81][82][83] with Satoshi of exchange, and a unit of account and agree that bit-
Nakamoto mining the rst block of bitcoins ever (known coin has some way to go to meet all these criteria.[97] It
as the genesis block), which had a reward of 50 bitcoins. does best as a medium of exchange; as of February 2015
the number of merchants accepting bitcoin had passed
One of the rst supporters, adopters, contributor to bit-
100,000.[20] As of March 2014, the bitcoin market suf-
coin and receiver of the rst bitcoin transaction was
fered from volatility, limiting the ability of bitcoin to act
programmer Hal Finney. Finney downloaded the bit-
as a stable store of value, and retailers accepting bitcoin
coin software the day it was released, and received
use other currencies as their principal unit of account.[97]
10 bitcoins from Nakamoto in the worlds rst bitcoin
transaction.[84][85] Other early supporters were Wei Dai,
creator of bitcoin predecessor b-money, and Nick Szabo, General use
creator of bitcoin predecessor bit gold.[86]
In the early days, Nakamoto is estimated to have mined According to research produced by Cambridge Univer-
1 million bitcoins.[87] Before disappearing from any in- sity there were between 2.9 million and 5.8 million unique
volvement in bitcoin, Nakamoto in a sense handed over users using a cryptocurrency wallet, as of 2017, most of
6 CHAPTER 1. OVERVIEW
100,000,000,000
payment for e-commerce and may emerge as a serious
competitor to traditional money-transfer providers.[110]
10,000,000,000 In June 2014, the rst bank that converts deposits in cur-
rencies instantly to bitcoin without any fees was opened
1,000,000,000 in Boston.[111]
100,000,000
10,000,000 As an investment
2010 2011 2012 2013 2014 2015 2016
Liquidity (estimated, USD/year, logarithmic scale).[33]Some Argentinians have bought bitcoins to protect their
savings against high ination or the possibility that gov-
ernments could conscate savings accounts.[63] During
them using bitcoin. The number of users has grown sig- the 20122013 Cypriot nancial crisis, bitcoin purchases
nicantly since 2013, when there were 300,000 to 1.3 in Cyprus rose due to fears that savings accounts would
million users.[21] be conscated or taxed.[112]
The Winklevoss twins have invested into bitcoins. In
Acceptance by merchants 2013 The Washington Post claimed that they owned 1%
of all the bitcoins in existence at the time.[113]
In 2015, the number of merchants accepting bitcoin ex- Other methods of investment are bitcoin funds. The
ceeded 100,000.[20] Instead of 23% typically imposed rst regulated bitcoin fund was established in Jersey in
by credit card processors, merchants accepting bitcoins July 2014 and approved by the Jersey Financial Services
often pay fees in the range from 0% to less than 2%.[98] Commission.[114] Forbes started publishing arguments in
Firms that accepted payments in bitcoin as of December favor of investing in December 2015.[115]
2014 included PayPal,[99] Microsoft,[100] Dell,[101] and
Newegg.[102] In 2013 and 2014, the European Banking Author-
ity[116] and the Financial Industry Regulatory Author-
ity (FINRA), a United States self-regulatory organiza-
Payment service providers tion,[117] warned that investing in bitcoins carries signif-
icant risks. Forbes named bitcoin the best investment of
Merchants accepting bitcoin ordinarily use the services 2013.[118] In 2014, Bloomberg named bitcoin one of its
of bitcoin payment service providers such as BitPay or worst investments of the year.[119] In 2015, bitcoin topped
Coinbase. When a customer pays in bitcoin, the payment Bloombergs currency tables.[120]
service provider accepts the bitcoin on behalf of the mer-
According to Bloomberg, in 2013 there were about 250
chant, converts it to the local currency, and sends the ob-
bitcoin wallets with more than $1 million worth of bit-
tained amount to merchants bank account, charging a fee
[103] coins. The number of bitcoin millionaires is uncertain as
for the service.
people can have more than one wallet.[121]
Financial institutions
10,000.00 350%
work. This is a form of Metcalfes law and suggests that
1,000.00 300% the network was demonstrating network eects propor-
100.00
250% tional to its level of user adoption.[141]
200%
10.00
150%
1.00
100%
1.1.5 Legal status, tax and regulation
0.10 50%
Main article: Legality of bitcoin by country or territory
0.01 0%
2010 2011 2012 2013 2014 2015
Price Volatility
The legal status of bitcoin varies substantially from coun-
try to country and is still undened or changing in many
Price[note 7] (left vertical axis, logarithmic scale) and
of them. While some countries have explicitly allowed its
volatility[note 8] (right vertical axis).[33]
use and trade, others have banned or restricted it. Regu-
lations and bans that apply to bitcoin probably extend to
similar cryptocurrency systems.[142]
Price and volatility
ceived bitcoins worth $100 to better understand this [5] It is misleading to think that there is an analogy between
emerging technology. The bitcoins were not provided gold mining and bitcoin mining. The fact is that gold min-
by MIT but rather the MIT Bitcoin Club, a student-run ers are rewarded for producing gold, while bitcoin min-
club.[151][152] ers are not rewarded for producing bitcoins; they are re-
warded for their record-keeping services.[35]
In 2016, Stanford University launched a lab course on
building bitcoin-enabled applications.[153] [6] The exact number is 20,999,999.9769 bitcoins.[9]:ch. 8
1.1.8 In art, entertainment, and media [8] Volatility is calculated on a yearly basis.
Films
1.1.11 References
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14 CHAPTER 1. OVERVIEW
[156] Stross, Charles (2013). Neptunes Brood (Kindle ed.). 1.2.2 Creation
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"...[E]very exchange between two beacons must be cryp- In November 2008, a paper was posted to a cryptogra-
tographically signed by a third party bank in another star phy mailing list[10] under the name Satoshi Nakamoto ti-
system: it take years to settle a transaction. Its theft-proof
tled Bitcoin: A Peer-to-Peer Electronic Cash System. This
too for each bitcoin is cryptographically signed by the
paper detailed methods of using a peer-to-peer network
mind of its owner
to generate what was described as a system for elec-
tronic transactions without relying on trust.[11][12][13][14]
In January 2009, the bitcoin network came into existence
with the release of the rst open source bitcoin client and
1.2 History of Bitcoin the issuance of the rst bitcoins,[12][15][16][17] with Satoshi
Nakamoto mining the rst block of bitcoins ever (known
Further information: Bitcoin as the genesis block), which had a reward of 50 bitcoins.
Bitcoin is a cryptocurrency, a digital asset designed to One of the rst supporters, adopters, contributor to bit-
coin and receiver of the rst bitcoin transaction was
programmer Hal Finney. Finney downloaded the bit-
coin software the day it was released, and received
10 bitcoins from Nakamoto in the worlds rst bitcoin
transaction.[18][19] Other early supporters were Wei Dai,
creator of bitcoin predecessor b-money, and Nick Szabo,
creator of bitcoin predecessor bit gold.[20]
In the early days, Nakamoto is estimated to have mined
1 million bitcoins.[21] Before disappearing from any in-
volvement in bitcoin, Nakamoto in a sense handed over
the reins to developer Gavin Andresen, who then became
the bitcoin lead developer at the Bitcoin Foundation, the
Number of bitcoin transactions per month (logarithmic scale)
'anarchic' bitcoin communitys closest thing to an ocial
public face.[22]
work as a medium of exchange that uses cryptography
The value of the rst bitcoin transactions were negotiated
to control its creation and management, rather than re-
by individuals on the bitcointalk forums with one notable
lying on central authorities.[1] The presumed pseudony-
transaction of 10,000 BTC used to indirectly purchase
mous Satoshi Nakamoto integrated many existing ideas
two pizzas delivered by Papa Johns.[12]
from the cypherpunk community when creating bitcoin.
On 6 August 2010, a major vulnerability in the bit-
coin protocol was spotted. Transactions weren't prop-
erly veried before they were included in the transac-
1.2.1 Pre-history tion log or blockchain, which let users bypass bitcoins
economic restrictions and create an indenite number
Prior to the release of bitcoin there were a number of dig- of bitcoins.[23][24] On 15 August, the vulnerability was
ital cash technologies starting with the issuer based ecash exploited; over 184 billion bitcoins were generated in a
protocols of David Chaum [2] and Stefan Brands. Adam transaction, and sent to two addresses on the network.
Back developed hashcash, a proof-of-work scheme for Within hours, the transaction was spotted and erased
spam control. The rst proposals for distributed dig- from the transaction log after the bug was xed and
ital scarcity based cryptocurrencies were Wei Dai's b- the network forked to an updated version of the bitcoin
money[3] and Nick Szabo's bit gold.[4][5] Hal Finney de- protocol.[25][26] This was the only major security aw
veloped reusable proof of work (RPOW) using hashcash found and exploited in bitcoins history.[23][24]
as its proof of work algorithm.[6]
In the bit gold proposal which proposed a collectible mar-
ket based mechanism for ination control, Nick Szabo 1.2.3 Growth
also investigated some additional enabling aspects includ-
ing a Byzantine fault-tolerant asset registry to store and 2011
transfer the chained proof-of-work solutions.[5]
There has been much speculation as to the identity of Based on bitcoins open[27] source code, other cryptocurren-
Satoshi Nakamoto with suspects including Wei Dai, Hal cies started to emerge.
Finney and accompanying denials.[7][8] The possibility The Electronic Frontier Foundation, a non-prot group,
that Satoshi Nakamoto was a computer collective in the started accepting bitcoins in January 2011,[28] stopped
European nancial sector has also been bruited.[9] accepting them in June 2011,[29] and began again in May
1.2. HISTORY OF BITCOIN 15
2013.[30] Gox exchange briey halted bitcoin deposits and the ex-
[31]
In June 2011 Wikileaks and other organizations began change rate briey dipped by 23% to $37 as the event
to accept bitcoins for donations. The Electronic Fron- occurred[44][45] before recovering to previous level of ap-
tier Foundation began, and then temporarily suspended, proximately $48 in the following hours.[46] In the US, the
bitcoin acceptance, citing concerns about a lack of legal Financial Crimes Enforcement Network (FinCEN) es-
precedent about new currency systems.[32] The EFFs de- tablished regulatory guidelines for decentralized virtual
cision was reversed on 17 May 2013 when they resumed currencies such as bitcoin, classifying American bitcoin
accepting bitcoin.[33] miners who sell their generated bitcoins as Money Ser-
vice Businesses (or MSBs), that may be subject to regis-
On 22 March 2011 WeUseCoins published the rst vi- tration and other legal obligations.[47][48][49]
ral video [34] which has had over 6.4 million views.
In September 2011 Vitalik Buterin co-founded Bitcoin In April, payment processors BitInstant and Mt. Gox
Magazine. On 23 December 2011, Douglas Feigelson of experienced processing delays due to insucient
BitBills led a patent application for Creating And Us- capacity[50] resulting in the bitcoin exchange rate drop-
ing Digital Currency with the United States Patent and ping from $266 to $76 before returning to $160 within
Trademark Oce, an action which was contested based six hours.[51] Bitcoin gained greater recognition when
on prior art in June 2013.[35][36] services such as OkCupid and Foodler began accepting
it for payment.[52]
On 15 May 2013, the US authorities seized accounts as-
2012 sociated with Mt. Gox after discovering that it had not
registered as a money transmitter with FinCEN in the
In January 2012, bitcoin was featured as the main subject US.[53][54]
within a ctionalized trial on the CBS legal drama The
Good Wife in the third-season episode "Bitcoin for Dum- On 17 May 2013, it was reported that BitInstant pro-
mies". The host of CNBC's Mad Money, Jim Cramer, cessed approximately 30 percent of the money going into
played himself in a courtroom scene where he testies and out of bitcoin,
[55]
and in April alone facilitated 30,000
that he doesn't consider bitcoin a true currency, saying transactions,
Theres no central bank to regulate it; its digital and On 23 June 2013, it was reported that the US Drug
functions completely peer to peer.[37] Enforcement Administration listed 11.02 bitcoins as a
In September 2012, the Bitcoin Foundation was launched seized asset in a United States Department[56]of Justice
to accelerate the global growth of bitcoin through seizure notice pursuant to 21 U.S.C. 881. It is the
standardization, protection, and promotion of the open rst time a government agency has claimed to have seized
[57][58]
source protocol. The founders were Gavin Andresen, bitcoin.
Jon Matonis, Patrick Murck, Charlie Shrem, and Peter In July 2013 a project began in Kenya linking bitcoin with
Vessenes.[38] M-Pesa, a popular mobile payments system, in an exper-
[59]
In October 2012, BitPay reported having over 1,000 mer- iment designed to spur innovative payments in Africa.
chants accepting bitcoin under its payment processing During the same month the Foreign Exchange Admin-
service.[39] In November 2012, WordPress had started istration and Policy Department in Thailand stated that
accepting bitcoins.[40] bitcoin lacks any legal framework and would therefore be
illegal, which eectively banned trading on bitcoin ex-
changes in the country.[60][61] According to Vitalik Bu-
2013 terin, a writer for Bitcoin Magazine, bitcoins fate in
Thailand may give the electronic currency more credibil-
In February 2013 the bitcoin-based payment processor ity in some circles, but he was concerned it didn't bode
Coinbase reported selling US$1 million worth of bitcoins well for bitcoin in China.[62]
in a single month at over $22 per bitcoin.[41] The Internet On 6 August 2013, Federal Judge Amos Mazzant of the
Archive announced that it was ready to accept donations Eastern District of Texas of the Fifth Circuit ruled that
as bitcoins and that it intends to give employees the option bitcoins are a currency or a form of money (specically
to receive portions of their salaries in bitcoin currency.[42] securities as dened by Federal Securities Laws), and as
In March the bitcoin transaction log called the blockchain such were subject to the courts jurisdiction,[63][64] and
temporarily split into two independent chains with dif- Germanys Finance Ministry subsumed bitcoins under the
fering rules on how transactions were accepted. For six term unit of accounta nancial instrumentthough
hours two bitcoin networks operated at the same time, not as e-money or a functional currency, a classication
each with its own version of the transaction history. The nonetheless having legal and tax implications.[65]
core developers called for a temporary halt to trans- In October 2013, the FBI seized roughly 26,000 BTC
actions, sparking a sharp sell-o.[43] Normal operation from website Silk Road during the arrest of alleged owner
was restored when the majority of the network down- Ross William Ulbricht.[66][67][68] Two companies, Robo-
graded to version 0.7 of the bitcoin software.[43] The Mt.
16 CHAPTER 1. OVERVIEW
coin and Bitcoiniacs launched the worlds rst bitcoin mission CFTC to begin listing an over-the-counter
ATM on 29 October 2013 in Vancouver, BC, Canada, swap product based on the price of a bitcoin. The CFTC
allowing clients to sell or purchase bitcoin currency at a swap product approval marks the rst time a U.S. regula-
downtown coee shop.[69][70][71] Chinese internet giant tory agency approved a bitcoin nancial product.[92]
Baidu had allowed clients of website security services to In December 2014 Microsoft began to accept bitcoin to
pay with bitcoins.[72] buy Xbox games and Windows apps.[93]
In November 2013, the University of Nicosia announced
that it would be accepting bitcoin as payment for tuition
fees, with the universitys chief nancial ocer calling 2015
it the gold of tomorrow.[73] During November 2013,
the China-based bitcoin exchange BTC China overtook In January 2015 Coinbase raised 75 million USD as part
the Japan-based Mt. Gox and the Europe-based Bitstamp of a Series C funding round, smashing the previous record
to become the largest bitcoin trading exchange by trade for a bitcoin company.[94] Less than one year after the
volume.[74] collapse of Mt. Gox, United Kingdom-based exchange
Bitstamp announced that their exchange would be taken
In December 2013, Overstock.com[75] announced plans oine while they investigate a hack which resulted in
to accept bitcoin in the second half of 2014. On 5 De- about 19,000 bitcoins (equivalent to roughly US$5 mil-
cember 2013, the Peoples Bank of China prohibited Chi- lion at that time) being stolen from their hot wallet.[95]
nese nancial institutions from using bitcoins.[76] After The exchange remained oine for several days amid
the announcement, the value of bitcoins dropped,[77] and speculation that customers had lost their funds. Bitstamp
Baidu no longer accepted bitcoins for certain services.[78] resumed trading on 9 January after increasing security
Buying real-world goods with any virtual currency has measures and assuring customers that their account bal-
been illegal in China since at least 2009.[79] ances would not be impacted.[96]
In March 2015 21 Inc announced it had raised 116 million
2014 USD in venture funding, the largest amount for any digital
currency-related companies.[97]
In January 2014, Zynga[80] announced it was testing As of August 2015 it was estimated that 160,000 mer-
bitcoin for purchasing in-game assets in seven of its chants accept bitcoin payments.[98] Barclays announced
games. That same month, The D Las Vegas Casino that they would become the rst UK high street bank to
Hotel and Golden Gate Hotel & Casino properties in start accepting bitcoin, with a plan to facilitate users to
downtown Las Vegas announced they would also begin make charitable donations using the cryptocurrency out-
accepting bitcoin, according to an article by USA To- side their systems.[99] They partnered in April 2016 with
day. The article also stated the currency would be ac- mobile payment startup Circle Internet Financial.[100]
cepted in ve locations, including the front desk and In October 2015, a proposal was submitted to the
certain restaurants.[81] The network rate exceeded 10 Unicode Consortium to add a codepoint for the bitcoin
petahash/sec.[82] TigerDirect[83] and Overstock.com[84] symbol.[101]
started accepting bitcoin.
In early February 2014, one of the largest bitcoin ex-
changes, Mt. Gox,[85] suspended withdrawals citing tech- 2016
nical issues.[86] By the end of the month, Mt. Gox had
led for bankruptcy protection in Japan amid reports that In January 2016, the network rate exceeded 1
744,000 bitcoins had been stolen.[87] Months before the exahash/sec.[102]
ling, the popularity of Mt. Gox had waned as users ex- In March 2016, the Cabinet of Japan recognized virtual
perienced diculties withdrawing funds.[88] currencies like bitcoin as having a function similar to real
[103]
In June 2014 the network exceeded 100 petahash/sec.[89] money. Bidorbuy, the largest South African online
marketplace, launched bitcoin payments for both buyers
On 18 June 2014, it was announced that bitcoin payment [104]
service provider BitPay would become the new sponsor of and sellers.
St. Petersburg Bowl under a two-year deal, renamed the In April 2016, Steam started accepting bitcoin as pay-
Bitcoin St. Petersburg Bowl. Bitcoin was to be accepted ment for video games and other online media.[105]
for ticket and concession sales at the game as part of the In July 2016, researchers published a paper show-
sponsorship, and the sponsorship itself was also paid for ing that by November 2013 bitcoin commerce was no
using bitcoin.[90] longer driven by sin activities but instead by legitimate
In July 2014 Newegg and Dell[91] started accepting bit- enterprises.[106] Uber switched to bitcoin in Argentina af-
coin. ter the government blocked credit card companies from
[107]
In September 2014 TeraExchange, LLC, received ap- dealing with Uber.
proval from the U.S.Commodity Futures Trading Com- In August 2016, a major bitcoin exchange, Bitnex, was
1.2. HISTORY OF BITCOIN 17
hacked and nearly 120,000 BTC (around $60m) was US$3,000 for the rst time.
stolen.[108] On August 12 2017, the price of one BTC passed
In September 2016, the number of bitcoin ATMs had US$4,000 for the rst time.
doubled over the last 18 months and reached 771 ATMs Two days later, the price of one BTC hit a record high of
worldwide.[109]
US$4,400 for the rst time.
In November 2016, the Swiss Railway operator SBB
(CFF) upgraded all their automated ticket machines so
that bitcoin could be bought from them using the scan- 1.2.4 Prices and value history
ner on the ticket machine to scan the bitcoin address on a
phone app.[110]
Bitcoin generates more academic interest year after year;
the number of Google Scholar articles published men-
tioning bitcoin grew from 83 in 2009, to 424 in 2012,
and 3580 in 2016.[111] Also, the academic Ledger (jour-
nal) published its rst issue. It is edited by Peter Rizun.
The number of businesses accepting bitcoin continues to Among the factors which may have contributed
increase. In January 2017, NHK reported the number of to this rise were the European sovereign-debt cri-
online stores accepting bitcoin in Japan had increased 4.6 sisparticularly the 20122013 Cypriot nancial
times over the past year.[112] BitPay CEO Stephen Pair crisisstatements by FinCEN improving the cur-
declared the companys transaction rate grew 3 from rencys legal standing and rising media and Internet
January 2016 to February 2017, and explained usage of interest.[125][126][127][128]
bitcoin is growing in B2B supply chain payments.[113] Until 2013, almost all market with bitcoins were in US
Bitcoin gains more legitimacy among lawmakers and $.[129][130][131]
legacy nancial companies. For example, Japan passed As the market valuation of the total stock of bitcoins ap-
a law to accept bitcoin as a legal payment method,[114] proached US$1 billion, some commentators called bit-
and Russia has announced that it will legalize the use coin prices a bubble.[132][133][134] In early April 2013,
of cryptocurrencies such as bitcoin.[115] And Norways the price per bitcoin dropped from $266 to around $50
largest online bank, Skandiabanken, integrate bitcoin and then rose to around $100. Over two weeks starting
accounts.[116] late June 2013 the price dropped steadily to $70. The
In the rst half of 2017, 1 bitcoin surpassed the spot price began to recover, peaking once again on 1 Octo-
price of an ounce of gold for the rst time,[117] and sub- ber at $140. On 2 October, The Silk Road was seized by
sequently broke its all-time high, reaching US$1,402.03 the FBI. This seizure caused a ash crash to $110. The
on 1 May 2017,[118] and over US$1,800 on 11 May price quickly rebounded, returning to $200 several weeks
2017.[119] On 20 May 2017, the price of one bitcoin later.[135] The latest run went from $200 on 3 November
passed US$2,000 for the rst time. to $900 on 18 November.[136] Bitcoin passed US$1,000
on 28 November 2013 at Mt. Gox.
In March 2017, the number of GitHub projects related to
bitcoin passed 10,000.[120] Prices fell to around $400 in April 2014, before rallying
in the middle of the year. They then declined to not much
Exchange trading volumes continue to increase. For the
more than $200 in early 2015.[137]
6-month period ending March 2017, Mexican exchange
Bitso saw trading volume increase 1500%.[121] Between In the second quarter of 2017, prices more than doubled
January and May 2017 Poloniex saw an increase of more from $1200 to over $2500.
than 600% active traders online and regularly processed
640% more transactions.[122]
1.2.5 Satoshi Nakamoto
In June 2017, the bitcoin symbol was encoded in Unicode
version 10.0 at position U+20BF ( ) in the Currency Main article: Satoshi Nakamoto
Symbols block.[123]
Per Fortune, on 1 August 2017 bitcoin split into two dig- Satoshi Nakamoto is presumed to be a pseudonym
ital currencies, the classic bitcoin (BTC) and the Bitcoin for the person or people who designed the original bit-
Cash (BCH).[124] coin protocol in 2008 and launched the network in 2009.
On August 5 2017, the price of one BTC passed Nakamoto was responsible for creating the majority of
18 CHAPTER 1. OVERVIEW
the ocial bitcoin software and was active in making piece by Andrew O'Hagan about Nakamoto.[165]
modications and posting technical information on the
BitcoinTalk Forum.[152] Investigations into the real iden-
tity of Satoshi Nakamoto were attempted by The New 1.2.6 The fork of March 2013
Yorker and Fast Company. The New Yorkers investiga-
tion brought up at least two possible candidates: Michael On 12 March 2013, a bitcoin miner running version 0.8.0
Clear and Vili Lehdonvirta. Fast Company's investigation of the bitcoin software created a large block that was con-
brought up circumstantial evidence linking an encryption sidered invalid in version 0.7 (due to an undiscovered in-
patent application led by Neal King, Vladimir Oksman consistency between the two versions). This created a
and Charles Bry on 15 August 2008, and the bitcoin.org split or fork in the blockchain since computers with the
domain name which was registered 72 hours later. The recent version of the software accepted the invalid block
patent application (#20100042841) contained network- and continued to build on the diverging chain, whereas
ing and encryption technologies similar to bitcoins, and older versions of the software rejected it and continued
textual analysis revealed that the phrase "... computation- extending the blockchain without the oending block.
ally impractical to reverse appeared in both the patent This split resulted in two separate transaction logs being
application and bitcoins whitepaper.[11] All three inven- formed without clear consensus, which allowed for the
tors explicitly denied being Satoshi Nakamoto.[153][154] In same funds to be spent dierently on each chain. In re-
May 2013, Ted Nelson speculated that Japanese mathe- sponse, the Mt. Gox exchange temporarily halted bitcoin
matician Shinichi Mochizuki is Satoshi Nakamoto.[155] deposits.[166] The exchange rate fell 23% to $37 on the
Later in 2013 the Israeli researchers Dorit Ron and Adi Mt. Gox exchange but rose most of the way back to its
Shamir pointed to Silk Road-linked Ross William Ul- prior level of $48.[44][45]
bricht as the possible person behind the cover. The
Miners resolved the split by downgrading to version 0.7,
two researchers based their suspicion on an analysis of
putting them back on track with the canonical blockchain.
the network of bitcoin transactions.[156] These allegations
User funds largely remained unaected and were avail-
were contested.[157] Ron and Shamir later retracted their
able when network consensus was restored.[167] The net-
claim.[158]
work reached consensus and continued to operate as nor-
Nakamotos involvement with bitcoin does not appear mal a few hours after the split.[168]
to extend past mid-2010.[159] In April 2011, Nakamoto
communicated with a bitcoin contributor, saying that he
had moved on to other things.[160] 1.2.7 Regulatory issues
Stefan Thomas, a Swiss coder and active commu-
nity member, graphed the time stamps for each of On 18 March 2013, the Financial Crimes Enforcement
Nakamotos 500-plus bitcoin forum posts; the resulting Network (or FinCEN), a bureau of the United States
chart showed a steep decline to almost no posts between Department of the Treasury, issued a report regarding
the hours of 5 a.m. and 11 a.m. Greenwich Mean Time. centralized and decentralized virtual currencies and
Because this pattern held true even on Saturdays and Sun- their legal status within "money services business" (MSB)
days, it suggested that Nakamoto was asleep at this time, and Bank Secrecy Act regulations.[49][54] It classied dig-
and the hours of 5 a.m. to 11 a.m. GMT are midnight to ital currencies and other digital payment systems such
6 a.m. Eastern Standard Time (North American Eastern as bitcoin as "virtual currencies" because they are not
Standard Time). Other clues suggested that Nakamoto legal tender under any sovereign jurisdiction. FinCEN
was British: A newspaper headline he had encoded in the cleared American users of bitcoin of legal obligations[54]
genesis block came from the UK-published newspaper by saying, A user of virtual currency is not an MSB un-
The Times, and both his forum posts and his comments der FinCENs regulations and therefore is not subject to
in the bitcoin source code used British English spellings, MSB registration, reporting, and recordkeeping regula-
such as optimise and colour.[161] tions. However, it held that American entities who gen-
erate virtual currency such as bitcoins are money trans-
An Internet search by an anonymous blogger of texts sim- mitters or MSBs if they sell their generated currency for
ilar in writing to the bitcoin whitepaper suggests Nick Sz- national currency: "...a person that creates units of con-
abo's bit gold articles as having a similar author.[7] Nick vertible virtual currency and sells those units to another
denied being Satoshi, and stated his ocial opinion on person for real currency or its equivalent is engaged in
Satoshi and bitcoin in a May 2011 article.[162] transmission to another location and is a money transmit-
In a March 2014 article in Newsweek, journalist Leah ter. This specically extends to miners of the bitcoin
McGrath Goodman doxed Dorian S. Nakamoto of currency who may have to register as MSBs and abide
Temple City, California, saying that Satoshi Nakamoto is by the legal requirements of being a money transmitter if
the mans birth name. Her methods and conclusion drew they sell their generated bitcoins for national currency and
widespread criticism.[163][164] are within the United States.[47] Since FinCEN issued this
guidance, dozens of virtual currency exchangers and ad-
In June 2016, the London Review of Books published a
ministrators have registered with FinCEN, and FinCEN
1.2. HISTORY OF BITCOIN 19
is receiving an increasing number of suspicious activity 1.2.8 Theft and exchange shutdowns
reports (SARs) from these entities.[169]
Additionally, FinCEN claimed regulation over American Theft of bitcoin has been documented on numerous occa-
entities that manage bitcoins in a payment processor set- sions. At other times, bitcoin exchanges have shut down,
ting or as an exchanger: In addition, a person is an ex- taking their clients bitcoins with them. A Wired study
changer and a money transmitter if the person accepts published April 2013 showed that 45 percent of bitcoin
such de-centralized convertible virtual currency from one exchanges end up closing.[179]
person and transmits it to another person as part of the ac-
ceptance and transfer of currency, funds, or other value On 19 June 2011, a security breach of the Mt. Gox bit-
that substitutes for currency.[48][49] coin exchange caused the nominal price of a bitcoin to
fraudulently drop to one cent on the Mt. Gox exchange,
In summary, FinCENs decision would require bitcoin ex- after a hacker used credentials from a Mt. Gox auditors
changes where bitcoins are traded for traditional curren- compromised computer illegally to transfer a large num-
cies to disclose large transactions and suspicious activity, ber of bitcoins to himself. They used the exchanges soft-
comply with money laundering regulations, and collect ware to sell them all nominally, creating a massive ask
information about their customers as traditional nancial order at any price. Within minutes, the price reverted to
institutions are required to do.[54][170][171] its correct user-traded value.[180][181][182][183][184][185] Ac-
Patrick Murck of the Bitcoin Foundation criticized Fin- counts with the equivalent of more than US$8,750,000
CENs report as an overreach and claimed that Fin- were aected.[182]
CEN cannot rely on this guidance in any enforcement In July 2011, the operator of Bitomat, the third-largest
action.[172] bitcoin exchange, announced that he had lost access to his
Jennifer Shasky Calvery, the director of FinCEN said, wallet.dat le with about 17,000 bitcoins (roughly equiv-
Virtual currencies are subject to the same rules as other alent to US$220,000 at that time). He announced that he
currencies. ... Basic money-services business rules apply would sell the service for the missing amount, aiming to
here.[54] use funds from the sale to refund his customers.[186]
In its October 2012 study, Virtual currency schemes, the In August 2011, MyBitcoin, a now defunct bitcoin trans-
European Central Bank concluded that the growth of vir- action processor, declared that it was hacked, which
tual currencies will continue, and, given the currencies caused it to be shut down, paying 49% on customer
inherent price instability, lack of close regulation, and deposits, leaving more than 78,000 bitcoins (equiva-
risk of illegal uses by anonymous users, the Bank warned lent to roughly US$800,000 at that time) unaccounted
[187][188]
that periodic examination of developments would be nec- for.
essary to reassess risks.[173] In early August 2012, a lawsuit was led in San Fran-
In 2013, the U.S. Treasury extended its anti-money cisco court against Bitcoinica a bitcoin trading venue
laundering regulations to processors of bitcoin claiming about US$460,000 from the company. Bit-
transactions.[174][175] coinica was hacked twice in 2012, which led to allegations
that the venue neglected the safety of customers money
In June 2013, Bitcoin Foundation board member Jon Ma- and cheated them out of withdrawal requests.[189][190]
tonis wrote in Forbes that he received a warning letter
from the California Department of Financial Institutions In late August 2012, an operation titled Bitcoin Sav-
accusing the foundation of unlicensed money transmis- ings and Trust was shut down by the owner, leav-
sion. Matonis denied that the foundation is engaged in ing around US$5.6 million in bitcoin-based debts;
money transmission and said he viewed the case as an this led to allegations that the operation was a Ponzi
opportunity to educate state regulators.[176] scheme.[191][192][193][194] In September 2012, the U.S.
Securities and Exchange Commission had reportedly
In late July 2013, the industry group Committee for the started an investigation on the case.[195]
Establishment of the Digital Asset Transfer Authority
began to form to set best practices and standards, to In September 2012, Bitoor, a bitcoin exchange, also re-
work with regulators and policymakers to adapt exist- ported being hacked, with 24,000 bitcoins (worth about
ing currency requirements to digital currency technol- US$250,000) stolen. As a result, Bitoor suspended
[196][197]
ogy and business models and develop risk management operations. The same month, Bitoor resumed
standards.[177] operations; its founder said that he reported the theft to
FBI, and that he plans to repay the victims, though the
In 2014, the U.S. Securities and Exchange Commission time frame for repayment is unclear.[198]
led an administrative action against Erik T. Voorhees,
for violating Securities Act Section 5 for publicly oering On 3 April 2013, Instawallet, a web-based wallet
[199]
unregistered interests in two bitcoin websites in exchange provider, was hacked, resulting in the theft of over
[200]
for bitcoins. [178] 35,000 bitcoins which were valued at US$129.90 per
bitcoin at the time, or nearly $4.6 million in total. As a
result, Instawallet suspended operations.[199]
20 CHAPTER 1. OVERVIEW
On 11 August 2013, the Bitcoin Foundation announced change for bitcoins, a realization event has probably oc-
that a bug in a pseudorandom number generator within curred and any gain or loss would likely be calculated us-
the Android operating system had been exploited to steal ing fair market values for the service provided.[215]
from wallets generated by Android apps; xes were pro- In August 2013, the German Finance Ministry char-
vided 13 August 2013.[201] acterized bitcoin as a unit of account,[65][216] usable in
In October 2013, Inputs.io, an Australian-based bitcoin multilateral clearing circles and subject to capital gains
wallet provider was hacked with a loss of 4100 bitcoins, tax if held less than one year.[216]
worth over A$1 million at time of theft. The service was On 5 December 2013, the Peoples Bank of China an-
run by the operator TradeFortress. Coinchat, the asso- nounced in a press release regarding bitcoin regulation
ciated bitcoin chat room, has been taken over by a new that whilst individuals in China are permitted to freely
admin.[202] trade and exchange bitcoins as a commodity, it is prohib-
On 26 October 2013, a Hong-Kong based bitcoin trad- ited for Chinese nancial banks to operate using bitcoins
ing platform owned by Global Bond Limited (GBL) van- or for bitcoins to be used as legal tender currency, and that
ished with 30 million yuan (US$5 million) from 500 entities dealing with bitcoins must track and report suspi-
investors.[203] cious activity to prevent money laundering.[217] The value
Mt. Gox, the Japan-based exchange that in 2013 handled of bitcoin dropped on various exchanges between 11 and
70% of all worldwide bitcoin trac, declared bankruptcy 20 percent following the regulation[218]
announcement, be-
in February 2014, with bitcoins worth about $390 million fore rebounding upward again.
missing, for unclear reasons. The CEO was eventually
arrested and charged with embezzlement.[204]
1.2.10 Sports sponsorship
On 3 March 2014, Flexcoin announced it was closing its
doors because of a hack attack that took place the day On 18 June 2014, it was announced that bitcoin payment
before.[205][206][207] In a statement that now occupies their
service provider BitPay would become the new sponsor
homepage, they announced on 3 March 2014 that As of the St. Petersburg Bowl game under a two-year deal,
Flexcoin does not have the resources, assets, or otherwise
renamed the Bitcoin St. Petersburg Bowl. Bitcoin will
to come back from this loss [the hack], we are closing our
be accepted for ticket and concession sales as part of
doors immediately.[208] Users can no longer log into the
the sponsorship, and the sponsorship itself was also paid
site. for using bitcoin.[90] On 2 April 2015, after one year of
Chinese cryptocurrency exchange Bter lost $2.1 million sponsorship, BitPay declined to renew sponsorship of the
in BTC in February 2015.[209] game.[219]
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1.3. LEGALITY OF BITCOIN BY COUNTRY 27
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Americas
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South America
1.3 Legality of bitcoin by country
Asia
For a broader coverage related to this topic, see Bitcoin.
Central Asia
The legal status of bitcoin varies substantially from coun-
try to country and is still undened or changing in many
Eurasia
of them. Whilst the majority of countries do not make
the usage of bitcoin itself illegal (with the exceptions of:
Bangladesh, Bolivia, Ecuador & Kyrgyzstan), its status Western Asia
as money (or a commodity) varies, with diering regu-
latory implications. While some countries have explic-
itly allowed its use and trade, others have banned or re- Southern Asia
stricted it. Likewise, various government agencies, de-
partments, and courts have classied bitcoins dierently. Eastern Asia
While this article provides the legal status of bitcoin, reg-
ulations and bans that apply to this cryptocurrency likely
extend to similar systems as well. Southeast Asia
Europe
1.3.1 Detail by union
Central Europe
1.3.2 Detail by country or territory
Alphabetical index to classications Eastern Europe
Africa
Northern Europe
Northern Africa
Southern Europe
Western Africa
Western Europe
Central Africa
Oceania
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[76] Vietnam to develop legal framework for Bitcoin. VN-
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1.3. LEGALITY OF BITCOIN BY COUNTRY 31
[100] Nathaniel Popper (21 December 2013). Into the Bitcoin 1.3.5 External links
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[107] Russian Tax Oce Updates Legal Stance On Bitcoin.
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Chapter 2
People
32
2.1. SATOSHI NAKAMOTO 33
claiming to be him, was of Commonwealth origin.[5][3][20] sive American man of Hungarian descent named Nick
[31]
Stefan Thomas, a Swiss coder and active commu- Szabo.
nity member, graphed the time stamps for each of
Nakamotos bitcoin forum posts (more than 500); the re- Dorian Nakamoto In a high-prole March 6,
sulting chart showed a steep decline to almost no posts be- 2014, article in the magazine Newsweek,[32] jour-
tween the hours of 5 a.m. and 11 a.m. Greenwich Mean nalist Leah McGrath Goodman identied Dorian
Time. Because this pattern held true even on Saturdays Prentice Satoshi Nakamoto, a Japanese American
and Sundays, it suggested that Nakamoto was asleep at man living in California, whose birth name is Satoshi
this time.[3] If Nakamoto is a single individual with con- Nakamoto,[32][33][34] as the Nakamoto in question.
ventional sleeping habits, it suggests he resided in a re- Besides his name, Goodman pointed to a number of
gion using the UTC05:00 or UTC06:00 time oset. facts that circumstantially suggested he was the bitcoin
This includes the parts of North America that fall within inventor.[32] Trained as a physicist, Nakamoto worked
the Eastern Time Zone and Central Time Zone, as well as a systems engineer on classied defense projects and
as parts of Central America, the Caribbean and South computer engineer for technology and nancial informa-
America. tion services companies. Nakamoto was laid o twice in
Satoshis initial email to Dai is dated August 22, 2008; the early 1990s and turned libertarian, according to his
the metadata for this PDF (pdftk bitcoin.pdf dump_data) daughter, and encouraged her to start her own business
yields as the CreationDate the value 20081003134958- and not under the governments thumb. In the articles
07'00' - this implies 3 October 2008 or a bit over a month seemingly biggest piece of evidence, Goodman wrote
later, which is consistent with the local date mentioned that when she asked him about bitcoin during a brief
in the Cypherpunk mailing list email. This is an earlier in-person interview, Nakamoto seemed to conrm his
draft than the nal draft on bitcoin.org, which is dated identity as the bitcoin founder by stating: I am no longer
20090324113315-06'00' or 24 March 2009; the time- involved in that and I cannot discuss it. Its been turned
zone diers: 7 vs 6.[21] over to other people. They are in charge of it now. I no
longer have any connection.[32][35] The articles publica-
Gavin Andresen has said of Nakamotos code He was a
tion led to a urry of media interest, including reporters
brilliant coder, but it was quirky.[22]
camping out near Dorian Nakamotos house and briey
chasing him by car when he drove to an interview.[36]
Possible identities However, during the subsequent full-length interview,
Dorian Nakamoto denied all connection to bitcoin,
saying he had never heard of the currency before, and
There is still doubt about the real identity of Satoshi
that he had misinterpreted Goodmans question as being
Nakamoto.
about his previous work for military contractors, much
of which was classied.[37] In a reddit ask-me-anything
Nick Szabo In December 2013, a blogger named Skye interview, he claimed he'd misinterpreted Goodmans
Grey linked Nick Szabo to the bitcoin whitepaper using question as being related to his work for Citibank.[38]
a stylometric analysis.[23][24][25] Szabo is a decentralized Later that day, the pseudonymous Nakamotos P2P
currency enthusiast and published a paper on bit gold, Foundation account posted its rst message in ve years,
which is considered a precursor to bitcoin.[24][25] He is stating: I am not Dorian Nakamoto.[39][40]
known to have been interested in using pseudonyms in
the 1990s.[26] In a May 2011 article, Szabo stated about Hal Finney Hal Finney (May 4, 1956 August 28,
the bitcoin creator: Myself, Wei Dai, and Hal Finney 2014) was a pre-bitcoin cryptographic pioneer and the
were the only people I know of who liked the idea (or rst person (other than Satoshi himself) to use the soft-
in Dais case his related idea) enough to pursue it to any ware, le bug reports, and make improvements.[41] He
signicant extent until Nakamoto (assuming Nakamoto is also lived a few blocks from Dorian Nakamotos family
not really Finney or Dai).[27] home, according to Forbes journalist Andy Greenberg.[42]
Detailed research by nancial author Dominic Frisby pro- Greenberg asked the writing analysis consultancy Juola
vides much circumstantial evidence but, as he admits, no & Associates to compare a sample of Finneys writing to
proof that Satoshi is Szabo.[28] Speaking on RTs The Satoshi Nakamotos, and they found that it was the clos-
Keiser Report, he said I've concluded there is only one est resemblance they had yet come across (including the
person in the whole world that has the sheer breadth but candidates suggested by Newsweek, Fast Company, The
also the specicity of knowledge and it is this chap ....[29] New Yorker, Ted Nelson and Skye Grey).[42] Greenberg
But Szabo has denied being Satoshi. In a July 2014 email theorized that Finney may have been a ghostwriter on be-
to Frisby, he said: 'Thanks for letting me know. I'm half of Nakamoto, or that he simply used his neighbor
afraid you got it wrong doxing me as Satoshi, but I'm used Dorians identity as a drop or patsy whose personal
to it'.[30] Nathaniel Popper wrote in the New York Times information is used to hide online exploits. However,
that the most convincing evidence pointed to a reclu- after meeting Finney, seeing the emails between him and
34 CHAPTER 2. PEOPLE
Satoshi, his bitcoin wallets history including the very rst thing, and security researcher Dan Kaminsky concluded
bitcoin transaction (from Satoshi to him, which he for- Wrights claim was intentional scammery.[57][58]
got to pay back) and hearing his denial, Greenberg con- On 4 May 2016, Wright made another post on his blog
cluded Finney was telling the truth. Juola & Associates promising to publish a series of pieces that will lay the
also found that Satoshis emails to Finney more closely re- foundations for this extraordinary claim.[59][60] But the
semble Satoshis other writings than Finneys do. Finneys following day, he deleted all his blog posts and replaced
fellow extropian and sometimes co-blogger Robin Han- them with a notice entitled I'm Sorry, which read in
son assigned a subjective probability of at least 15% part:
that Hal was more involved than hes said, before fur-
ther evidence suggested that was not the case.[43]
I believed that I could put the years of
anonymity and hiding behind me. But, as the
events of this week unfolded and I prepared
Craig Steven Wright On 8 December 2015, Wired
to publish the proof of access to the earliest
wrote that Craig Steven Wright, an Australian former aca-
keys, I broke. I do not have the courage. I
demic, either invented bitcoin or is a brilliant hoaxer
cannot.[61][62]
who very badly wants us to believe he did.[44] Craig
Wright took down his Twitter account and neither he
nor his ex-wife responded to press inquiries. The same In June 2016, the London Review of Books published a
day, Gizmodo published a story with evidence obtained 35,000 word article by Andrew O'Hagan about the events,
by a hacker who supposedly broke into Wrights email based on discussions with Wright and many of the other
accounts, claiming that Satoshi Nakamoto was a joint people involved.[63][64] It also reveals that the Canadian
pseudonym for Craig Steven Wright and computer foren- company nTrust was behind Wrights claim made in May
sics analyst David Kleiman, who died in 2013.[45] A 2016.
number of prominent bitcoin promoters remained uncon-
vinced by the reports.[46] Subsequent reports also raised Other speculation In a 2011 article in The New
the possibility that the evidence provided was an elabo- Yorker, Joshua Davis claimed to have narrowed down
rate hoax,[47][48] which Wired acknowledged cast doubt the identity of Nakamoto to a number of possible indi-
on their suggestion that Wright was Nakamoto.[49] viduals, including the Finnish economic sociologist Dr.
On 9 December, only hours after Wired claimed Wright Vili Lehdonvirta and Irish student Michael Clear, then
was Nakamoto, Wrights home in Gordon, New South a graduate student in cryptography at Trinity College
Wales was raided by at least ten police ocers. His Dublin.[65] Clear strongly denied he was Nakamoto,[66]
business premises in Ryde, New South Wales were also as did Lehdonvirta.[67] In October 2011, writing for Fast
searched by police. The Australian Federal Police stated Company, investigative journalist Adam Penenberg cited
they conducted searches to assist the Australian Taxation circumstantial evidence suggesting Neal King, Vladimir
Oce and that This matter is unrelated to recent media Oksman and Charles Bry could be Nakamoto.[68] They
reporting regarding the digital currency bitcoin.[50] Ac- jointly led a patent application that contained the phrase
cording to a document released by Gizmodo alleged to be computationally impractical to reverse in 2008, which
a transcript of a meeting between Wright and the ATO, was also used in the bitcoin white paper by Nakamoto.[69]
he had been involved in a taxation dispute with them for The domain name bitcoin.org was registered three days
several years.[45] after the patent was led. All three men denied being
Nakamoto when contacted by Penenberg.[68]
On 2 May 2016, Craig Wright posted on his blog pub-
licly claiming to be Satoshi Nakamoto. In articles re- In May 2013, Ted Nelson speculated that Nakamoto is
leased on the same day, journalists from the BBC and really Japanese mathematician Shinichi Mochizuki.[70]
The Economist stated that they saw Wright signing a mes- Later, an article was published in The Age newspaper
sage using the private key associated with the rst bitcoin that claimed that Mochizuki denied these speculations,
transaction.[51][52] Wrights claim was supported by Jon but without attributing a source for the denial.[71] A 2013
Matonis (former director of the Bitcoin Foundation) and article,[72] in Vice listed Gavin Andresen, Jed McCaleb,
bitcoin developer Gavin Andresen, both of whom met or a government agency as possible candidates to be
Wright and witnessed a similar signing demonstration.[53] Nakamoto. Dustin D. Trammell, a Texas-based security
However, bitcoin developer Peter Todd said that Wrights researcher, was suggested as Nakamoto, but he publicly
blog post, which appeared to contain cryptographic denied it.[73] In 2013, two Israeli mathematicians, Dorit
proof, actually contained nothing of the sort.[54] The Ron and Adi Shamir, published a paper claiming a link
Bitcoin Core project released a statement on Twitter between Nakamoto and Ross William Ulbricht. The two
saying There is currently no publicly available cryp- based their suspicion on an analysis of the network of bit-
tographic proof that anyone in particular is Bitcoins coin transactions,[74] but later retracted their claim.[75]
creator.[55][56] Bitcoin developer Je Garzik agreed that Some considered Nakamoto might be a team of people;
evidence publicly provided by Wright does not prove any- Dan Kaminsky, a security researcher who read the bitcoin
2.1. SATOSHI NAKAMOTO 35
code,[76] said that Nakamoto could either be a team of [16] Satoshi Nakamoto has got richer in theory Steemit.
people or a genius";[20] Laszlo Hanyecz, a former bit- Steemit. 2017-08-05. Retrieved 2017-08-05.
coin core developer who had emailed Nakamoto, had the
feeling the code was too well designed for one person.[3] [17] Bitcoin Cash Price Chart (BCH/USD) | CoinGecko.
CoinGecko. Retrieved 2017-08-05.
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[2] Patron, Travis (9 November 2014). Who is Satoshi [20] Jeries, Adrianne (4 October 2011). The New Yorkers
Nakamoto?". diginomics.com. Diginomics. Retrieved 7 Joshua Davis Attempts to Identify Bitcoin Creator Satoshi
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[3] Wallace, Benjamin (23 November 2011). The Rise [21] Dai, Satoshi Nakamoto, Wei. Dai/Nakamoto emails -
and Fall of Bitcoin. Wired. Retrieved 31 May 2016. Gwern.net. www.gwern.net. Retrieved 2017-07-01.
It seemed doubtful that Nakamoto was even Japanese.
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[4] McMillan, Robert (18 December 2013). Who Owns the
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trieved 2014-03-06.
[5] Nakamoto, Satoshi (24 May 2009). Bitcoin: A Peer-to-
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2014. bly) Nick Szabo. Retrieved 2014-03-13.
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[7] Satoshis posts to Cryptography mailing list. Mail- [26] Re: on anonymity, identity, reputation, and spoong.
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tery Reopened. Fast Company. A New Yorker writer Bitcoin : the Future of Money?, p 85-149. Unbound.
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[31] Popper, Nathaniel. Decoding the Enigma. New York
[11] Satoshi Nakamoto (17 June 2010). Re: Transactions and Times. the most convincing evidence pointed to a reclu-
Scripts: DUP HASH160 ... EQUALVERIFY CHECK- sive American man of Hungarian descent named Nick Sz-
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[32] Leah McGrath Goodman (6 March 2014). The Face Be-
[12] Bosker, Bianca. Gavin Andresen, Bitcoin Architect: hind Bitcoin. Newsweek. Retrieved 6 March 2014.
Meet The Man Bringing You Bitcoin (And Getting Paid
In It)". HuPostTech. [33] Andy Greenberg. Bitcoin Community Responds To
Satoshi Nakamotos Outing With Disbelief, Anger, Fas-
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[34] Oremus, Will (2013-11-26). The real Satoshi
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[35] Winton, Richard (2014-03-07). Deputies: Newsweek
[15] Bitcoin Exchange Rate Bitcoin Live Converter Bitcoin story quoted Satoshi Nakamoto accurately. Los
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36 CHAPTER 2. PEOPLE
[36] Rodriguez, Salvador (2014-03-06). Dorian Satoshi [55] Bitcoin Core Project. Twitter.
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Craig Wright BlogDr. Craig Wright Blog, archived from
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2.2. HAL FINNEY 37
2.2.6 References
2.2.3 Bitcoin
[1] AtariAge. Retrieved 24 February 2015.
Finney was a cypherpunk and said:[8] [2] Popper, Nathaniel, Hal Finney, Cryptographer and Bit-
coin Pioneer, Dies at 58, The New York Times, August
""It seemed so obvious to me;" Here we 30, 2014
are faced with the problems of loss of privacy, [3] For instance, many ACLU members do not share the
creeping computerization, massive databases, generalized antipathy toward government that is a com-
more centralization - and Chaum oers a mon premise of cypherpunk activists like Hal Finney
completely dierent direction to go in, one and Tim May. David Brin, The Transparent Society ch2
which puts power into the hands of individuals
rather than governments and corporations. [4] Prospects for remailers - Parekh - First Monday. Re-
trieved 24 February 2015.
The computer can be used as a tool to liberate
and protect people, rather than to control [5] Give Us Some Credit: Your Card is Safe, The Washing-
them."" ton Post, 1996
38 CHAPTER 2. PEOPLE
[6] Heres The Problem With The New Theory That A by Satoshi Nakamoto, the pseudonymous inventor of Bit-
Japanese Math Professor Is The Inventor Of Bitcoin. SF- coin, as lead developer on Bitcoin Core, the reference
Gate. Retrieved 24 February 2015. implementation for Bitcoin client software. In 2012 he
[7] Hal Finney received the rst Bitcoin transaction. Heres
founded the Bitcoin Foundation to support and nurture
how he describes it.. Washington Post. Retrieved 24 the development of the Bitcoin currency, and by 2014
February 2015. left his software development role to concentrate on his
work with the Foundation.
[8] The Little Black Book of Billionaire Secrets Nakamotos
Neighbor: My Hunt For Bitcoins Creator Led To A Par-
alyzed Crypto Genius. Forbes. Retrieved 17 April 2017. 2.3.1 Career
line feed character in |title= at position 45 (help)
Andresen graduated from Princeton University in
[9] The Little Black Book of Billionaire Secrets Nakamotos
Neighbor: My Hunt For Bitcoins Creator Led To A Par- 1988.[1] He began his career working on 3D graphics
alyzed Crypto Genius. Forbes. Retrieved 17 April 2017. software at Silicon Graphics Computer Systems.[2] In
line feed character in |title= at position 45 (help) 1996, he co-authored the VRML 2.0 specication,[3] and
later published a reference manual for VRML 2.0.[4]
[10] The Little Black Book of Billionaire Secrets Nakamotos
Neighbor: My Hunt For Bitcoins Creator Led To A Par- Since leaving Silicon Valley in 1996, Andresen has tack-
alyzed Crypto Genius. Forbes. Retrieved 17 April 2017. led a wide variety of software-related ventures, includ-
line feed character in |title= at position 45 (help) ing CTO of an early voice-over-the-Internet startup and
co-founder of a company that made multiplayer online
[11] Robert McMillan (29 December 2014). An Extor- games for blind people and their sighted friends.[2]
tionist Has Been Making Life Hell for Bitcoins Earliest
Adopters. Wired. Cond Nast. Retrieved 3 January
2015. Bitcoin
[12] Dying Outside. Retrieved 24 February 2015.
Prior to 2014 Andresen was the lead developer for a part
[13] Fight for a Cure for ALS: A Marathoners Story of the bitcoin digital currency project, working to create a
secure, stable cash for the Internet. [5] Andresen discov-
[14] Hal and Fran Finney Are Running for a Cause. Re-
ered bitcoin in 2010, quickly recognising the brilliance
trieved 24 February 2015.
of its design. Soon after he created a website called the
[1]
[15] After a Year of ALS, Reality Begins to Hit Home for Hal Bitcoin Faucet which gave away bitcoin. In April 2011,
and Fran Finney. Retrieved 24 February 2015. Forbes quoted Andresen as saying, Bitcoin is designed to
bring us back to a decentralized currency of the people,
[16] Max More (2014-08-28). Hal Finney being cryopre-
and this is like better gold than gold.[6] He was soon
served now.
designated by the inventor of bitcoin, Satoshi Nakamoto
[17] Andy Greenberg (2014-08-28). Bitcoins Earliest to lead development of the client software for the bitcoin
Adopter Is Cryonically Freezing His Body to See the Fu- network which is now known as Bitcoin Core.[1]
ture.
Andresen also created ClearCoin, an escrow-type of ser-
vice, which was closed c. June 23, 2011.[7] After several
2.2.7 External links years working on the software, Andresen left the role of
lead developer of bitcoin to work on the strategic devel-
[8]
Hal Finney home page. Archived from the origi- opment of its technology. He conceived of the Bitcoin
nal on 2014-04-03. Foundation which became reality in 2012.
Gavin initially stated he believed that Craig Wright was
Review: Vernor Vinges Fast Times (review by
the real identity of Satoshi Nakamoto, but later retracted
Finney in Extropy)
this statement.[9] As of June 2017, he has not contributed
Hal Finneys prole in Forbes Magazine to Bitcoin Core since February 2016.[10] His commit ac-
cess was revoked in May 2016.[11]
Institute of Technology. Retrieved 14 November 2016. the highly evolved practices of contract law and prac-
tice to the design of electronic commerce protocols be-
[2] The Future of Payments - Panelists - Bitcoin 2013: The tween strangers on the Internet.[3][4] Smart contracts are a
Future of PaymentsMay 17-19, 2013 - San Jose, CA.
major feature of cryptocurrency[5] and the programming
Bitcoin 2013. 2011-04-16. Retrieved 2014-03-06.
language E.[6]
[3] VRML 2.0. Szabo inuentially[7] argued that a minimum granularity
of micropayments is set by mental transaction costs.[8][9]
[4] The Annotated VRML 2.0 Reference Manual.
ican man of Hungarian descent named Nick Szabo. In [17] Episode 676. RT. 6 November 2014. Retrieved 8 Jan-
2008, prior to the release of bitcoin, Szabo wrote a com- uary 2017.
ment on his blog about the intent of creating a live version
[18] Frisby, Dominic (2014), p. 147
of his hypothetical currency.[1]
In 2015, the subsequent blockchain Ethereum named a
subunit of the Ethereum value token the "Szabo". 2.4.4 External links
Ocial website
2.4.3 References
Nick Szabos Essays, Papers, and Concise Tutorials
[1] Popper, Nathaniel (15 May 2015). Decoding the Enigma at Archive.is (archived 16 July 2015)
of Satoshi Nakamoto and the Birth of Bitcoin. The New
York Times. Retrieved 8 January 2017.
In 2009, they began graduate business study at the Sad rowing, and race against the Winklevoss twins, who are
Business School at the University of Oxford and com- voiced by Armie Hammer.[30] They appear in the Fam-
pleted MBA degrees in 2010.[15] While at Oxford, the ily Guy episode The Giggity Wife when Joe, Peter, and
brothers were members of Christ Church,[16] and rowed Quagmire use a conscated Harvard student card to eat
in the Blue Boat in the Oxford-Cambridge Boat Race in the esteemed Harvard dining hall.
earning them an Oxford Blue.[17][18]
2.5.5 References
2.5.2 ConnectU
[1] Karl M. Aspelund (December 8, 2013). Winklevi Finally
Main article: ConnectU Vindicated?". Harvard Crimson. Retrieved February 24,
2015.
ConnectU (originally HarvardConnection) was a social [2] James Temple (April 23, 2011). The Winklevi typify
networking website launched on May 21, 2004,[19] that culture of whiners. San Francisco Chronicle. Retrieved
was founded by Harvard students Cameron Winklevoss, February 24, 2015.
Tyler Winklevoss, and Divya Narendra in December [3] Killingsworth, Silvia (May 15, 2012). The Winklevii.
2002.[20] Users could add people as friends, send them The New Yorker.
messages, and update their personal proles to notify
friends about themselves.[21] Users were placed in net- [4] Mashable Video (April 28, 2012). Winklevoss Twins
works based upon the domain name associated with the Start Up a Venture Capital Firm [VIDEO]". Mash-
able.com. Retrieved 2012-12-18.
email address they used for registration.[22]
[5] Taylor, Colleen (May 17, 2013). With $1.5M Led By
Winklevoss Capital, BitInstant Aims To Be The Go-To
2.5.3 Bitcoin Site To Buy And Sell Bitcoins. TechCrunch.
The twins company, Math-Based Asset Services LLC, [6] NBC Olympics Cameron Winklevoss Athlete Bio. Re-
led to register a bitcoin-based exchange-traded fund trieved 2010-08-26.
called Winklevoss Bitcoin Trust in 2013.[23][24][25] The [7] Chamo, Lisa (March 27, 2010). Friendships Forged in
fund was denied in March 2017.[26] Devastating Nor-Easter. Greenwich Time.
In 2013, the twins led a $1.5 million in seed funding [8] Mildred Lotz Leonard Obituary. The Wave. February
of BitInstant, a bitcoin payment processor. However, 9, 2007.
in January 2014, Charlie Shrem, CEO of BitInstant,
was arrested and charged with money laundering related [9] Winklevoss Technologies About Us. Retrieved 2010-
to the Silk Road online black market investigation.[27] 08-21.
The brothers said they were passive investors in the [10] Gustafson, Colin (August 16, 2010). Twins back in spot-
company.[25] light with upcoming Facebook lm. Greenwich Time.
In 2014, the twins launched Winkdex, a nancial index [11] Riley, Cailin (July 10, 2008). Twin rowers headed to
that tracks the price of bitcoin.[25] The index uses data Olympics. The Southampton Press.
from seven exchanges, weighed based on the daily trading
volume of each exchange.[25] [12] Matson, Barbara (July 27, 2008). Rowing Machines:
Winklevoss twins hope to form successful pair in Beijing.
In March 2014, it was announced that the twins had pur- The Boston Globe.
chased seats on Richard Branson's Virgin Galactic shuttle
using the prots they had made from bitcoin.[28] [13] Ben Mezrich. The Accidental Billionaires. p. 28.
In October 2015, Gemini, the twins Bitcoin exchange, [14] Aaron Sorkin toured Harvards secret clubs for Facebook
received approval to launch from the New York State De- lm. New York Post. July 25, 2010.
partment of Financial Services. The exchange is targeted
[15] Betts, Hannah (March 20, 2010). Muscle-bound,
at both rst-time users and professional traders. [29]
Oxford-educated and multi-millionaires-meet the Win-
klevoss twins. London: The Times, The Sunday Times.
2.5.4 Popular culture [16] Milmo, Cahal (March 3, 2010). Is there anything the
Winklevoss twins can't do?". London: The Independent.
Both twins are played by actor Armie Hammer in The
Social Network (2010), a lm directed by David Fincher [17] Rossingh, Danielle (April 1, 2010). Harvard Twins Who
Sue Facebook Now Take on Cambridge in 156th Boat
about the founding of Facebook. Actor Josh Pence was
Race. Bloomberg.
the body double for Tyler with Hammers face super-
imposed. In an episode of The Simpsons, "The D'oh- [18] Whittle, Natalie (March 5, 2010). Social networking pi-
cial Network", Patty and Selma take part in the Olympic oneers...and killer oarsmen. Financial Times.
42 CHAPTER 2. PEOPLE
Karpels was born in 1985 in Chenve, France, the child According to a joint report by Cyrus Farivar of Ars Tech-
of Anne-Robert Karpels, a geologist.[7] He was raised nica and Pierre Alonso of Le Monde, Karpels was found
in Dijon.[7][8] Between 1995 and 2000, Karpels was guilty of fraud when he was tried in absentia in France in
educated at Collge Prieur de Binson in Chtillon-sur- 2010. He also admitted to having pirated a server to
Marne, near Dormans.[3] He then spent one year at Lyce French authorities. He was sentenced to a year in jail but
Claude Bernard in Paris, before completing his education has not yet served his sentence.[35][36]
in 2003 at Lyce Louis Armand in Paris.[3] Ross William Ulbricht, while on trial for operating the
2.6. MARK KARPELS 43
[16] https://github.com/MagicalTux/nezumi
2.6.3 Arrest and prosecution
[17] https://github.com/MagicalTux/nezumi/blob/master/
Karpels was arrested on 1 August 2015 by Japanese Changelog.txt#L838
police on suspicion of having accessed the exchanges [18] https://web.archive.org/web/20010331201253/http:
computer system to falsify data on its outstanding //www.ookoo.org/
balance,[40][41][42] he was re-arrested and allegedly
charged with embezzlement.[43] [19] https://web.archive.org/web/20010925140409/http:
//www.ookoo.org/
Karpels was released on bail in July 2016, but must re-
main in Japan.[44] [20] https://web.archive.org/web/20140910190104/http:
//ookoo.org/
[21] http://www.cnbc.com/id/101486280
2.6.4 References
[22] David Meyer. A Bitcoin Exchange Goes for Respectabil-
[1] Declaration of Mark Marie Mark Karpeles (PDF). US ity. Businessweek.com. Retrieved 24 February 2015.
Bankruptcy Court for the Northern District of Texas Dal-
las Division: 1. Retrieved 13 March 2014. The docu- [23] Mt. Gox resigns from Bitcoin Foundation. Reuters.
ment, signed by Robert Marie Mark Karpeles, was pub- February 23, 2014. Retrieved 25 February 2014.
lished by Ars Technica on the Scribd website, and ac-
cording to Ars Technica is a court document led in US [24] Mt. Gox quits Bitcoin Foundation board. PCWorld. 24
Bankruptcy Court. February 2014. Retrieved 24 February 2015.
[2] Farivar, Cyrus (2014-03-10). MtGox les for US [25] Jon Matonis (27 September 2012). Bitcoin Foundation
bankruptcy protection to put lawsuits on hold. Ars Tech- Launches To Drive Bitcoins Advancement. Forbes. Re-
nica. trieved 24 February 2015.
[11] https://web.archive.org/web/20130323152647/ [35] Farivar, Cyrus (August 1, 2014). Why the head of Mt.
http://blog.magicaltux.net/2009/02/19/ Gox Bitcoin exchange should be in jail. Ars Technica.
your-own-php-dns-daemon/ Retrieved August 1, 2014.
44 CHAPTER 2. PEOPLE
Organizations
3.1 Bitcoin Foundation and Elizabeth Ploshay.[7] In October 2014, Jon Matonis
resigned from his position of Executive Director of the
The Bitcoin Foundation is an American nonprot cor- Foundation, and at the end of the election cycle on 31
poration. It was founded in September 2012 with the December[8]2014 stepped down from the groups board of
stated mission to standardize, protect and promote the directors.
use of bitcoin cryptographic money for the benet of BTC China CEO Bobby Lee and venture capitalist
users worldwide.[1] The organization was modeled on Brock Pierce were appointed to the foundations board
the Linux Foundation and is funded mainly through of directors following a May 2014 runo election, ll-
grants made by for-prot companies that depend on the ing vacancies left by the earlier resignations of former
bitcoin technology.[2] BitInstant CEO Charlie Shrem and Mt. Gox CEO Mark
[7]
In March 2014, the Foundation hired Jim Harper of the Karpels. Nine members of the foundation resigned
Cato Institute as Global Policy Counsel and Amy Weiss following the May election, citing opposition to [9] the ap-
of Weiss Public Aairs as a media consultant. [3] pointments and the direction of the organization.
On 13 April 2015, the board appointed investor and -
nancial consultant Bruce Fenton as Executive Director of
3.1.1 History the Bitcoin Foundation.[10] At the Blockchain Training
Conference / DEVCORE Toronto, the Bitcoin Founda-
According to its founding documents, the Bitcoin Foun- tion announced the appointment of Llew Claasen as Ex-
dations original members included Gavin Andresen, ecutive Director, eective 1 July 2016 [11]
Charlie Shrem, Mark Karpeles, Peter Vessenes, Roger
Ver, and Patrick Murck. Current board members are di-
vided into one of three categories: Founding Members, 3.1.3 Awards
Industry Members, and Individual Members. The board
is made up of a combination of elected members of the On 29 March 2016, the Bitcoin Foundation was listed by
aforementioned categories. UK-based company Richtopia at number 27 in the list of
[12][13]
Former lead bitcoin developer Gavin Andresen is em- 100 Most Inuential Blockchain Organisations.
ployed by the foundation as chief scientist.[2] In June
2013, the foundation received media attention when it
published a letter from the California Department of Fi- 3.1.4 Criticism
nancial Institutions requesting that they cease and desist
from conducting the business of money transmission in The Foundation and its leadership have been criticized by
this state,[4] and again when it published their detailed some in the media.[14][15] Former vice-chairman Charlie
response to the regulators.[5] In November 2013, Patrick Shrem pleaded guilty to aiding and abetting the operation
Murck, general counsel of the Bitcoin Foundation, testi- of an unlicensed money-transmitting business related to
ed before a United States Senate committee convened to his role in assisting agents of the online marketplace Silk
assess digital currencies, at which the reception of bitcoin Road.[16][17][18] Executive chairman Peter Vessenes busi-
by lawmakers was generally positive.[6] ness relationship to former board member Mark Karpe-
les, the former CEO of collapsed Bitcoin exchange Mt.
Gox, has been highlighted as inappropriate.[15] The Foun-
3.1.2 Leadership dation has also suered scrutiny and resignations over its
hiring of former child star Brock Pierce.[19]
Bitcoin Foundations board of directors, as of May 2014, In November 2014, the Bitcoin Foundation announced
included chairperson Peter Vessenes, Gavin Andresen, that it would seek to wind down its education, outreach
Bobby Lee, Micky Malka, Jon Matonis, Brock Pierce, and public policy initiatives as it turns its focus to core
45
46 CHAPTER 3. ORGANIZATIONS
development. Three surveys conducted earlier by the Bit- [7] Rizzo, Pete (9 May 2014). Bobby Lee, Brock Pierce join
coin Foundation suggest that many community members, Bitcoin Foundations board of directors. CoinDesk.
both inside and outside of the organization, want to see
[8] Rizzo, Pete (30 October 2014). Jon Matonis Resigns As
it adopt a stronger focus on bitcoins open-source tech- Bitcoin Foundation Executive Director. CoinDesk.
nology development.[20] The bitcoin community itself is
divided over the role of the Foundation as a community or [9] Hajdarbegovic, Nermin (12 May 2014). Bitcoin Founda-
industry representative.[14] Some libertarian bitcoin advo- tion members resign following appointment controversy.
cates have criticized the organizations strategy of politi- CoinDesk.
cal lobbying and participation with federal regulators.[14] [10] The Bitcoin Foundation Welcomes Bruce Fenton as Ex-
In November 2014, Cody Wilson announced his run for ecutive Director. Bitcoin Foundation. April 13, 2015.
board seat in the Bitcoin Foundation, stating I will run Archived from the original on May 10, 2015. Retrieved
on a platform of the complete dissolution of the Bitcoin March 28, 2016.
Foundation and will begin and end every single one of my
public statements with that message. [21] [11] Bitcoin Foundation Appoints Llew Claasen as Executive
Director. Retrieved 2016-07-12.
Professor and author Mark T. Williams criticized the Bit-
coin Foundations priorities, writing in a Business Insider [12] Top 100 Blockchain Organisations: From CoinDesk to
editorial that A Foundation of 'B' players has no busi- BitPay, These Are the Most Inuential Organisations in
the Distributed Ledger Space. Richtopia. Retrieved 18
ness claiming it is a protector of a system that remains
[22] June 2016.
vulnerable and untrustworthy.
In early 2015, Jim Harper, a fellow at the Cato Institute [13] Blockchain Organisations Top 100. Blockchain Age.
Retrieved 11 May 2016.
and Olivier Janssens, a founder of the Freedom Invest-
ment Group, were elected to the Bitcoin Foundations [14] Neal, Meghan (May 12, 2014). Bitcoin is Hiring Lobby-
Board.[23] In July 2015, towards the beginning of his term ists. Motherboard.com. Retrieved May 16, 2014.
as board member, Janssens made a public announcement
[15] Tiku, Nitasha (March 7, 2014). Whistleblower Threat-
on both the Bitcoin Foundation online forum and Reddit
ens to Expose Corruption at Bitcoin Foundation. Val-
concerning the near-term insolvency of the Bitcoin Foun-
leyWag. Archived from the original on May 17, 2014.
dation, which had been kept secret by the board. As a Retrieved May 16, 2014.
result of this and a lack of cash ow, various sta were
terminated.[24] Following disagreement over the future of [16] Jerving, Sara (September 6, 2014) Bitcoin Promoter
the organizationHarper and Janssens having both cast Charles Shrem Pleads Guilty The Wall Street Journal
votes to dissolve the FoundationHarper resigned and
[17] Hill, Kashmir (January 27, 2014). Winklevosses, Bitcoin
Janssens was removed the Board in December 2015.[25] Community Shocked By Arrest of BitInstant CEO Charlie
Although their philosophies and interests dier, Fenton, Shrem. Forbes.com. Retrieved May 16, 2014.
Janssens and Harper may all be considered reformers. [18] Jeres, Adrianne (January 28, 2014). Charlie Shrem
resigns from the Bitcoin Foundation after arrest. The
Verge. Retrieved May 16, 2014.
3.1.5 References
[19] Menn, Joseph (May 16, 2014). Bitcoin Foundation hit by
[1] Matonis, Jon (27 September 2012). Bitcoin Foundation resignations over new director. Reuters.com. Retrieved
launches to drive bitcoins advancement. Forbes. May 16, 2014.
[2] Bustillos, Maria (2 April 2013). The bitcoin boom. The [20] Higgins, Stan. Bitcoin Foundation Pledges to Focus
New Yorker. Retrieved 30 December 2013. Solely on Core Development. coindesk.com. Retrieved
19 November 2014.
[3] Jim Harper joins Bitcoin Foundation as global policy
counsel and Amy Weiss as media consultant (PDF). [21] del Castillo, Michael (22 December 2014). Its ocial:
Bitcoin Foundation (Press release). 11 March 2014. Cody Wilson is trying to destroy the Bitcoin Foundation
Archived from the original (PDF) on 7 April 2014. from within. Upstart.
Technologies
4.1 Bitcoin network payee can examine each previous transaction to verify the
chain of ownership. Unlike traditional check endorse-
For a broader coverage related to this topic, see Bitcoin. ments, bitcoin transactions are irreversible, which elimi-
[3]
The bitcoin network is a peer-to-peer payment net- nates risk of chargeback fraud.
Although it is possible to handle bitcoins individually, it
Transaction Transaction Transaction
would be unwieldy to require a separate transaction for
Owner 1's Owner 2's Owner 3's
every bitcoin in a transaction. Transactions are therefore
Public key Public key Public key allowed to contain multiple inputs and outputs,[4] allow-
ing bitcoins to be split and combined. Common trans-
Hash Hash Hash
actions will have either a single input from a larger pre-
vious transaction or multiple inputs combining smaller
Owner 0's Owner 1's Owner 2's
Signature Signature Signature amounts, and one or two outputs: one for the payment,
and one returning the change, if any, to the sender. Any
dierence between the total input and output amounts of
Owner 1's Owner 2's Owner 3's
Private Key Private Key Private Key a transaction goes to miners as a transaction fee.[1]
48
4.1. BITCOIN NETWORK 49
work of that block and all blocks after it and then surpass
the work of the honest nodes. The probability of a slower
attacker catching up diminishes exponentially as subse-
quent blocks are added.[2]
1,000,000,000,000
10,000,000,000
100,000,000
1,000,000
10,000
100
1
The best chain consists of the longest series of transaction records 2009 2010 2011 2012 2013 2014 2015 2016 2017
Majority consensus in bitcoin is represented by the To compensate for increasing hardware speed and vary-
longest chain, which required the greatest amount of ef- ing interest in running nodes over time, the diculty of
fort to produce. If a majority of computing power is nding a valid hash is adjusted roughly every two weeks.
controlled by honest nodes, the honest chain will grow If blocks are generated too quickly, the diculty in-
fastest and outpace any competing chains. To modify a creases and more hashes are required to make a block
past block, an attacker would have to redo the proof-of- and to generate new bitcoins.[2]
50 CHAPTER 4. TECHNOLOGIES
Diculty Process
Energy consumption
Journalist Matt O'Brien opined that it is not obvious 6. Nodes express their acceptance by moving to work
whether bitcoin is lowering transaction costs, since the on the next block, incorporating the hash of the ac-
costs are transformed into pollution costs, which he char- cepted block.
acterizes as environmental spillovers on everyone else,
or what economists call negative externalities.[15]
Mined bitcoins
To lower the costs, bitcoin miners have set up in places
like Iceland where geothermal energy is cheap and cool- By convention, the rst transaction in a block is a spe-
ing Arctic air is free.[15] Chinese bitcoin miners are cial transaction that produces new bitcoins owned by the
known to use hydroelectric power in Tibet to reduce elec- creator of the block. This is the incentive for nodes to
tricity costs.[16] support the network.[1] It provides the way to move new
4.1. BITCOIN NETWORK 51
Various potential attacks on the bitcoin network and its History modication
use as a payment system, real or theoretical, have been
considered. The bitcoin protocol includes several fea- Each block that is added to the blockchain, starting with
tures that protect it against some of those attacks, such the block containing a given transaction, is called a con-
as unauthorized spending, double spending, forging bit- rmation of that transaction. Ideally, merchants and ser-
coins, and tampering with the blockchain. Other at- vices that receive payment in bitcoin should wait for at
tacks, such as theft of private keys, require due care by least one conrmation to be distributed over the network,
users.[18][19][20][21][22][23][24] before assuming that the payment was done. The more
conrmations that the merchant waits for, the more di-
cult it is for an attacker to successfully reverse the trans-
Unauthorized spending action in a blockchainunless the attacker controls more
than half the total network power, in which case it is
Unauthorized spending is mitigated by bitcoins imple- called a 51% attack.[22]
mentation of public-private key cryptography. For ex-
ample; when Alice sends a bitcoin to Bob, Bob becomes
the new owner of the bitcoin. Eve observing the trans- Deanonymisation of clients
action might want to spend the bitcoin Bob just received,
but she cannot sign the transaction without the knowledge Deanonymisation is a strategy in data mining in which
of Bobs private key.[19] anonymous data is cross-referenced with other sources
of data to re-identify the anonymous data source. Along
with transaction graph analysis, which may reveal con-
Double spending nections between bitcoin addresses (pseudonyms),[18][23]
there is a possible attack[24] which links a users
A specic problem that an internet payment system must pseudonym to its IP address. If the peer is using Tor, the
solve is double-spending, whereby a user pays the same attack includes a method to separate the peer from the
coin to two or more dierent recipients. An example of Tor network, forcing them to use their real IP address for
such a problem would be if Eve sent a bitcoin to Alice and any further transactions. The attack makes use of bitcoin
later sent the same bitcoin to Bob. The bitcoin network mechanisms of relaying peer addresses and anti-DoS pro-
guards against double-spending by recording all bitcoin tection. The cost of the attack on the full bitcoin network
transfers in a ledger (the blockchain) that is visible to all is under 1500 per month.[24]
users, and ensuring for all transferred bitcoins that they
haven't been previously spent.[19]:4
4.1.4 Payment verication
Race attack
Main article: Online transaction processing
If Eve oers to pay Alice a bitcoin in exchange for goods
and signs a corresponding transaction, it is still possible Each miner can choose which transactions are included
that she also creates a dierent transaction at the same in or exempted from a block.[25] A greater number of
52 CHAPTER 4. TECHNOLOGIES
transactions in a block does not equate to greater com- weapons[37] are also allegedly available on black market
putational power required to solve that block.[25] sites that sell in bitcoin. Due to the anonymous nature and
Upon receiving a new transaction a node must validate it: the lack of central control on these markets, it is hard to
in particular, verify that none of the transactions inputs know whether [38]
the services are real or just trying to take
have been previously spent. To carry out that check the the bitcoins.
node needs to access the blockchain. Any user who does Several deep web black markets have been shut by au-
not trust his network neighbors, should keep a full local thorities. In October 2013 Silk Road was shut down by
copy of the blockchain, so that any input can be veried. U.S. law enforcement[39][40][41] leading to a short-term
[42]
As noted in Nakamotos whitepaper, it is possible to ver- decrease in the value of bitcoin. In 2015, [43]
the founder
ify bitcoin payments without running a full network node of the site was sentenced to life in prison. Alternative
(simplied payment verication, SPV). A user only needs sites were soon available, and in early 2014 the Australian
a copy of the block headers of the longest chain, which Broadcasting Corporation reported that the closure of
are available by querying network nodes until it is appar- Silk Road had little impact on the number of Australians
[44]
ent that the longest chain has been obtained. Then, get the selling drugs online, which had actually increased. In
Merkle branch linking the transaction to its block. Link- early 2014, Dutch authorities closed Utopia, an online il-
[45]
ing the transaction to a place in the chain demonstrates legal goods market, and seized 900 bitcoins. In late
that a network node has accepted it, and blocks added 2014, a joint police operation saw European and Ameri-
after it further establish the conrmation.[1] can authorities seize bitcoins and close 400 deep web sites
including the illicit goods market Silk Road 2.0.[46] Law
enforcement activity has resulted in several convictions.
4.1.5 Data in the blockchain In December 2014, Charlie Shrem was sentenced to two
years in prison for indirectly helping to send $1 million
to the Silk Road drugs site,[47] and in February 2015, its
While it is possible to store any digital le in the
founder, Ross Ulbricht, was convicted on drugs charges
blockchain, the larger the transaction size, the larger any
[26] and faces a life sentence.[48]
associated fees become. Various items have been em-
bedded, including URLs to child pornography, an ASCII Some black market sites may seek to steal bitcoins from
art image of Ben Bernanke, material from the Wikileaks customers. The bitcoin community branded one site,
cables, prayers from bitcoin miners, and the original bit- Sheep Marketplace, as a scam when it prevented with-
coin whitepaper.[27] drawals and shut down after an alleged bitcoins theft.[49]
In a separate case, escrow accounts with bitcoins belong-
ing to patrons of a dierent black market were hacked in
4.1.6 Criminal activity early 2014.[50]
According to the Internet Watch Foundation, a UK-based
The use of bitcoin by criminals has attracted the atten- charity, bitcoin is used to purchase child pornography,
tion of nancial regulators, legislative bodies, law en- and almost 200 such websites accept it as payment. Bit-
forcement, and the media.[28] The FBI prepared an intelli- coin isn't the sole way to purchase child pornography on-
gence assessment,[29] the SEC has issued a pointed warn- line, as Troels Oertling, head of the cybercrime unit at
ing about investment schemes using virtual currencies,[28] Europol, states, Ukash and Paysafecard... have [also]
and the U.S. Senate held a hearing on virtual currencies been used to pay for such material. However, the In-
in November 2013.[30] ternet Watch Foundation lists around 30 sites that exclu-
Several news outlets have asserted that the popularity of sively accept bitcoins.[35] Some of these sites have shut
bitcoins hinges on the ability to use them to purchase il- down, such as a deep web crowdfunding website that
legal goods.[31][32] In 2014, researchers at the University aimed to fund the creation of new child porn.[51] Further-
of Kentucky found robust evidence that computer pro- more, hyperlinks to child porn websites have been added
gramming enthusiasts and illegal activity drive interest in to the blockchain as arbitrary data can be included when
bitcoin, and nd limited or no support for political and a transaction is made.[52][53]
investment motives.[33]
Malware
Black markets
Malware stealing Some malware can steal private
Main article: Darknet market keys for bitcoin wallets allowing the bitcoins themselves
to be stolen. The most common type searches computers
A CMU researcher estimated that in 2012, 4.5% to 9% of for cryptocurrency wallets to upload to a remote server
all transactions on all exchanges in the world were for drug where they can be cracked and their coins stolen.[54]
trades on a single dark web drugs market, Silk Road.[34] Many of these also log keystrokes to record passwords,
Child pornography,[35] murder-for-hire services,[36] and often avoiding the need to crack the keys.[54] A dier-
4.1. BITCOIN NETWORK 53
ent approach detects when a bitcoin address is copied For four days in December 2013 and January 2014,
to a clipboard and quickly replaces it with a dier- Yahoo! Europe hosted an ad containing bitcoin min-
ent address, tricking people into sending bitcoins to the ing malware that infected an estimated two million
wrong address.[55] This method is eective because bit- computers.[70] The software, called Sefnit, was rst de-
coin transactions are irreversible.[56]:57 tected in mid-2013 and has been bundled with many soft-
One virus, spread through the Pony botnet, was reported ware packages. Microsoft has been removing the mal-
in February 2014 to have stolen up to $220,000 in cryp- ware through its Microsoft
[71]
Security Essentials and other
[57]
tocurrencies including bitcoins from 85 wallets. Secu- security software.
rity company Trustwave, which tracked the malware, re- Several reports of employees or students using univer-
ports that its latest version was able to steal 30 types of sity or research computers to mine bitcoins have been
digital currency.[58] published.[72]
A type of Mac malware active in August 2013, Bit-
vanity posed as a vanity wallet address generator and Money laundering
stole addresses and private keys from other bitcoin
client software.[59] A dierent trojan for macOS, called Bitcoins may not be ideal for money laundering, because
CoinThief was reported in February 2014 to be re- all transactions are public.[73] Authorities, including the
sponsible for multiple bitcoin thefts.[59] The software European Banking Authority[74] the FBI,[29] and the
was hidden in versions of some cryptocurrency apps on Financial Action Task Force of the G7[75] have expressed
Download.com and MacUpdate.[59] concerns that bitcoin may be used for money laundering.
In early 2014, an operator of a U.S. bitcoin exchange,
Charlie Shrem, was arrested for money laundering.[76]
Ransomware Some ransomware demand payment in
Subsequently, he was sentenced to two years in prison
bitcoin. One program called CryptoLocker, typically
for aiding and abetting an unlicensed money transmitting
spread through legitimate-looking email attachments, en-
business.[47] A report by UKs Treasury and Home Of-
crypts the hard drive of an infected computer, then dis-
ce named UK national risk assessment of money laun-
plays a countdown timer and demands a ransom, usually
dering and terrorist nancing (2015 October) found that,
two bitcoins, to decrypt it.[60] Massachusetts police said
of the twelve methods examined in the report, bitcoin car-
they paid a 2 bitcoin ransom in November 2013, worth
ries the lowest risk of being used for money laundering,
more than $1,300 at the time, to decrypt one of their
with the most common money laundering method being
hard drives.[61] Linkup, a combination ransomware and
the banks.[77]
bitcoin mining program that surfaced in February 2014,
disables internet access and demands credit card informa-
tion to restore it, while secretly mining bitcoins.[60] Bit- Ponzi scheme
coin is currently being used as the ransom medium of
choice in the WannaCry ransomware hack hitting many In a Ponzi scheme that utilized bitcoins, The Bitcoin Sav-
buildings in Asia and Europe.[62] ings and Trust promised investors up to 7 percent weekly
interest, and raised at least 700,000 bitcoins from 2011
to 2012.[78] In July 2013 the U.S. Securities and Ex-
Unauthorized mining In June 2011, Symantec change Commission charged the company and its founder
warned about the possibility that botnets could mine in 2013 with defrauding investors in a Ponzi scheme in-
covertly for bitcoins.[63] Malware used the parallel pro- volving bitcoin.[78] In September 2014 the judge ned
cessing capabilities of GPUs built into many modern Bitcoin Savings & Trust and its owner $40 million for
video cards.[64] Although the average PC with an inte- operating a bitcoin Ponzi scheme.[79]
grated graphics processor is virtually useless for bitcoin
mining, tens of thousands of PCs laden with mining mal-
ware could produce some results.[65] Theft
In mid-August 2011, bitcoin mining botnets were There have been many cases of bitcoin theft.[80] One way
detected,[66] and less than three months later, bitcoin min- this is accomplished involves a third party accessing the
ing trojans had infected Mac OS X.[67] private key to a victims bitcoin address,[81] or of an online
In April 2013, electronic sports organization E-Sports wallet.[82] If the private key is stolen, all the bitcoins from
Entertainment was accused of hijacking 14,000 comput- the compromised address can be transferred. In that case,
ers to mine bitcoins; the company later settled the case the network does not have any provisions to identify the
with the State of New Jersey.[68] thief, block further transactions of those stolen bitcoins,
[83]
German police arrested two people in December 2013 or return them to the legitimate owner.
who customized existing botnet software to perform bit- Theft also occurs at sites where bitcoins are used to pur-
coin mining, which police said had been used to mine at chase illicit goods. In late November 2013, an esti-
least $950,000 worth of bitcoins.[69] mated $100 million in bitcoins were allegedly stolen from
54 CHAPTER 4. TECHNOLOGIES
the online illicit goods marketplace Sheep Marketplace, [3] Dean, Andrew (14 August 2014). Online Gambling
which immediately closed.[84] Users tracked the coins as Meets Bitcoin. Retrieved 21 August 2014.
they were processed and converted to cash, but no funds
were recovered and no culprits identied.[84] A dierent [4] Block Chain Overview. bitcoin.org/. Bitcoin Project
20092014 Released under the MIT license. 20092014.
black market, Silk Road 2, stated that during a Febru-
Retrieved 14 August 2014.
ary 2014 hack, bitcoins valued at $2.7 million were taken
from escrow accounts.[50] [5] Enabling Blockchain Innovations with Pegged
Sites where users exchange bitcoins for cash or store them Sidechains (PDF). Blockstream. 22 October 2014. p.
in wallets are also targets for theft. Inputs.io, an Aus- 3. Retrieved 9 January 2017.
tralian wallet service, was hacked twice in October 2013
[6] Peter Kelly-Detwiler (21 July 2016). Mining Bitcoins Is
and lost more than $1 million in bitcoins.[85] In late Febru- A Surprisingly Energy-Intensive Endeavor. Forbes. Re-
ary 2014 Mt. Gox, one of the largest virtual currency ex- trieved 7 January 2017.
changes, led for bankruptcy in Tokyo amid reports that
bitcoins worth $350 million had been stolen.[86] Flexcoin, [7] Lester Coleman (25 July 2016). As Mining Expands,
a bitcoin storage specialist based in Alberta, Canada, shut Will Electricity Consumption Constrain Bitcoin?". cryp-
down on March 2014 after saying it discovered a theft tocoin news. Retrieved 7 January 2017.
of about $650,000 in bitcoins.[87] Poloniex, a digital cur-
rency exchange, reported on March 2014 that it lost bit- [8] Mining Bitcoin With Wind And Solar Power. Energy
Matters. 7 November 2016. Retrieved 7 January 2017.
coins valued at around $50,000.[88] In January 2015 UK-
based bitstamp, the third busiest bitcoin exchange glob- [9] Tindell, Ken (5 April 2013). Geeks Love The Bitcoin
ally, was hacked and $5 million in bitcoins were stolen.[89] Phenomenon Like They Loved The Internet In 1995.
February 2015 saw a Chinese exchange named BTER Business Insider.
lose bitcoins worth nearly $2 million to hackers.[90]
[10] Bitcoin boom beneting TSMC: report. Taipei Times.
A major bitcoin exchange, Bitnex, was hacked and
4 January 2014.
nearly 120,000 bitcoins (around $60m) was stolen in
2016. Bitnex was forced to suspend its trading. The [11] Biggs, John (8 April 2013). How To Mine Bitcoins.
theft is the second largest bitcoin heist ever, dwarfed only Techcrunch.
by Mt. Gox theft in 2014. According to Forbes, All
of Bitnexs customers,... will stand to lose money. The [12] Gimein, Mark (13 April 2013). Virtual Bitcoin Min-
company has announced a haircut of 36.067% across the ing Is a Real-World Environmental Disaster. Bloomberg
board.[91] Business. Bloomberg LP. Retrieved 22 April 2015.
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toCompare said, Its a reminder of the fragility of the Retrieved 25 November 2016.
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or theft.[93]
[16] Maras, Elliot (14 September 2016). Chinas Mining
Dominance: Good Or Bad For Bitcoin?". Cryptocoin
4.1.7 See also News. Retrieved 25 November 2016.
[21] Karame, Ghassan O.; Androulaki, Elli; Capkun, Srdjan were traded in Bitcoin exchanges over the same period...
(2012). Two Bitcoins at the Price of One? Double- The only conclusion we can draw from this comparison is
Spending Attacks on Fast Payments in Bitcoin (PDF). that Silk Road-related trades could plausibly correspond
International Association for Cryptologic Research. Re- to 4.5% to 9% of all exchange trades
trieved 22 October 2014.
[35] Schweizer, Kristen (10 October 2014). Bitcoin
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work. ACM Conference on Computer and Communica- Guns Could Undermine New Rules. hungtonpost.com.
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code. CNN Money. CNN. 2 May 2013. Owner Of Silk Road (blog). Forbes.com. Retrieved 24
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24 April 2012. Retrieved 2 November 2014. tober 2014. Digital currency loses quarter of value after
arrest of Ross Ulbricht, who is accused of running online
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coin charmed Washington. The Washington Post. Re-
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[33] Matthew Graham Wilson & Aaron Yelowitz (November
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latter corresponds to the amount of money entering and
leaving the Bitcoin network, and statistics for it are read- [48] Ross Ulbricht: Silk Road creator convicted on drugs
ily available... approximately 1,335,580 BTC were ex- charges. BBC. 5 February 2015. Retrieved 17 Febru-
changed on Silk Road... approximately 29,553,384 BTC ary 2015.
56 CHAPTER 4. TECHNOLOGIES
[49] Ravi Mandalia (1 December 2013). Silk Road-like [67] Lucian Constantin (1 November 2011). Mac OS X Tro-
Sheep Marketplace scams users; over 39k Bitcoins worth jan steals processing power to produce Bitcoins: Security
$40 million stolen. Techie News. Retrieved 2 December researchers warn that DevilRobber malware could slow
2013. down infected Mac computers. TechWorld. IDG com-
munications. Retrieved 24 January 2012.
[50] Silk Road 2 loses $2.7m in bitcoins in alleged hack.
BBC News. 14 February 2014. Retrieved 15 February [68] E-Sports Entertainment settles Bitcoin botnet allega-
2014. tions. BBC News. 20 November 2013. Retrieved 24
November 2013.
[51] While Markets Get Seized: Pedophiles Launch a Crowd-
funding Site. Retrieved 19 February 2015. [69] Mohit Kumar (9 December 2013). The Hacker News
The Hacker News +1,440,833 ThAlleged Skynet Botnet
[52] Hopkins, Curt (7 May 2013). If you own Bitcoin, you creator arrested in Germany. Retrieved 8 January 2015.
also own links to child porn. The Daily Dot. Retrieved
16 February 2015. [70] McGlaun, Shane (9 January 2014). Yahoo malware
turned Euro PCs into bitcoin miners. SlashGear. Re-
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grows. IET Engineering and Technology Magazine.
[71] Liat Clark (20 January 2014). Microsoft stopped Tor
[54] Hajdarbegovic, Nermin (27 February 2014). Nearly 150 running automatically on botnet-infected systems. Re-
strains of malware are after your bitcoins. CoinDesk. Re- trieved 8 January 2015.
trieved 7 March 2014.
[72] Hornyack, Tim (6 June 2014). US researcher banned
[55] Gregg Keizer (28 February 2014). Bitcoin malware for mining Bitcoin using university supercomputers. PC
count soars as cryptocurrency value climbs. Computer- world.com. IDG Consumer & SMB. Retrieved 13 June
world. Retrieved 8 January 2015. 2014.
[56] Barski, Conrad; Wilmer, Chris (14 November 2014). Bit- [73] Kirk, Jeremy (28 August 2013). Bitcoin oers privacy-
coin for the Befuddled. No Starch Press. ISBN 978-1- as long as you don't cash out or spend it. PC World. Re-
59327-573-0. trieved 31 October 2014.
[66] Infosecurity - Researcher discovers distributed bitcoin [82] Everett, David (April 2012). So how can you steal Bit-
cracking trojan malware. Infosecurity-magazine.com. coins. Smartcard & Identity News. Retrieved 17 January
19 August 2011. Retrieved 24 January 2012. 2014.
4.2. CRYPTOCURRENCY 57
4.2 Cryptocurrency
Nxt exchanges
4.2.2 History
Monero wallet on a mobile phone
4.2.3 Legality
these altcoins are independent from formal banking sys- as Paycoin. He is accused of masterminding an elab-
tems, and therefore can make tax evasion simpler for in- orate ponzi scheme under the guise of cloud mining
dividuals. Since charting taxable income is based upon with mining equipment hosted in a data center. He pur-
what a recipient reports to the revenue service, it becomesported the cloud miners known as hashlets to be min-
extremely dicult to account for transactions made us- ing cryptocurrency within the Zenportal cloud when in
ing existing cryptocurrencies, a mode of exchange that is fact there were no miners actively mining cryptocurrency.
complex (and in some cases impossible) to track.[40] Zenportal had over 10,000 users that had purchased hash-
[48][49]
Systems of anonymity that most cryptocurrencies oer lets for a total of over 19 million U.S. dollars.
can also serve as a simpler means to launder money. On August 24, 2016, a federal judge in Florida certi-
Rather than laundering money through an intricate net of ed a class action lawsuit[50] against defunct cryptocur-
nancial actors and oshore bank accounts, laundering rency exchange Cryptsy and Cryptsys owner. He is ac-
money through altcoins stands outside institutions and can cused of misappropriating millions of dollars of user de-
be achieved through anonymous transactions.[40] Laun- posits, destroying evidence, and is believed to have ed
dering services for cryptocurrency exist to service the to China.[51]
bitcoin currency, in which multiple sourced bitcoins are
blended to obscure the relationship between input and
output addresses.[40]
Arrests
Darknet markets
There have been arrests in the United States related to
cryptocurrency. A notable case was the arrest of Charlie
Shrem, the CEO of BitInstant.[41][42] Main article: Darknet market
4.2.4 Timestamping
Proof-of-work schemes
4.2.6 List
Main article: List of cryptocurrencies
was announced. It will cover studies of cryptocurren- irreversible transaction using a system with native
cies and related technologies, and is published by the chargebacks, so this aspect is actually an advantage.
University of Pittsburgh.[62][63] The journal encourages
authors to digitally sign a le hash of submitted pa- Some coins may be a project with little to no com-
pers, which will then be timestamped into the bitcoin munity backing and no visible developer.[75]
blockchain. Authors are also asked to include a personal While cryptocurrencies are digital currencies that
bitcoin address in the rst page of their papers.[64][65] are managed through advanced encryption tech-
niques, many governments have taken a cautious ap-
proach toward them, fearing their lack of central
4.2.8 Criticism
control and the eects they could have on nancial
security.[76]
In December 2013, Jason O'Grady reported on var- Environmentally conscious people are concerned
ious pump and dump schemes in altcoins distinct with the enormous amount of energy that goes into
from bitcoin and Litecoin.[66] cryptocurrency mining with little to show in return,
but it is important to compare it to the consumption
Community refers to premining, hidden launches, of the legacy nancial system.[77]
or extreme rewards for the altcoin founders as a de-
ceptive practice,[67] but it can also be used as an in- Traditional nancial products have strong consumer
herent part of a digital cryptocurrencys design, as in protections. However, if bitcoins are lost or stolen,
the case of Ripple.[68] Pre-mining means currency is there is no intermediary with the power to limit con-
generated by the currencys founders prior to mining sumer losses.[78]
code being released to the public.[69]
Regulators in several countries have warned against
Most cryptocurrencies are duplicates of existing their use and some have taken concrete regulatory
cryptocurrencies with minor changes and no novel measures to dissuade users.[79]
technical developments. One such, Coinye West,
a comedy cryptocurrency alluding to the rapper The success of some cryptocurrencies has caused
Kanye West, was served a cease-and-desist letter on multi-level marketing schemes to arise with pseudo
7 January 2014, for using Wests name and implying cryptocurrencies, such as Onecoin.[80]
a connection that did not exist.[70]
Banks generally do not oer services for cryptocur- 4.2.9 See also
rencies and sometimes refuse to oer services to
virtual-currency companies.[71] Cryptographic protocol
There are ways to permanently lose cryptocurrency
from local storage due to malware or data loss. This 4.2.10 References
can also happen through the destruction of the phys-
ical media, eectively removing lost cryptocurren- [1] Andy Greenberg (20 April 2011). Crypto Currency.
cies forever from their markets.[72] Forbes.com. Retrieved 8 August 2014.
There are many perceived criteria that cryptocurren- [2] Sagona-Stophel, Katherine. Bitcoin 101 white paper
cies must reach before they can become mainstream. (PDF). Thomson Reuters. Retrieved 11 July 2016.
For example, the number of merchants accepting
[3] Tasca, Paolo (7 September 2015). Digital Currencies:
cryptocurrencies is increasing, but still only a few
Principles, Trends, Opportunities, and Risks. SSRN
merchants accept them.[73]
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With technological advancement in cryptocurren-
cies such as bitcoin, the cost of entry for min- [4] Altcoin. Investopedia. Retrieved 8 January 2015.
ers requiring specialized hardware and software is [5] Wilmoth, Josiah. What is an Altcoin?". cryptocoin-
high.[74] snews.com. Retrieved 4 March 2015.
Cryptocurrency transactions are normally irre- [6] McDonnell, Patrick PK (9 September 2015). What
versible after a number of blocks conrm the trans- Is The Dierence Between Bitcoin, Forex, and Gold.
action. One of the features cryptocurrency lacks in NewsBTC. Retrieved 15 September 2015.
comparison to credit cards is consumer protection
against fraud, such as chargebacks.[12] This is, how- [7] Allison, Ian (8 September 2015). If Banks Want Benets
Of Blockchains, They Must Go Permissionless. News-
ever, a non-issue because third-party multisignature-
BTC. Retrieved 15 September 2015.
based escrow can be used to mediate a transac-
tion, this is eectively equivalent to enabling charge- [8] All you need to know about Bitcoin. timesondia-
backs. This is also much easier than performing an economictimes.
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Retrieved 18 June 2016. [31] Dogecoin Users Raise $30,000 to Send Jamaican Bob-
sled Team to Winter Olympics, Digital Trends, 20 January
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ary 2014.
[32] Dogecoin Community Raising $30,000 for Childrens
[11] Proof of burn (another authentication protocol forked Charity, International Business Times, 4 February 2014
from P.O.S.. en.bitcoin.it. 7 June 2013.
[33] The Big Picture Behind the News of Chinas Bitcoin Bans
[12] Jerry Brito and Andrea Castillo (2013). Bitcoin: Bitcoin Magazine. Bitcoin Magazine. Retrieved 24
A Primer for Policymakers (PDF). Mercatus Center. February 2015.
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Anonymous And Untraceable, Forbes, 26 May 2013
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[16] Matthew Green (26 May 2013). Zerocoin: Anonymous Pryor Cashman LLP, 6 January 2014
Distributed E-Cash from Bitcoin (pdf). Johns Hopkins
[38] Iwamura, Mitsuru; Kitamura, Yukinobu; Matsumoto,
University.
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of money, was one of the rst to imagine a new digital University: Computing Science, 2015. (Newcastle Uni-
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Bitcoin
[41] Sidel, Robin. Bitcoin Entrepreneur Charlie Shrem Re-
[20] Bitcoin developer chats about regulation, open source, and ports to Prison.
the elusive Satoshi Nakamoto, PCWorld, 26-05-2013
[42] Tracking the Intangible: How Fraud Examiners Are
[21] Wary of Bitcoin? A guide to some other cryptocurrencies, Busting Bitcoin Fraud. Retrieved 24 February 2015.
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[43] SEC v Shavers, United States District Court Eastern Dis-
[22] Popov, Serguei (2016). The Tangle Whitepaper (PDF). trict Of Texas, 08-06-2013
[23] Snsteb, David (2016). IOTA First Chapter Synopsis. [44] Banshee bitcoins: $5 million worth of bitcoin vanish in
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[25] UK launches initiative to explore potential of virtual cur-
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[27] How Bitcoin Compares to Fiat Currencys House of
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[51] http://cryptsyreceivership.com/
v1/wp-content/uploads/2016/08/ [71] Sidel, Robin (22 December 2013). Banks Mostly Avoid
Notice-of-Filing-Receivers-2nd-Report-8-2-16-full. Providing Bitcoin Services. Lenders Don't Share In-
pdf vestors Enthusiasm for the Virtual-Currency Craze. On-
line.wsj.com. Retrieved 29 December 2013.
[52] Raeesi, Reza (2015-04-23). The Silk Road, Bitcoins and
the Global Prohibition Regime on the International Trade [72] Keeping Your Cryptocurrency Safe, Center for a Stateless
in Illicit Drugs: Can this Storm Be Weathered?". Glendon Society, 1 April 2014
Journal of International Studies / Revue d'tudes interna-
tionales de Glendon. 8 (12). ISSN 2291-3920. [73] The Future of Cryptocurrency, Investopedia, 10 Septem-
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[53] CryptoCoinTalk.com - Discussing the World of Cryp-
tocurrencies. CryptoCoinTalk. Retrieved 24 February [74] Want to make money o Bitcoin mining? Hint: Don't
2015. mine, The Week, 15 April 2013
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(PDF). Retrieved 12 May 2013.
[76] Cryptocurrency and Global Financial Security Panel at
[55] https://coinmarketcap.com/charts/ Georgetown Diplomacy Conf, MeetUp, 11 April 2014
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Bitcoin, March 2014
[57] CRIXCRypto IndeX. crix.hu-berlin.de. Retrieved
2016-08-12. [78] Four Reasons You Shouldn't Buy Bitcoins, Forbes, 3 April
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[58] Simon Trimborn; Wolfgang Karl Hrdle. CRIX or eval-
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[60] Ladislav Kristoufek (2 June 2014). What are the main
drivers of the Bitcoin price? Evidence from wavelet co-
herence analysis. p. 1 Section 1 Introduction, "(the) suc-
cess has ignited an exposition of new alternative crypto-
4.2.11 Further reading
currencies.
Chayka, Kyle (2 July 2013). What Comes After
[61] Crypto-Currency Market Capitalizations. Bitcoin?". Pacic Standard. Retrieved 18 January
2014.
[62] Introducing Ledger, the First Bitcoin-Only Academic
Journal. Motherboard. Guadamuz, Andres; Marsden, Chris (2015).
[63] Bitcoin Peer-Reviewed Academic Journal Ledger Blockchains and Bitcoin: Regulatory responses
Launches. CoinDesk. to cryptocurrencies. First Monday. 20 (12).
doi:10.5210/fm.v20i12.6198.
[64] Editorial Policies. ledgerjournal.org.
[68] Bradbury, Danny (25 June 2013). Bitcoins successors: 4.3 Elliptic Curve Digital Signa-
from Litecoin to Freicoin and onwards. The Guardian.
Guardian News and Media Limited. Retrieved 11 January ture Algorithm
2014.
[69] Morris, David Z (24 December 2013). Beyond bitcoin: In cryptography, the Elliptic Curve Digital Signature
Inside the cryptocurrency ecosystem. CNNMoney, a ser- Algorithm (ECDSA) oers a variant of the Digital Sig-
vice of CNN, Fortune & Money. Cable News Network. nature Algorithm (DSA) which uses elliptic curve cryp-
Retrieved 11 January 2014. tography.
4.3. ELLIPTIC CURVE DIGITAL SIGNATURE ALGORITHM 65
4.3.1 Key and signature-size comparison attacker can now calculate the private key dA = skz
r
to DSA . This implementation failure was used, for example, to
extract the signing key used for the PlayStation 3 gaming-
As with elliptic-curve cryptography in general, the bit size console.[2] Another way ECDSA signature may leak pri-
of the public key believed to be needed for ECDSA is vate keys is when k is generated by a faulty random num-
about twice the size of the security level, in bits. For ex- ber generator. Such a failure in random number genera-
ample, at a security level of 80 bits (meaning an attacker tion caused users of Android Bitcoin Wallet to lose their
requires a maximum of about 280 operations to nd the funds in August 2013.[3] To ensure that k is unique for
private key) the size of an ECDSA public key would be each message one may bypass random number genera-
160 bits, whereas the size of a DSA public key is at least tion completely and generate deterministic signatures by
1024 bits. On the other hand, the signature size is the deriving k from both the message and the private key.[4]
same for both DSA and ECDSA: apx. 4t bits, where t is
the security level measured in bits, that is, about 320 bits
for a security level of 80 bits. 4.3.3 Signature verication algorithm
For Bob to authenticate Alices signature, he must have a
4.3.2 Signature generation algorithm copy of her public-key curve point QA . Bob can verify
QA is a valid curve point as follows:
Suppose Alice wants to send a signed message to
Bob. Initially, they must agree on the curve parameters 1. Check that QA is not equal to the identity element
(CURVE, G, n) . In addition to the eld and equation of O , and its coordinates are otherwise valid
the curve, we need G , a base point of prime order on the
curve; n is the multiplicative order of the point G . 2. Check that QA lies on the curve
Alice creates a key pair, consisting of a private key integer 3. Check that n QA = O
dA , randomly selected in the interval [1, n 1] ; and a
public key curve point QA = dA G . We use to After that, Bob follows these steps:
denote elliptic curve point multiplication by a scalar.
For Alice to sign a message m , she follows these steps: 1. Verify that r and s are integers in [1, n 1] . If not,
the signature is invalid.
1. Calculate e = HASH(m) , where HASH is a 2. Calculate e = HASH(m) , where HASH is the same
cryptographic hash function, such as SHA-2. function used in the signature generation.
2. Let z be the Ln leftmost bits of e , where Ln is the 3. Let z be the Ln leftmost bits of e .
bit length of the group order n .
4. Calculate w = s1 mod n .
3. Select a cryptographically secure random integer
k from [1, n 1] . 5. Calculate u1 = zw mod n and u2 = rw mod n .
4. Calculate the curve point (x1 , y1 ) = k G . 6. Calculate the curve point (x1 , y1 ) = u1 G + u2
QA . If u1 G + u2 QA = O then the signature
5. Calculate r = x1 mod n . If r = 0 , go back to step is invalid.
3.
7. The signature is valid if r x1 (mod n) , invalid
6. Calculate s = k 1 (z + rdA ) mod n . If s = 0 , go otherwise.
back to step 3.
7. The signature is the pair (r, s) . Note that using Shamirs trick, a sum of two scalar mul-
tiplications u1 G + u2 QA can be calculated faster
than two scalar multiplications done independently.[5]
When computing s , the string z resulting from
HASH(m) shall be converted to an integer. Note that
z can be greater than n but not longer.[1] 4.3.4 Correctness of the algorithm
As the standard notes, it is crucial to select dierent k
for dierent signatures, otherwise the equation in step 6 It is not immediately obvious why verication even func-
can be solved for dA , the private key: Given two signa- tions correctly. To see why, denote as C the curve point
tures (r, s) and (r, s ) , employing the same unknown k computed in step 6 of verication,
for dierent known messages m and m , an attacker can C = u1 G + u2 QA
calculate z and z , and since s s = k 1 (z z ) (all
operations in this paragraph are done modulo n ) the at- From the denition of the public key as QA = dA G ,
1
tacker can nd k = zzss . Since s = k (z + rdA ) , the C = u1 G + u2 dA G
66 CHAPTER 4. TECHNOLOGIES
Collecting the common term s1 , [4] RFC 6979 - Deterministic Usage of the Digital Signature
1 Algorithm (DSA) and Elliptic Curve Digital Signature Al-
C = (z + rdA )s G gorithm (ECDSA)". Retrieved February 24, 2015.
Expanding the denition of s from signature step 6,
[5] The Double-Base Number System in Elliptic Curve
C = (z + rdA )(z + rdA )1 (k 1 )1 G Cryptography (PDF). Retrieved 22 April 2014.
Since the inverse of an inverse is the original element, and [6] Bendel, Mike (2010-12-29). Hackers Describe PS3 Se-
the product of an elements inverse and the element is the curity As Epic Fail, Gain Unrestricted Access. Ex-
identity, we are left with ophase.com. Retrieved 2011-01-05.
C =kG [7] Cryptology ePrint Archive: Report 2011/232. Re-
From the denition of r , this is verication step 6. trieved February 24, 2015.
This shows only that a correctly signed message will verify [8] Vulnerability Note VU#536044 - OpenSSL leaks ECDSA
correctly; many other properties are required for a secure private key through a remote timing attack
signature algorithm.
[9] ChangeLog. OpenSSL Project. Retrieved 22 April
2014.
4.3.5 Security [10] Android bug batters Bitcoin wallets. The Register. 12
August 2013.
In December 2010, a group calling itself fail0verow an-
nounced recovery of the ECDSA private key used by
Sony to sign software for the PlayStation 3 game console.
4.3.8 References
However, this attack only worked because Sony did not
Accredited Standards Committee X9, American
properly implement the algorithm, because k was static
National Standard X9.62-2005, Public Key Cryptog-
instead of random. As pointed out in the Signature gen-
raphy for the Financial Services Industry, The El-
eration algorithm section above, this makes dA solvable
[6] liptic Curve Digital Signature Algorithm (ECDSA),
and the entire algorithm useless.
November 16, 2005.
On March 29, 2011, two researchers published an IACR
paper[7] demonstrating that it is possible to retrieve a Certicom Research, Standards for ecient cryptog-
TLS private key of a server using OpenSSL that authen- raphy, SEC 1: Elliptic Curve Cryptography, Version
ticates with Elliptic Curves DSA over a binary eld via a 2.0, May 21, 2009.
timing attack.[8] The vulnerability was xed in OpenSSL
Lpez, J. and Dahab, R. An Overview of Elliptic
1.0.0e.[9]
Curve Cryptography, Technical Report IC-00-10,
In August 2013, it was revealed that bugs in some imple- State University of Campinas, 2000.
mentations of the Java class SecureRandom sometimes
generated collisions in the k value. As discussed above, Daniel J. Bernstein, Pippengers exponentiation al-
this allowed solution of the private key, in turn allowing gorithm, 2002.
stealing bitcoins from the containing wallet on Android
Daniel R. L. Brown, Generic Groups, Collision Re-
app implementations, which use Java and rely on ECDSA
sistance, and ECDSA, Designs, Codes and Cryptog-
to authenticate transactions.[10]
raphy, 35, 119152, 2005. ePrint version
This issue can be prevented by deterministic generation
of k, as described by RFC 6979. Ian F. Blake, Gadiel Seroussi, and Nigel Smart, edi-
tors, Advances in Elliptic Curve Cryptography, Lon-
don Mathematical Society Lecture Note Series 317,
Cambridge University Press, 2005.
4.3.6 See also
Hankerson, D.; Vanstone, S.; Menezes, A. (2004).
Elliptic curve cryptography Guide to Elliptic Curve Cryptography. Springer Pro-
fessional Computing. New York: Springer. ISBN
EdDSA 0-387-95273-X. doi:10.1007/b97644.
4.4. PEER-TO-PEER 67
Overlay network diagram for a structured P2P network, us- Security and trust
ing a distributed hash table (DHT) to identify and locate
nodes/resources Peer-to-peer systems pose unique challenges from a
computer security perspective.
to search for resources on the network using a hash ta- Like any other form of software, P2P applications can
ble: that is, (key, value) pairs are stored in the DHT, and contain vulnerabilities. What makes this particularly dan-
any participating node can eciently retrieve the value gerous for P2P software, however, is that peer-to-peer
associated with a given key.[22][23] applications act as servers as well as clients, meaning that
they can be more vulnerable to remote exploits.[31]
Data Key Distributed
Hash Network
Fox function DFCD3454
Routing attacks Also, since each node plays a role in
The red fox
runs across
Hash
52ED879E
routing trac through the network, malicious users can
function
the ice
perform a variety of routing attacks, or denial of service
The red fox
Hash
attacks. Examples of common routing attacks include
walks across 46042841
the ice function
Peers incorrect lookup routing whereby malicious nodes de-
liberately forward requests incorrectly or return false re-
sults, incorrect routing updates where malicious nodes
Distributed hash tables
corrupt the routing tables of neighboring nodes by send-
However, in order to route trac eciently through the ing them false information, and incorrect routing net-
network, nodes in a structured overlay must maintain lists work partition where when new nodes are joining they
of neighbors that satisfy specic criteria. This makes bootstrap via a malicious node, which places the new
them less robust in networks with a high rate of churn (i.e. node in a partition of the network that is populated by
with large numbers of nodes frequently joining and leav- other malicious nodes.[32]
ing the network).[15][24] More recent evaluation of P2P
resource discovery solutions under real workloads have Corrupted data and malware See also: Data valida-
pointed out several issues in DHT-based solutions such as tion and Malware
high cost of advertising/discovering resources and static
and dynamic load imbalance.[25]
The prevalence of malware varies between dierent peer-
Notable distributed networks that use DHTs include to-peer protocols. Studies analyzing the spread of mal-
BitTorrents distributed tracker, the Kad network, the ware on P2P networks found, for example, that 63% of
Storm botnet, YaCy, and the Coral Content Distribu- the answered download requests on the Limewire net-
tion Network. Some prominent research projects include work contained some form of malware, whereas only 3%
the Chord project, Kademlia, PAST storage utility, P- of the content on OpenFT contained malware. In both
Grid, a self-organized and emerging overlay network, and cases, the top three most common types of malware ac-
CoopNet content distribution system.[26] DHT-based net- counted for the large majority of cases (99% in Limewire,
works have also been widely utilized for accomplishing and 65% in OpenFT). Another study analyzing trac on
ecient resource discovery[27][28] for grid computing sys- the Kazaa network found that 15% of the 500,000 le
tems, as it aids in resource management and scheduling sample taken were infected by one or more of the 365
of applications. dierent computer viruses that were tested for.[33]
Corrupted data can also be distributed on P2P networks
Hybrid models Hybrid models are a combination of by modifying les that are already being shared on the
peer-to-peer and client-server models.[29] A common hy- network. For example, on the FastTrack network, the
70 CHAPTER 4. TECHNOLOGIES
RIAA managed to introduce faked chunks into down- works related to the topic of data backup, recovery, and
loads and downloaded les (mostly MP3 les). Files in- availability. In a centralized network, the system admin-
fected with the RIAA virus were unusable afterwards and istrators are the only forces controlling the availability
contained malicious code. The RIAA is also known to of les being shared. If the administrators decide to no
have uploaded fake music and movies to P2P networks longer distribute a le, they simply have to remove it
in order to deter illegal le sharing.[34] Consequently, the from their servers, and it will no longer be available to
P2P networks of today have seen an enormous increase users. Along with leaving the users powerless in decid-
of their security and le verication mechanisms. Mod- ing what is distributed throughout the community, this
ern hashing, chunk verication and dierent encryption makes the entire system vulnerable to threats and requests
methods have made most networks resistant to almost any from the government and other large forces. For example,
type of attack, even when major parts of the respective YouTube has been pressured by the RIAA, MPAA, and
network have been replaced by faked or nonfunctional entertainment industry to lter out copyrighted content.
hosts.[35] Although server-client networks are able to monitor and
manage content availability, they can have more stability
in the availability of the content they choose to host. A
Resilient and scalable computer networks client should not have trouble accessing obscure content
that is being shared on a stable centralized network. P2P
See also: Wireless mesh network and Distributed com- networks, however, are more unreliable in sharing unpop-
puting ular les because sharing les in a P2P network requires
that at least one node in the network has the requested
The decentralized nature of P2P networks increases ro- data, and that node must be able to connect to the node
bustness because it removes the single point of failure requesting the data. This requirement is occasionally hard
that can be inherent in a client-server based system.[36] to meet because users may delete or stop sharing data at
As nodes arrive and demand on the system increases, the any point.[37]
total capacity of the system also increases, and the like- In this sense, the community of users in a P2P network is
lihood of failure decreases. If one peer on the network completely responsible for deciding what content is avail-
fails to function properly, the whole network is not com- able. Unpopular les will eventually disappear and be-
promised or damaged. In contrast, in a typical client come unavailable as more people stop sharing them. Pop-
server architecture, clients share only their demands with ular les, however, will be highly and easily distributed.
the system, but not their resources. In this case, as more Popular les on a P2P network actually have more sta-
clients join the system, fewer resources are available to bility and availability than les on central networks. In a
serve each client, and if the central server fails, the entire centralized network a simple loss of connection between
network is taken down. the server and clients is enough to cause a failure, but in
P2P networks the connections between every node must
be lost in order to cause a data sharing failure. In a cen-
Distributed storage and search
tralized system, the administrators are responsible for all
data recovery and backups, while in P2P systems, each
node requires its own backup system. Because of the lack
of central authority in P2P networks, forces such as the
recording industry, RIAA, MPAA, and the government
are unable to delete or stop the sharing of content on P2P
systems.[38]
4.4.3 Applications
Content delivery
dividuals within the network. Networking research of- [5] RFC 1, Host Software, S. Crocker, IETF Working Group
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[6] Berners-Lee, Tim (August 1996). The World Wide
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International Advanced Computing Conference, 2014. Glasnost test P2P trac shaping (Max Planck Insti-
doi:10.1109/IAdCC.2014.6779311 tute for Software Systems)
usually meaning processing time by a computer. The con- teractive link between the requester (client) and the
cept may have been rst presented by Cynthia Dwork and provider (server). The provider chooses a challenge,
Moni Naor in a 1993 journal article.[1] The term Proof say an item in a set with a property, the requester
of Work or POW was rst coined and formalized in nds the relevant response in the set, which is sent
a 1999 paper by Markus Jakobsson and Ari Juels.[2] An back and checked by the provider. As the challenge
early example of the proof-of-work system used to give is chosen on the spot by the provider, its diculty
value to a currency is the Shell Money of the Solomon can be adapted to its current load. The work on
Islands. the requester side may be bounded if the challenge-
response protocol has a known solution (chosen by
A key feature of these schemes is their asymmetry: the
work must be moderately hard (but feasible) on the re- the provider), or is known to exist within a bounded
search space.
quester side but easy to check for the service provider.
This idea is also known as a CPU cost function, client
puzzle, computational puzzle or CPU pricing function. It 1. request service
is distinct from a CAPTCHA, which is intended for a hu- 3. challenge
2. choose
Network-bound[10] if the client must perform few of the real-world resources required to 'mint' a POW to-
computations, but must collect some tokens from ken. In Finneys version of RPOW, the POW token is a
remote servers before querying the nal service piece of Hashcash.
provider. In this sense the work is not actually per- A website can demand a POW token in exchange for
formed by the requester, but it incurs delays anyway service. Requiring a POW token from users would in-
because of the latency to get the required tokens. hibit frivolous or excessive use of the service, sparing the
services underlying resources, such as bandwidth to the
Finally, some POW systems oer shortcut computations Internet, computation, disk space, electricity and admin-
that allow participants who know a secret, typically a pri- istrative overhead.
vate key, to generate cheap POWs. The rationale is that
Finneys RPOW system diered from a POW system in
mailing-list holders may generate stamps for every recip-
permitting random exchange of tokens without repeating
ient without incurring a high cost. Whether such a feature
the work required to generate them. After someone had
is desirable depends on the usage scenario.
spent a POW token at a website, the websites operator
could exchange that spent POW token for a new, un-
4.5.3 List of proof-of-work functions spent RPOW token, which could then be spent at some
third party web site similarly equipped to accept RPOW
Here is a list of known proof-of-work functions: tokens. This would save the resources otherwise needed
to 'mint' a POW token. The anti-counterfeit property of
the RPOW token was guaranteed by remote attestation.
Integer square root modulo a large prime[1] The RPOW server that exchanges a used POW or RPOW
token for a new one of equal value uses remote attes-
Weaken FiatShamir signatures[1]
tation to allow any interested party to verify what soft-
OngSchnorrShamir signature broken by ware is running on the RPOW server. Since the source
Pollard[1] code for Finneys RPOW software was published (under
a BSD-like license), any suciently knowledgeable pro-
Partial hash inversion[11][12][2] This paper formalizes grammer could, by inspecting the code, verify that the
the idea of a proof of work (POW) and introduces software (and, by extension, the RPOW server) never is-
the dependent idea of a bread pudding protocol", sued a new token except in exchange for a spent token of
a re-usable proof of work (RPOW) system.[13] as equal value.
Hashcash
Until 2009, Finneys system was the only RPOW sys-
Hash sequences [14] tem to have been implemented; it never saw economically
signicant use. In 2009, the bitcoin network went on-
Puzzles [15] line. Bitcoin is a proof-of-work cryptocurrency that, like
Finneys RPOW, is also based on the Hashcash POW. But
DieHellman-based puzzle[16] in bitcoin double-spend protection is provided by a de-
centralized P2P protocol for tracking transfers of coins,
Moderate[6] rather than the hardware trusted computing function used
Mbound [7] by RPOW. Bitcoin has better trustworthiness because it
is protected by computation; RPOW is protected by the
Hokkaido [8] private keys stored in the TPM hardware and manufac-
turers holding TPM private keys. Hackers who steal a
Cuckoo Cycle[9] TPM manufacturer key, or anyone capable of obtaining
the key by examining the TPM chip itself, could subvert
Merkle tree based[17] that assurance. Bitcoins are mined using the Hashcash
Guided tour puzzle protocol [10] proof-of-work function by individual nodes and veried
by the decentralized P2P bitcoin network.
tain types, which can have useful side-applications (see [11] Back, Adam. HashCash. Popular proof-of-work sys-
Primecoin#Proof-of-work system). tem. First announce in March 1997.
with digests (hash values) that are 224, 256, 384 or 512 A B C D E F G H
bits: SHA-224, SHA-256, SHA-384, SHA-512, SHA- Wt
512/224, SHA-512/256.
Ch Kt
SHA-256 and SHA-512 are novel hash functions com-
puted with 32-bit and 64-bit words, respectively. They 1
cation disallows creation of digital signatures with a hash lic SHA-1-signed TLS certicates from February 2017.
security lower than 112-bits after 2013. The previous re- Mozilla disabled SHA-1 in early January 2016, but had
vision from 2007 specied the cuto to be the end of to re-enable it temporally via a Firefox update, after prob-
2010.[15] In August 2012, NIST revised SP800-107 in lems with web-based user interfaces of some router mod-
the same manner.[14] els and security appliances.[31]
The NIST hash function competition selected a new hash
function, SHA-3, in 2012.[19] The SHA-3 algorithm is not 4.6.3 Cryptanalysis and validation
derived from SHA-2.
For a hash function for which L is the number of bits in
the message digest, nding a message that corresponds to
4.6.2 Applications a given message digest can always be done using a brute
force search in 2L evaluations. This is called a preimage
For more details on this topic, see Cryptographic hash attack and may or may not be practical depending on L
function Applications. and the particular computing environment. The second
criterion, nding two dierent messages that produce the
The SHA-2 hash function is implemented in some widely same message digest, known as a collision, requires on
used security applications and protocols, including TLS average only 2L/2 evaluations using a birthday attack.
and SSL, PGP, SSH, S/MIME, and IPsec. Some of the applications that use cryptographic hashes,
SHA-256 partakes in the process of authenticating such as password storage, are only minimally aected by
Debian software packages[20] and in the DKIM message a collision attack. Constructing a password that works for
signing standard; SHA-512 is part of a system to authen- a given account requires a preimage attack, as well as ac-
ticate archival video from the International Criminal Tri- cess to the hash of the original password (typically in the
bunal of the Rwandan genocide.[21] SHA-256 and SHA- shadow le) which may or may not be trivial. Revers-
512 are proposed for use in DNSSEC.[22] Unix and Linux ing password encryption (e.g., to obtain a password to try
vendors are moving to using 256- and 512-bit SHA-2 for against a users account elsewhere) is not made possible
secure password hashing.[23] by the attacks. (However, even a secure password hash
cannot prevent brute-force attacks on weak passwords.)
Several cryptocurrencies like Bitcoin use SHA-256 for
verifying transactions and calculating proof-of-work or In the case of document signing, an attacker could not
proof-of-stake. The rise of ASIC SHA-2 accelerator simply fake a signature from an existing documentthe
chips has led to the use of scrypt-based proof-of-work attacker would have to produce a pair of documents, one
schemes. innocuous and one damaging, and get the private key
holder to sign the innocuous document. There are prac-
SHA-1 and SHA-2 are the secure hash algorithms re-
tical circumstances in which this is possible; until the
quired by law for use in certain U.S. Government ap-
end of 2008, it was possible to create forged SSL certi-
plications, including use within other cryptographic al-
cates using an MD5 collision which would be accepted
gorithms and protocols, for the protection of sensitive
by widely used web browsers.[32]
unclassied information. FIPS PUB 180-1 also encour-
aged adoption and use of SHA-1 by private and com- Increased interest in cryptographic hash analysis during
mercial organizations. SHA-1 is being retired for most the SHA-3 competition produced several new attacks on
government uses; the U.S. National Institute of Standards the SHA-2 family, the best of which are given in the table
and Technology says, Federal agencies should stop us- below. Only the collision attacks are of practical com-
ing SHA-1 for...applications that require collision resis- plexity; none of the attacks extend to the full round hash
tance as soon as practical, and must use the SHA-2 fam- function.
ily of hash functions for these applications after 2010 At FSE 2012, researchers at Sony gave a presentation sug-
(emphasis in original).[24] NISTs directive that U.S. gov- gesting pseudo-collision attacks could be extended to 52
ernment agencies must stop uses of SHA-1 after 2010[25] rounds on SHA-256 and 57 rounds on SHA-512 by build-
was hoped to accelerate migration away from SHA-1. ing upon the biclique pseudo-preimage attack.[33]
The SHA-2 functions were not quickly adopted initially,
despite better security than SHA-1. Reasons might in-
clude lack of support for SHA-2 on systems running Win- Ocial validation
dows XP SP2 or older[26] and a lack of perceived ur-
gency since SHA-1 collisions had not yet been found. Main article: Cryptographic Module Validation Program
The Google Chrome team announced a plan to make their
web browser gradually stop honoring SHA-1-dependent Implementations of all FIPS-approved security functions
TLS certicates over a period from late 2014 and early can be ocially validated through the CMVP program,
2015.[27][28][29] Similarly, Microsoft announced[30] that jointly run by the National Institute of Standards and
Internet Explorer and Edge would stop honouring pub- Technology (NIST) and the Communications Security
4.6. SHA-2 81
Establishment (CSE). For informal verication, a pack- := 0x428a2f98, 0x71374491, 0xb5c0fbcf, 0xe9b5dba5,
age to generate a high number of test vectors is made 0x3956c25b, 0x59f111f1, 0x923f82a4, 0xab1c5ed5,
available for download on the NIST site; the resulting ver- 0xd807aa98, 0x12835b01, 0x243185be, 0x550c7dc3,
ication, however, does not replace the formal CMVP 0x72be5d74, 0x80deb1fe, 0x9bdc06a7, 0xc19bf174,
validation, which is required by law for certain applica- 0xe49b69c1, 0xefbe4786, 0x0fc19dc6, 0x240ca1cc,
tions. 0x2de92c6f, 0x4a7484aa, 0x5cb0a9dc, 0x76f988da,
As of December 2013, there are over 1300 validated im- 0x983e5152, 0xa831c66d, 0xb00327c8, 0xbf597fc7,
plementations of SHA-256 and over 900 of SHA-512, 0xc6e00bf3, 0xd5a79147, 0x06ca6351, 0x14292967,
0x27b70a85, 0x2e1b2138, 0x4d2c6dfc, 0x53380d13,
with only 5 of them being capable of handling messages
with a length in bits not a multiple of eight while support- 0x650a7354, 0x766a0abb, 0x81c2c92e, 0x92722c85,
0xa2bfe8a1, 0xa81a664b, 0xc24b8b70, 0xc76c51a3,
ing both variants (see SHS Validation List).
0xd192e819, 0xd6990624, 0xf40e3585, 0x106aa070,
0x19a4c116, 0x1e376c08, 0x2748774c, 0x34b0bcb5,
4.6.4 Test vectors 0x391c0cb3, 0x4ed8aa4a, 0x5b9cca4f, 0x682e63,
0x748f82ee, 0x78a5636f, 0x84c87814, 0x8cc70208,
Hash values of an empty string (i.e., a zero-length input 0x90befa, 0xa4506ceb, 0xbef9a3f7, 0xc67178f2 Pre-
text). processing: begin with the original message of length L
bits append a single '1' bit append K '0' bits, where K is
SHA224("") 0x d14a028c2a3a2bc9476102bb288234c415a2b01f828ea62ac5b3e42f
the minimum number >= 0 such that L + 1 + K + 64 is
SHA256("") 0x e3b0c44298fc1c149afbf4c8996fb92427ae41e4649b934ca495991b7852b855
a multiple of 512 append L as a 64-bit big-endian inte-
SHA384("") 0x 38b060a751ac96384cd9327eb1b1e36a21fdb71114be07434c0cc7bf63f6e1da274edebfe76f65fbd51ad2f14898b95b
ger, making the total post-processed length a multiple of
SHA512("") 0x cf83e1357eefb8bdf1542850d66d8007d620e4050b5715dc83f4a921d36ce9ce47d0d13c5d85f2b08318d2877eec2f6
512 bits Process the message in successive 512-bit chunks:
SHA512/224("") 0x 6ed0dd02806fa89e25de060c19d3ac86cabb87d6a0ddd05c333b84f4
break message into 512-bit chunks for each chunk cre-
SHA512/256("") 0x c672b8d1ef56ed28ab87c3622c5114069bdd3ad7b8f9737498d0c01ecef0967a
ate a 64-entry message schedule array w[0..63] of 32-bit
Even a small change in the message will (with overwhelm- words (The initial values in w[0..63] don't matter, so many
ing probability) result in a mostly dierent hash, due to implementations zero them here) copy chunk into rst 16
the avalanche eect. For example, adding a period to the words w[0..15] of the message schedule array Extend the
end of this sentence changes almost half (111 out of 224) rst 16 words into the remaining 48 words w[16..63] of
of the bits in the hash: the message schedule array: for i from 16 to 63 s0 :=
SHA224("The quick brown fox (w[i-15] rightrotate 7) xor (w[i-15] rightrotate 18) xor
jumps over the lazy dog") 0x (w[i-15] rightshift 3) s1 := (w[i-2] rightrotate 17) xor
730e109bd7a8a32b1cb9d9a09aa2325d2430587ddbc0c38bad911525 (w[i-2] rightrotate 19) xor (w[i-2] rightshift 10) w[i] :=
SHA224("The quick brown fox w[i-16] + s0 + w[i-7] + s1 Initialize working variables to
jumps over the lazy dog.) 0x current hash value: a := h0 b := h1 c := h2 d := h3 e := h4
619cba8e8e05826e9b8c519c0a5c68f4fb653e8a3d8aa04bb2c8cd4c f := h5 g := h6 h := h7 Compression function main loop:
for i from 0 to 63 S1 := (e rightrotate 6) xor (e rightro-
tate 11) xor (e rightrotate 25) ch := (e and f) xor ((not
4.6.5 Pseudocode e) and g) temp1 := h + S1 + ch + k[i] + w[i] S0 := (a
rightrotate 2) xor (a rightrotate 13) xor (a rightrotate
Pseudocode for the SHA-256 algorithm follows. Note 22) maj := (a and b) xor (a and c) xor (b and c) temp2
the great increase in mixing between bits of the w[16..63] := S0 + maj h := g g := f f := e e := d + temp1 d := c c :=
words compared to SHA-1. b b := a a := temp1 + temp2 Add the compressed chunk
to the current hash value: h0 := h0 + a h1 := h1 + b h2 :=
Note 1: All variables are 32 bit unsigned integers and ad-
h2 + c h3 := h3 + d h4 := h4 + e h5 := h5 + f h6 := h6 +
dition is calculated modulo 232 Note 2: For each round,
g h7 := h7 + h Produce the nal hash value (big-endian):
there is one round constant k[i] and one entry in the mes-
digest := hash := h0 append h1 append h2 append h3
sage schedule array w[i], 0 i 63 Note 3: The com-
append h4 append h5 append h6 append h7
pression function uses 8 working variables, a through h
Note 4: Big-endian convention is used when expressing the The computation of the ch and maj values can be opti-
constants in this pseudocode, and when parsing message mized the same way as described for SHA-1.
block data from bytes to words, for example, the rst word SHA-224 is identical to SHA-256, except that:
of the input message abc after padding is 0x61626380
Initialize hash values: (rst 32 bits of the fractional the initial hash values h0 through h7 are dierent,
parts of the square roots of the rst 8 primes 2..19): and
h0 := 0x6a09e667 h1 := 0xbb67ae85 h2 := 0x3c6ef372
h3 := 0xa5453a h4 := 0x510e527f h5 := 0x9b05688c the output is constructed by omitting h7.
h6 := 0x1f83d9ab h7 := 0x5be0cd19 Initialize array of
round constants: (rst 32 bits of the fractional parts of SHA-224 initial hash values (in big endian): (The second
the cube roots of the rst 64 primes 2..311): k[0..63] 32 bits of the fractional parts of the square roots of the
82 CHAPTER 4. TECHNOLOGIES
4.6.6 Comparison of SHA functions Skein-512 and the SHA-2 family (PDF). IACR Cryptol-
ogy ePrint Archive. 2011:286.
In the table below, internal state means the internal hash
[2] Mario Lamberger & Florian Mendel (2011). Higher-
sum after each compression of a data block. Order Dierential Attack on Reduced SHA-256 (PDF).
Further information: MerkleDamgrd construction IACR Cryptology ePrint Archive. 2011:37.
[25] Secure Hashing. NIST. Retrieved 2010-11-25. [41] The MD5 Message-Digest Algorithm. Retrieved 2016-
04-18. In the unlikely event that b is greater than 2^64,
[26] Microsoft Corporation,Overview of Windows XP Service then only the low-order 64 bits of b are used.
Pack 3
[42] Announcing the rst SHA1 collision. Retrieved 2017-
[27] Chromium Blog, September 5, 2014, Gradually sunset- 02-23.
ting SHA-1
[43] The Sponge Functions Corner. Retrieved 2016-01-27.
[28] Eric Mill. SHAAAAAAAAAAAAA.
SHAAAAAAAAAAAAA.com. [44] The Keccak sponge function family. Retrieved 2016-
01-27.
[29] Filippo Valsorda, The Unocial Chrome SHA1 Depre-
cation FAQ [45] SUPERCOP Benchmarks Measurements of hash func-
tions, indexed by machine
[30] An update to our SHA-1 deprecation roadmap -
Microsoft Edge Dev BlogMicrosoft Edge Dev Blog. [46] SUPERCOP. Retrieved 24 February 2015.
blogs.windows.com. Retrieved 2016-11-28.
[34] Somitra Kumar Sanadhya & Palash Sarkar (2008). New 4.6.9 External links
Collision Attacks Against Up To 24-step SHA-2 (PDF).
IACR Cryptology ePrint Archive. 2008:270. Descriptions of SHA-256, SHA-384, and SHA-512
from NIST
[35] Kazumaro Aoki; Jian Guo; Krystian Matusiewicz; Yu
Sasaki & Lei Wang (2009). Preimages for step-reduced SHA-2 Checker SHAChecker check your SSL
SHA-2. Advances in Cryptology - ASIACRYPT 2009. compatibility for SHA-2.
Lecture Notes in Computer Science. Springer Berlin Hei-
delberg. 5912: 578597. ISBN 978-3-642-10366-7. Specications for a Secure Hash Standard (SHS)
ISSN 0302-9743. doi:10.1007/978-3-642-10366-7_34. Draft for proposed SHS (SHA-0)
[36] Jian Guo; San Ling; Christian Rechberger & Huaxiong Secure Hash Standard (SHS) Proposed SHS
Wang (2010). Advanced meet-in-the-middle preimage (SHA-0)
attacks: First results on full Tiger, and improved results
on MD4 and SHA-2 (PDF). Advances in Cryptology - CSRC Cryptographic Toolkit Ocial NIST site
ASIACRYPT 2010. Lecture Notes in Computer Science. for the Secure Hash Standard
Springer Berlin Heidelberg. 6477: 5675. ISBN 978-
3-642-17373-8. ISSN 0302-9743. doi:10.1007/978-3-
FIPS PUB 180-4: Secure Hash Standard (SHS)
642-17373-8_4. (PDF, 1.7 MB) Current version of the Secure Hash
Standard (SHA-1, SHA-224, SHA-256, SHA-384,
[37] Florian Mendel; Tomislav Nad; Martin Schler (2013). and SHA-512), March 2012
Improving Local Collisions: New Attacks on Reduced
SHA-256. Advances in Cryptology EUROCRYPT 2013. Test vectors for SHA-256/384/512 from the
Lecture Notes in Computer Science. Springer Berlin Hei- NESSIE project
delberg. 7881: 262278. ISBN 978-3-642-38348-9.
ISSN 0302-9743. doi:10.1007/978-3-642-38348-9_16. Test vectors for SHA-1, SHA-2 from NIST site
[38] Maria Eichlseder and Florian Mendel and Martin Schlf- NIST Cryptographic Hash Project SHA-3 competi-
fer (2014). Branching Heuristics in Dierential Colli- tion
sion Search with Applications to SHA-512 (PDF). IACR
RFC 3874: A 224-bit One-way Hash Function:
Cryptology ePrint Archive. 2014:302.
SHA-224.
[39] Christoph Dobraunig; Maria Eichlseder & Florian Mendel
(2016). Analysis of SHA-512/224 and SHA-512/256 RFC 6234: US Secure Hash Algorithms SHA and
(PDF). SHA-based HMAC and HKDF. Contains sample C
implementation.
[40] http://bench.cr.yp.to/results-hash.html#amd64-skylake
Chapter 5
Exchanges
ANX INTERNATIONAL (formerly known as Asia Launched in May 2016,[14] ANX Blockchain Services is
Nexgen[1] ) is a Hong Kong-based nancial technology a cloud platform built on blockchain technology, which
company that provides solutions based on blockchain can be implemented across a wide range of industries.[15]
technology. The company serves over 3 million users in It is a self-service platform for users to create digital as-
more than 50 countries and has processed over 100 mil- sets, digital wallets, and branded exchange platforms.[16]
lion transactions since its establishment.[2] In 2016, ANX Potential applications include loyalty programs, payment
launched ANX Blockchain Services (ABS), which is a applications, token systems, voucher systems, coupon ap-
cloud platform for customers to generate digital assets, plications, registry systems and more. ABS requires no
digital wallets, and branded exchange platforms.[3] software installation and is free to use.[17] Users can cre-
ate unique customised digital assets to suit their business
needs and determine how many digital assets to create.[18]
Digital wallets and exchange platforms can be customised
with company logo, colour scheme, and personalised con-
5.1.1 Company Growth tent, allowing digital assets to be sent and received within
the network.[3] Added-on managed services are also avail-
ANX International was founded in 2013 by Ken Lo, Dave able for ABS users.
Chapman and Hugh Madden. Lo now serves as Chief Ex-
ecutive Ocer, Chapman serves as Chief Operating Of-
cer, and Madden serves as Chief Technology Ocer.[2]
Digital Assets White Label Solutions
In February 2014, the company launched the worlds rst
digital assets physical retail store in Sai Ying Pun, Hong Digital Assets White Label Solutions include technical
Kong,[4][5] allowing buyers to walk into the store, pay cash development, infrastructure hosting, maintenance and se-
and send digital assets to their virtual wallets instead of curity, customer support, payment processing, distribu-
buying with credit cards on online exchanges.[6][7] tion, and regulatory compliance.[19] ANX provides digital
In March 2014, ANX International announced the launch assets exchange setup, coin development, API for custom
of digital asset ATMs,[8] which were the rst digital asset digital assets, mobile app and wallet services.
ATMs in Hong Kong.[9] The machines accept deposits of
Hong Kong dollars in exchange for digital assets.
In July 2014, ANX introduced one of the rst digital asset ANXPRO
debit cards that can be used worldwide at any merchant
that support the respective payment networks.[10][11] To ANX operates a digital assets exchange platform called
remedy the situation of digital assets not being widely ac- ANXPRO.[20] It originated from ANXBTC and is de-
cepted, ANX merged digital assets with traditional card signed for experienced digital assets traders, specialis-
payments.[12] Users can reload funds to the debit cards ing in Altcoins, Algos and Performance. The order en-
with digital assets and the card can then be used for both gine delivers pre-scan pricing and users can choose to
online and Point of Sale purchases, as well as withdrawals either x the quantity of digital assets or x the price
through the Global AT&T Network.[13] paid for every order. The trading platform is modelled
on the same LMAX/disruptor pattern leveraged by the
worlds largest investment banks. It also features one con-
solidated shared order book for blended multi-currency
5.1.2 Major Products and Services settlement in addition to real time FX pricing and risk
management.[21]
85
86 CHAPTER 5. EXCHANGES
ANX Vault App platforms transactions between digital assets and at cur-
rencies in the US, Canada and the European Union.[35]
In April 2014, ANX Vault App was launched on the App In January 2015, ANX added Black Gold Coin,[36]
Store[22] and Google Play Store.[23] Users can login their which was launched by National Aten Coin.[37] Clients
ANXPRO account via a mobile interface using the app. in National Aten Coin (NAC) will have instant access to
It features high security encryption, one-time passwords, ANXPROs UI, shared order book for multi-currency set-
and send privilege controls. The app relies on industrial tlement, real time FX pricing, deposit options and risk
strength security standards, including a three-factor au- management and trading tools.[38]
thentication optical. It supports major at currencies and
digital assets.[24] All customer funds are held in cold stor- In October 2016, ANX became one of the rst join-
age for protection against hackers.[25] ANX works with a ers of the Multichain partner program for blockchain
leading provider of DDoS protection services, and multi- developers, along with Accenture, D+H, Mphasis and
rewall protection is also implemented into services. All more.[39][40] The program is designed to foster the re-
servers are hosted in a Tier 3 compliant data centre.[1] lationship between Multichain and the growing num-
ber of IT consulting companies and blockchain solution
providers building on the platform.[41]
Payment Solutions
ANX Payment Solutions oer transaction acquiring ser- 5.1.5 Awards and Recognitions
vices and digital asset debit card payout solutions.[26]
ANX is one of the rst digital assets exchanges in Hong 2015
Kong to ocially be issued the Money Services Opera-
Hong Kongs Most Valuable Companies Award[42]
tor (MSO) license,[27] providing day-to-day foreign ex-
change services for worldwide markets.
2016
The Payment Processing specialist Vogogo signed an [8] Three companies set to launch bitcoin ATMs in Hong
agreement with ANXPRO and The Rock Trading Com- Kong within days. South China Morning Post. Retrieved
2017-01-25.
pany of Malta, a Maltese-based exchanges, in December
2014.[33] Rock Trading and ANXPRO will be integrated [9] Justice, Adam (2014-03-13). Hong Kong Company
with Vogogos payment processing and risk management Launches Citys First Bitcoin ATM. International Busi-
platform,[34] enabling each to oer users their respective ness Times UK. Retrieved 2017-01-25.
5.2. BITINSTANT 87
[10] Hong Kong Exchange ANX Launches Bitcoin Debit [31] Honk Kong Bitcoin Exchange ANX Acquires Coin-
Card. CoinDesk. July 15, 2014. Retrieved May 30, MKT. NEWSBTC. 2015-01-27. Retrieved 2017-01-26.
2015.
[32] Hong Kong Exchange ANX Chases US Market with
[11] ANX Issues Worlds First Bitcoin Debit Card. CoinMKT Acquisition. CoinDesk. 2015-01-27. Re-
CoinTelegraph. July 13, 2014. Retrieved May 30, 2015. trieved 2017-01-26.
[12] ANX Issues Worlds First Bitcoin Debit Card. Coin- [33] Bitcoin Exchanges ANXPro and Rock Trading Integrate
Telegraph. 13 July 2014. Retrieved 1 June 2015. with Vogogo. MarketWatch. Retrieved 2017-01-26.
[13] Keiser Report: (Dis-)harmony with Cash (E702)".
[34] Vogogo to Handle Payments for ANXPro, the Rock
Youtube. RT Keiser Report. Retrieved 1 June 2015.
Trading Company | Finance Magnates. Finance Mag-
[14] ANX Launches The Worlds First Free and Instant Ac- nates | Financial and business news. 2014-12-07. Re-
cess to Blockchain Applications - Press Release. Coin- trieved 2017-01-26.
Desk. Retrieved 2017-01-25.
[35] Bitcoin Exchanges ANXPro and Rock Trading Integrate
[15] ANX launches free instant access to blockchain appli- with Vogogo. Marketwired. 2014-12-05. Retrieved
cations | Computerworld Hong Kong. Computerworld 2017-01-27.
Hong Kong. Retrieved 2017-01-25.
[36] ANXPRO Exchange To Include Aten Black Gold Coin
[16] ANX Launches The Worlds First Free and Instant Ac- In 2015 | Business Wire. www.businesswire.com. Re-
cess to Blockchain Applications. Retrieved 2017-01-25. trieved 2017-01-26.
[17] Kastelein, Richard (2016-05-18). Hong Kongs ANX In- [37] ""Anti-Money Laundering Coin to Become Available for
ternational to launch Free, Instant Blockchain Service. Trade on ANXPRO | Finance Magnates. Finance Mag-
Blockchain News. Retrieved 2017-01-25. nates | Financial and business news. 2015-01-27. Re-
[18] Startup Touts Blockchain Exchange Thats as Simple as trieved 2017-01-26.
E-Mail. Bloomberg. 2016-05-17. Retrieved 2017-01-
[38] ANXPRO Exchange To Include Aten Black Gold Coin
25.
In 2015. Retrieved 2017-01-26.
[19] White Label | ANX INTERNATIONAL. anxintl.com.
Retrieved 2017-01-25. [39] First MultiChain Partners Announced | MultiChain.
www.multichain.com. Retrieved 2017-01-26.
[20] Homepage. anxpro.com. Retrieved 2017-01-26.
[40] MultiChain Platform Partners | MultiChain. www.
[21] About ANXPRO. anxpro.com. Retrieved 2017-01-26. multichain.com. Retrieved 2017-01-26.
[22] ANX Vault: Your Bitcoin Wallet on the App Store. App [41] Kastelein, Richard (2016-10-27). First MultiChain Part-
Store. Retrieved 2017-01-25. ners Announced. Blockchain News. Retrieved 2017-01-
[23] ANX Vault: Your Bitcoin Wallet - Android Apps on 26.
Google Play. Google Play Store. Retrieved 2017-01-25.
[42] ANX International Oers Front-To-Back Solutions That
[24] Millet, Author Jonathan (2014-07-29). ANX Vault App Can Make Working With Bitcoin Easier. CoinTelegraph.
For iOS Enables Send/Receive Functionality. NEWS- Retrieved 2017-01-26.
BTC. Retrieved 2017-01-25.
[43] Banking Special | September Issue | ESoutlook Magazine
[25] How to prevent bitcoin hacking. CNBC. Retrieved 1. www.esoutlook.com. Retrieved 2017-01-26.
2017-01-25.
[44] UKTI Hong Kong FinTech Awards 2016 (PDF). Re-
[26] Payment Solutions | ANX INTERNATIONAL. anx- trieved 2016-01-27.
intl.com. Retrieved 2017-01-26.
[45] Top 12 Fintech Startups in Hong Kong. Fintech Hong
[27] Search Licensee Register List - Money Service Opera- Kong. 2016-11-04. Retrieved 2017-01-26.
tors Licensing System -Money Service Operators Licens-
ing System. Customs and Excise Department (in Chi-
nese). Archived from the original on 2015-06-30. Re-
trieved 2017-01-26. 5.2 BitInstant
[28] Next Commerce Solutions | ANX INTERNATIONAL.
anxintl.com. Retrieved 2017-01-26. BitInstant was a bitcoin exchange start-up based in New
York City.[1][2] Founded in 2011 by Gareth Nelson and
[29] Justcoin Rights Acquired by ANX Hong Kong Bitcoin Charlie Shrem, BitInstant provided a means to rapidly
Company. CryptoCoinsNews. 2014-11-21. Retrieved
pay traditional funds to bitcoin exchanges.[3] As of Jan-
2017-01-26.
uary 2014, BitInstants website is no longer available, dis-
[1]
[30] ANX Acquires Justcoin, Incorporates Platform within a playing only a blank page. Its blog was unavailable as
Week. CoinTelegraph. Retrieved 2017-01-26. of October 31, 2014.
88 CHAPTER 5. EXCHANGES
In June 2013, BitInstant announced integration with [6] Roose, Kevin (8 April 2013). Inside the Bitcoin Bubble:
Jumio, an online payment company led by Daniel Mat- A Q&A With BitInstants Stressed-Out CEO. New York
tes. Jumios Netverify software allows BitInstant to ver- Magazine. Retrieved 11 July 2013.
ify customers identity.[8] BitInstant also restricted bitcoin [7] Gilson, David (8 July 2013). BitInstant to partner up with
transactions in some states, stating that We have tem- Winklevoss twins bitcoin fund. CoinDesk. Archived
porarily limited transactions in some locations, and we from the original on 20 February 2014. Retrieved 11 July
apologize for the inconvenience. We believe that these 2013.
measures are vital to serving the interests of both BitIn-
stant and the greater bitcoin community..[9] [8] Jumio June 13, 2013 8:00 AM (2013-06-13). Bitcoin
Purchase Platform BitInstant Integrates Jumios Netver-
In July 2013, BitInstant suspended services, saying it ify to Speed Transactions and Reduce Fraud - Yahoo Fi-
wanted to improve the code based on trends they no- nance. Finance.yahoo.com. Retrieved 2014-01-07.
ticed in nearly 17,300 customer service complaints.[10]
[9] Squarespace - Account Not Available.
Several days earlier, a class action lawsuit had been led
Blog.bitinstant.com. Archived from the original on
on behalf of customers, claiming failure to perform ser-
2014-01-08. Retrieved 2014-01-07.
vices and false representation.[11]
On January 27, 2014, company CEO Charlie Shrem was [10] BitInstant website. 15 July 2013. Archived from the
original on 5 October 2013. Retrieved 29 July 2013.
arrested at New Yorks JFK airport and charged with
conspiring to commit money laundering by selling more [11] Iacono et al. v. BitInstant LLC, Case 1:13-cv-04674-CM
than $1 million in bitcoins to users of the black mar- (S.D.N.Y. 8 July 2013).
ket website Silk Road....[12] BitInstant website has been
[12] Bitcoin Operators Charged in Illicit Drug Site Bust. As-
blank since then.
sociated Press. Retrieved 27 January 2014.
BitInstant received many complaints from customers con- [14] Sidel, Robin (25 June 2013). States Put Heat on Bitcoin.
cerning transaction processing delays sometimes of sev- The Wall Street Journal. Retrieved 11 July 2013.
eral days.[6][13] In response to complaints, BitInstant CTO
Gareth Nelson stated that we are all stressing out and
working day and night (literally) to get things xed and 5.3 Bitstamp
hope to have a proper resolution for the backlogged
orders.[13] Bitstamp is a bitcoin exchange based in Luxembourg.
The New York State Department of Financial Ser- As of 2016 it was the worlds second largest by volume.[2]
vices issued a warning letter to BitInstant, asking it to It allows trading between USD currency and bitcoin
5.3. BITSTAMP 89
5.4 BTC-e while vacationing with his family in Greece and is cur-
rently awaiting extradition to the US. These events led to
[10][11]
BTC-e was a digital currency trading platform and the temporary suspension of the BTC-e service.
exchange.[1][2] It was founded in July 2011 and as of On the 28th of July 2017, US authorities seized the BTC-
February 2015 handled around 2.5% of all Bitcoin ex- e.com domain name.
change volume.[3] Until 25 July 2017, it allowed trad-
BTC-e posted on 31st July 2017 that Alexander Vinnik
ing between the U. S. dollar, Russian ruble and euro
was never the operator or employee of BTC-e and that
currencies, and the bitcoin, litecoin, namecoin, novacoin,
they would be back working within a month or would put
peercoin, dash and ethereum cryptocurrencies.
facilities in place to return funds and coins to users.[12]
It has been a component of the CoinDesk Bitcoin Price
Index since the index started in September 2013.[4]
5.4.2 References
BTC-e is operated by ALWAYS EFFICIENT LLP,[5]
which is registered in London and is listed as having 2 [1] Benjamin Guttmann (2014). The Bitcoin Bible Gold
ocers: Sandra Gina Esparon and Evaline Sophie Jou- Edition. Books on Demand. pp. 175176. ISBN
bert and two people with signicant control: Alexander 9783732296965.
Buyanov and Andrii Shvets.[6]
[2] Russian National And Bitcoin Exchange Charged In 21-
The US Justice Dept attempted to close down BTC-e Count Indictment For Operating Alleged International
on 7/26/2017 when they charged Alexander Vinnik and Money Laundering Scheme And Allegedly Laundering
BTC-e in a 21-count indictment for operating alleged in- Funds From Hack Of Mt. Gox.
ternational money laundering scheme and allegedly laun- [3] Bitcoin Exchanges Market Share. Bitcoinity. Retrieved
dering funds from the hack of Mt. Gox[2][7] . 2015-02-10.
[4] Del Rey, Jason (September 11, 2013). Whats a Bitcoin
5.4.1 History Really Worth? CoinDesk Thinks It Has the Answer.. All
Things D.
[5] https://btc-e.com/page/1. Missing or empty |title= (help)
[6] ALWAYS EFFICIENT LLP - Overview.
[7] Vinnik Superseding Indictment Redacted for U.S. Dis-
trict Court Northern District of California San Francisco
Division Case No CR 16-00227 SI.
[8] BTC-e (2011-10-25). Start trading on a pairs of
BTC/RUB, LTC/USD, RUC/RUB, USD/RUB!". Re-
trieved 2015-11-20.
[9] Jonathon Millet @ NewsBTC. BTC-e Reports DDOS
Attack Against Their Server.
[10] Russian National And Bitcoin Exchange Charged In 21-
Count Indictment For Operating Alleged International
Money Laundering Scheme And Allegedly Laundering
BTC-e Domain Seized by U.S. Law Enforcement Funds From Hack Of Mt. Gox.
[11] Russian wanted in US caught in Greece for money laun-
BTC-e started in July 2011, handling just a few coin pairs, dering. The Daily Star Newspaper - Lebanon. 2017-07-
including Bitcoin/U. S. dollar and I0Coin to Bitcoin. By 26. Retrieved 2017-07-28.
October 2011, they supported many dierent currency
[12] Jamie Redman @ Bitcoin.com. BTC-e on Refunds, the
pairs, including Litecoin to dollars, Bitcoin to rubles and FBI and Alexander Vinnik.
RuCoin to rubles.[8]
During 2013 and 2014, BTC-e had many outages related
to Distributed Denial of Service attacks.[9] They later be- 5.5 BTC China
gan using the reverse proxy service CloudFlare to help
mitigate these attacks, reducing downtime for the ex- BTCChina (now BTCC), based in Shanghai, is the
change. worlds second largest bitcoin exchange by volume as
The BTC-e website is oine since 25 July 2017, follow- of October 2014.[1] Founded in June 2011, it was the
ing the arrest of BTC-e sta members and the seizure of Chinas rst bitcoin exchange, and most of its customers
server equipment at one of their data centres. In addition, are thought to be Chinese.[2] In November 2013, the com-
suspected BTC-e operator Alexander Vinnik was arrested pany had grown to 20 employees.[2]
5.6. BUTTERCOIN 91
Company CEO Bobby Lee approached the then two- Buttercoin was a private American start-up company
person company in early 2013, and after investing his that provided digital currency exchange services to the
own money and attracting investors, oversaw the com- US.[2][3] Specically, Buttercoin operated a full order
panys rapid expansion and marketshare growth by the book trading platform for buying and selling bitcoins.
end of the year.[2] The Stanford computer science gradu-
ate, whose brother founded the cryptocurrency Litecoin, On April 6, 2015, citing a loss of interest in bitcoin from
previously worked for Yahoo! in the United States, and venture capital rms, the company announced that it was
for Walmart China as Vice President of Technology.[2] shutting down as of April 10, 2015.[5]
In November 2013, BTCChina raised $5 million in Series
A funding from investors Lightspeed China Partners and
Lightspeed Venture Partners.[3]
5.6.1 Funding
On 18 December 2013, BTCChina announced that it was Y Combinator, Google Ventures (Kevin Rose and Chris
temporarily suspending acceptance of Chinese yuan de- Hutchins), Floodgate, Initialized Capital, Rothenberg
posits, attributing the decision to government regulations, Ventures, and Reddit co-founder Alexis Ohanian in-
following a 5 December statement from the Peoples vested approximately $1 million into Buttercoin.[1][4] A
Bank of China (PBOC).[4] On 30 January 2014, the Swiss company, Centralway Ventures, invested an addi-
exchange resumed accepting yuan deposits, after fur- tional $250,000 into Buttercoin.[3] Combined with other
ther studying the PBOC statement and other rules.[5] sources, Buttercoin raised a total of $1.6 million as of
While the PBOC prohibited banks from trading in Bit- September 2013.[3] Subsequently, Buttercoin raised an
coin, BTCChina explained that they were accepting yuan undisclosed sum from Wedbush Securities, making it the
into their corporate bank account, and transferring that rst bitcoin company to receive investment from a large
money to their customer accounts, before it was traded Wall Street institution. [6]
for bitcoins.[5]
5.6.2 References
5.5.2 References
[1] Cutler, Kim-Mai (August 20, 2013). YC-Backed Butter-
[1] Bitcoin Market. Bitcoin Charts. Retrieved October 10, coin Uses Bitcoin To Attack The $500B-A-Year Remit-
2014. tances Economy. TechCrunch. Retrieved November 30,
2013.
[2] Hill, Kashmir (2013-11-08). From Walmart To Bitcoin:
The CEO Behind The Chinese Exchange Sending BTC
[2] Reutzel, Bailey (September 9, 2013). Buttercoin Takes
To New Highs. Forbes. Retrieved 2013-11-08.
a Dierent Path to Handling Virtual Currency. Pay-
[3] Lomas, Natasha (2013-11-18). As Chinese Investors mentsSource. Retrieved November 30, 2013.
Pile Into Bitcoin, Chinas Oldest Exchange, BTCChina,
Raises $5M From Lightspeed. TechCrunch. Retrieved [3] Lomas, Natasha (September 18, 2013). Swiss Company-
2014-02-21. Builder Centralway Opens $50M Fund, Invests $250k In
Bitcoin Whitelabel Exchange Buttercoin. TechCrunch.
[4] Rose, Adam (2013-12-18). China tightens curbs on bit- Retrieved December 1, 2013.
coin trade. Reuters since major stack holder from India
smcapl . Retrieved 2014-02-21. [4] Kolodny, Lora (August 19, 2013). International Bit-
coin Exchange Buttercoin Raises $1M to Revamp Re-
[5] Casey, Michael J. (2014-01-31). China Bitcoin ex- mittance. VentureWire. Retrieved November 30, 2013.
change restores deposit facility. The Wall Street Journal. (Subscription required (help)).
Retrieved 2014-03-03.
[5] Russell, Jon (April 6, 2015). Google Ventures-
Backed Bitcoin Exchange Buttercoin Is Shutting Down.
5.5.3 External links TechCrunch. Retrieved April 6, 2015.
Ocial site [6] Kharif, Olga (November 17, 2014). Bitcoin Startup But-
tercoin Draws Wedbush as Investor. "Bloomberg". Re-
trieved December 9, 2014.
5.6 Buttercoin
5.6.3 External links
Warning: Page using Template:Infobox company with
unknown parameter Former type (this message is Buttercoin Ocial website
92 CHAPTER 5. EXCHANGES
[7] Global Coinbase. Retrieved 2017-05-05. [27] Cox, Joseph (5 May 2015). Coinbase accused to spying
on a Dark Net researcher. The Daily Dot.
[8] Coinbase - Your Hosted Bitcoin Wallet. Coinbase. Re-
trieved 30 November 2015. [28] Coinbase to Shutdown CAD Services to Canadian Cus-
tomers - CCN: Financial Bitcoin & Cryptocurrency
[9] Fowler, Georey A. (2014-02-18). Bitcoin experiment News. cryptocoinsnews.com. 8 July 2016. Retrieved 23
in everyday life. The Wall Street Journal. Retrieved July 2016.
2014-02-25.
[29] Top 100 Blockchain Organisations: From CoinDesk to
[10] Fung, Brian. Expedia wants you to book your next hotel BitPay, These Are the Most Inuential Organisations in
stay with Bitcoin. The Washington Post. Retrieved 1 July the Distributed Ledger Space. Richtopia. Retrieved 21
2014. May 2016.
[11] Ember, Sydney (2014-09-10). Coinbase Extends Bitcoin [30] Blockchain Organisations Top 100. Blockchain Age.
Access to International Customers. The New York Times. Retrieved 3 June 2016.
Retrieved 10 October 2014.
[31] GDAX - Trusted Digital Asset Exchange. Retrieved
[12] Dish Network Says It Will Accept Bitcoin. The New 2017-06-07.
York Times. Retrieved 1 July 2014.
[32] Shin, Laura (2016-05-20). Digital Currencies Show Po-
[13] Ludwig, Sean (2013-02-08). Y Combinator-backed tential To Be New Asset Class As Demand For Bitcoin
Coinbase now selling over $1M Bitcoins per month. Rival Ethereum Rises. forbes.com. Retrieved 23 July
2016.
[14] Sarah E. Needleman (2013-05-07). Coinbase Nabs $5M
[33] Tepper, Fitz (2016-07-21). Coinbase is adding support
in Biggest Funding for Bitcoin Startup. The Wall Street
for Ethereum. techcrunch.com. Retrieved 23 July 2016.
Journal. Retrieved 10 October 2014.
[34] Suarez, Juan (2017-01-17). Coinbase obtains the Bitli-
[15] Alex Williams (2013-12-12). Coinbase Raises $25M
cense. Retrieved 10 June 2017.
Led By Andreessen Horowitz To Build Its Bitcoin Wallet
And Merchant Services. TechCrunch. Retrieved 2013- [35] DFS authorizes Coinbase, Inc. to provide additional vir-
12-13. tual currency products and services. 2017-03-22.
[16] Cutler, Kim-Mai (2014-05-06). Coinbase Acquires YC- [36] Reisinger, Don (2014-09-11). Bitcoin platform Coin-
Backed Kippt To Beef Up Its Product, Design Talent. base expands to 13 European countries.
[17] Cutler, Kim-Mai (2014-08-18). Coinbase Acquires [37] Coinbase Exchange Documentation. 2015-01-26.
Blockchain Explorer Blockr.io.
[7] Huobi emerges as leading bitcoin platform in China. same month, LocalBitcoins suered from a security
wantchinatimes.com. Archived from the original on 2015- breach, when 30 bitcoins (then worth US$15k) were
08-02. stolen from its users.[9]
In December 2014, the Federal Financial Supervisory
Authority of Germany contacted LocalBitcoins about li-
5.9 ItBit censing issues, and LocalBitcoins ceased to operate in
Germany.[10] LocalBitcoins said that it had about 8000
itBit is a nancial services company that oers a suite people actively using the service from Germany at the
of bitcoin trading services, including a global bitcoin ex- time.[10]
change and over-the-counter (OTC) trading desk. The
In February 2014, two men from Florida were charged
company launched in November 2013.
with violating state money laundering laws for using
In May 2015, itBit received a trust charter [1] from the LocalBitcoins.[11] In April 2016, another two men from
New York State Department of Financial Services (DFS) Louisiana, United States, a former chiropractor and his
and became the rst company to operate a regulated bit- son, pleaded guilty to funneling money through an un-
coin exchange in the United States. lawful Bitcoin nancial scheme. The men were using Lo-
[12]
itBit received more than US$5 million in venture capi- calBitcoins to advertise their services.
tal [2] from Canaan Partners, RRE Ventures, Liberty City In August 2015, LocalBitcoins ceased to operate in New
Ventures, and angel investors Jay W. Jordan II and Ben York state because sellers would have to purchase a
Davenport in their initial funding round. itBits Series BitLicense from the New York State Department of Fi-
A round raised $25 million from RRE Ventures, Liberty nancial Services to remain in compliance with local nan-
City Ventures and others. cial regulations.[13]
The company is headquartered in New York with an in- In August 2016, LocalBitcoins said that 1.35 million peo-
ternational oce in Singapore. ple from 249 countries were using its platform, and that
the weekly volume of transactions was US$14 million.[3]
LocalBitcoins is a bitcoin startup company based in [1] Knibbs, Kate (2015-02-05). Meet the Street Dealers
Helsinki, Finland. Its service facilitates over-the-counter Who Peddle Bitcoin. Gizmodo. Archived from the orig-
trading of local currency for bitcoins.[5] Users post ad- inal on 2016-12-30. Retrieved 2016-12-30.
vertisements on the website, where they state exchange
rates and payment methods for buying or selling bitcoins. [2] LocalBitcoins | CrunchBase Prole. CrunchBase. Re-
trieved 2014-02-19.
Other users reply to these advertisements and agree to
meet the person to buy bitcoins with cash[6] or pay with
[3] Leung, Angus (2016-09-16). Russia Blocks Finnish Bit-
online banking. LocalBitcoins has a reputation and feed- coin Exchange, Reasons Not Explained. CoinTelegraph.
back mechanism for users and an escrow and conict- Archived from the original on 2017-01-03. Retrieved
resolution service. As of December 2013, LocalBitcoins 2017-01-03.
has around 110,000 active traders with a trade volume of
14003000 bitcoins per day.[7] [4] Pineda, Marco (2014-07-14). Exclusive Interview With
Founder of LocalBitcoins.com - Jeremias Kangas. Bit-
coinist. Archived from the original on 2017-01-03. Re-
5.10.1 History trieved 2017-01-03.
LocalBitcoins was founded in June 2012 by Jeremias [5] McMillan, Robert (2013-03-28). Why the Only Real
Kangas. He implemented an escrow system for the mar- Way to Buy Bitcoins Is on the Streets | Wired Enterprise.
ketplace by the end of 2012. The website started gener- Wired. Cond Nast. Retrieved 2014-02-19.
ating revenue by early 2013.[4]
[6] Murphy, Kate (July 31, 2013). Virtual Currency Gains
In April 2014, the company announced that it would Ground in Actual World. New York Times. Retrieved
begin mass-producing low-cost bitcoin ATMs.[8] In the February 20, 2014.
5.11. MT. GOX 95
[7] Lemarchand, Rafael (2013-12-06). Helsinkis LocalBit- Mt. Gox announced that approximately 850,000 bit-
coins Hits Up To 3 Million A Day In Exchanges. Arc- coins belonging to customers and the company were miss-
ticStartup. Retrieved 2014-02-19. ing and likely stolen, an amount valued at more than
$450 million at the time.[9][10] Although 200,000 bit-
[8] Joon Ian Wong (2014-02-15). LocalBitcoins Starts Man-
ufacturing Low-Cost Bitcoin ATM. CoinDesk. Re-
coins have since been found, the reason(s) for the
trieved 2014-02-19. disappearancetheft, fraud, mismanagement, or a com-
bination of thesewere initially unclear. New evidence
[9] Berkman, Fran (2014-04-17). LocalBitcoins exchange presented in April 2015 by Tokyo security company Wiz-
conrms security breach, stolen bitcoins. The Daily Dot. Sec led them to conclude that most or all of the missing
Archived from the original on 2016-12-30. Retrieved bitcoins were stolen straight out of the Mt. Gox hot wallet
2016-12-30. over time, beginning in late 2011.[11][12]
[10] Rizzo, Pete (2014-12-10). LocalBitcoins 'Exploring
Options After Service Halt in Germany. CoinDesk.
Archived from the original on 2016-04-10. Retrieved
5.11.1 Founding (2006-10)
2017-01-03.
In late 2006, programmer Jed McCaleb (eDonkey2000,
[11] LocalBitcoins.com Targeted - Another Major Bitcoin Overnet1, Ripple, Stellar) thought of building a website
Exchange May Be Under Threat. Business Insider. 2014- for users of the Magic: The Gathering Online fantasy-
02-09. Retrieved 2014-02-19. based card game service, to let them trade Magic:
The Gathering Online cards like stocks.[13][14][4] In
[12] Elliot Maras (2016-05-23). Arrests And Prosecutions
Reveal Big Vagaries In Bitcoin Selling Regulations.
January 2007, he purchased the domain name mt-
CryptoCoinsNews. Retrieved 2016-05-23. gox.com, short for Magic: The Gathering On-
line eXchange.[15][16][17][18] Initially in beta release,[19]
[13] Young, Joseph (2015-08-25). BitQuick and Local Bit- sometime around late 2007, the service went live for ap-
coins Terminate Service in NY due to BitLicense Compli- proximately three months before McCaleb moved on to
ance Costs. Bitcoin Magazine. Archived from the origi- other projects, having decided it was not worth his time.
nal on 2016-05-21. Retrieved 2017-01-03. He reused the domain name in 2009 to advertise his card
[20]
[14] Redman, Jamie (2016-09-12). Russian Authorities Ban game The Far Wilds.
LocalBitcoins, Contradicting Previous Statements. Bit- In July 2010, McCaleb read about bitcoin on Slashdot,[21]
coin.com. Saint Bitts. Archived from the original on and decided that the bitcoin community needed an ex-
2016-09-12. Retrieved 2017-01-03. change for trading bitcoin and regular currencies. After
[15] Das, Samburaj (2016-09-13). Russia Blocks Access to writing an exchange website, he launched it while reusing
Bitcoin P2P Exchange LocalBitcoins. CryptoCoinsNews. the spare mtgox.com domain name.[14] On July 18, Mt.
Archived from the original on 2016-09-14. Gox launched its exchange and price quoting service de-
ploying it on the spare mtgox.com domain name.[14][22]
[16] Mizrahi, Avi (2016-09-13). Russias National Censor
Blocks Access to LocalBitcoins. LocalBitcoins responded
to the ban by instructing Russian users on how to bypass 5.11.2 Security breach and invalid ad-
the censorship.. Finance Magnates. Archived from the dresses (2011)
original on 2016-12-30. Retrieved 2016-12-30.
McCaleb sold the site to French developer Mark
Karpels, who was living in Japan, in March 2011, say-
5.10.3 External links
ing to really make mtgox what it has the potential to be
Ocial website would require more time than I have right now. So Ive
decided to pass the torch to someone better able to take
the site to the next level.[23][4]
5.11 Mt. Gox On 19 June 2011, a security breach of the Mt. Gox
bitcoin exchange caused the nominal price of a bitcoin
to fraudulently drop to one cent on the Mt. Gox ex-
Mt. Gox was a bitcoin exchange based in Shibuya, change, after a hacker allegedly used credentials from
Tokyo, Japan.[1] Launched in July 2010, by 2013 and a Mt. Gox auditors compromised computer to trans-
into 2014 it was handling over 70% of all bitcoin transac- fer a large number of bitcoins illegally to himself. He
tions worldwide, as the largest bitcoin intermediary and used the exchanges software to sell them all nominally,
the worlds leading bitcoin exchange.[2][3][4][5] creating a massive "ask" order at any price. Within
In February 2014, Mt. Gox suspended trading, closed its minutes the price corrected to its correct user-traded
website and exchange service, and led for bankruptcy value.[24][25][26][27][28][29] Accounts with the equivalent of
protection from creditors.[6][7] In April 2014, the com- more than $8,750,000 were aected.[26] In order to prove
pany began liquidation proceedings.[8] that Mt. Gox still had control of the coins, the move of
96 CHAPTER 5. EXCHANGES
5.11.4 Withdrawals halted; trading sus- Six other major bitcoin exchanges released a joint state-
pended; bitcoin missing (2014) ment distancing themselves from Mt. Gox, shortly before
Mt. Goxs website went oine.[63][64]
On 25 February 2014, Mt. Gox reported on its website
Customer complaints about long delays were mounting as that a decision was taken to close all transactions for the
of February 2014, with more than 3,300 posts in a thread time being, citing recent news reports and the potential
about the topic on the Bitcoin Talk online forum.[46] repercussions on Mt Goxs operations. Chief executive
Mark Karpels told Reuters that Mt. Gox was at a turn-
On 7 February 2014, Mt. Gox halted all bitcoin
ing point.[65][66][67][68]
withdrawals.[47] The company said it was pausing with-
drawal requests to obtain a clear technical view of the From 1 February 2014 until the end of March, during the
currency processes.[47] The company issued a press re- period of Mt. Gox problems, the value of bitcoin declined
lease on February 10, 2014, stating that the issue was due by 36%.[69]
to transaction malleability: A bug in the bitcoin software
makes it possible for someone to use the bitcoin network
to alter transaction details to make it seem like a sending
5.11.5 Bankruptcy; Stolen bitcoin (2014
of bitcoins to a bitcoin wallet did not occur when in fact
it did occur. Since the transaction appears as if it has not 16)
proceeded correctly, the bitcoins may be resent. Mt Gox
is working with the bitcoin core development team and On 28 February 2014 Mt. Gox led in Tokyo for a
others to mitigate this issue.[48][49] form of bankruptcy protection from creditors called minji
saisei (or civil rehabilitation) to allow courts to seek a
On 17 February 2014, with all Mt. Gox withdrawals buyer, reporting that it had liabilities of about 6.5 bil-
still halted and competing exchanges back in full oper- lion yen ($65 million, at the time), and 3.84 billion yen in
ation, the company published another press release indi- assets.[70][71][72][73][3]
cating the steps it claimed it was taking to address secu-
rity issues.[50] In an email interview with the Wall Street The company said it had lost almost 750,000 of its cus-
Journal, CEO Mark Karpels refused to comment on in- tomers bitcoins, and around 100,000 of its own bitcoins,
creasing concerns among customers about the nancial totaling around 7% of all bitcoins, and worth around $473
[72][73]
status of the exchange, did not give a denite date on million near the time of the ling. Mt. Gox released
which withdrawals would be resumed, and wrote that the a statement saying, The company believes there is a high
exchange would impose new daily and monthly limits possibility that the bitcoins were stolen, blamed hackers,
[10][37]
[51]
on withdrawals if and when they were resumed. A poll and began a search for the missing bitcoin. Chief
of 3,000 Mt. Gox customers by CoinDesk indicated that Executive Karpels said technical issues opened up the
68% of polled customers were still awaiting funds from way for fraudulent withdrawals.
Mt. Gox. The median waiting time was between one Mt. Gox also faces lawsuits from its customers.[74][75]
and three months, and 21% of poll respondents had been
waiting for three months or more.[52] On 9 March 2014, Mt. Gox led for bankruptcy protec-
tion in the US, to halt U.S. legal action temporarily by
On 20 February 2014, with all withdrawals still halted, traders who alleged the bitcoin exchange operation was a
Mt. Gox issued yet another statement, not giving any date fraud.[76][77][78]
for the resumption of withdrawals.[53] A protest by two
bitcoin enthusiasts outside the building that houses the On 20 March 2014, Mt. Gox reported on its website that
Mt. Gox headquarters in Tokyo continued. Citing secu- it found some bitcoins worth around $116 million [4]
rity concerns, Mt. Gox moved its oces to a dierent in an old digital wallet used prior to June 2011. That
location in Shibuya. Bitcoin prices quoted by Mt. Gox brought the total number[79] of bitcoins the rm lost down to
650,000, from 850,000.
dropped to below 20% of the prices on other exchanges,
reecting the markets estimate of the unlikelihood of Mt. New evidence presented in April 2015 by Tokyo security
Gox paying its customers.[54][55] company WizSec led them to conclude that most or all
On 23 February 2014, Mt. Gox CEO Mark Karpels of the missing bitcoins were stolen straight out of the Mt.
[80][81]
resigned from the board of the Bitcoin Foundation. [56] Gox hot wallet over time, beginning in late 2011.
The same day, all posts on its Twitter account were On April 14, Mt. Gox lawyers said that Karpels would
removed.[57] not appear for a deposition in a Dallas court, or heed a
[37]
On 24 February 2014, Mt. Gox suspended all trading, subpoena by FinCEN. On 16 April 2014, Mt. Gox
and hours later its website went oine, returning a blank gave up its plan to rebuild under bankruptcy protection,
page.[58][59][60]
A leaked alleged internal crisis manage- and asked a Tokyo court to allow it to be liquidated.[82]
ment document claimed that the company was insolvent, In a 6 Jan 2015 interview, Kraken bitcoin exchange
after having lost 744,408 bitcoins in a theft which went CEO Jesse Powell discussed being appointed by the
undetected for years.[58][59][61][62] bankruptcy trustee to assist in processing claims by the
98 CHAPTER 5. EXCHANGES
127,000 creditors of Mt. Gox.[83][84][85][3] [10] Mt. Gox Seeks Bankruptcy After $480 Million Bitcoin
Loss, Carter Dougherty and Grace Huang, Bloomberg
CEO Karpels was arrested in August 2015 by Japanese News, Feb. 28, 2014
police and charged with fraud and embezzlement, and
manipulating the Mt. Gox computer system to increase [11] Nilsson, Kim (19 April 2015). The missing MtGox bit-
the balance in an account -- this charge was not related to coins. Retrieved 10 December 2015. Most or all of the
the missing 650,000 bitcoins.[86][87][4][88][89] After he was missing bitcoins were stolen straight out of the Mt. Gox
interrogated, Japanese prosecutors accused him of mis- hot wallet over time, beginning in late 2011
appropriating Y315m ($2.6m) in bitcoin deposited into [12]
their trading accounts by investors at Mt. Gox, and mov-
ing it into an account he controlled, approximately six [13] The Middle Class in Emerging Societies: Consumers,
months before Mt. Gox failed in early 2014.[90][91] Lifestyles and Markets
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lost $2.4 trillion when Mt. Gox went bankrupt, which
[15] Mt. Goxs Original Creator Is At Work On A Secret Bit-
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coin Project. TechCrunch. AOL. Retrieved 24 February
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sets had been tracked down to distribute to claimants, de-
spite Mt. Gox having asserted in the weeks before it went [16] 5 Things About Mt. Goxs Crisis. WSJ. Retrieved 24
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The trustees interim legal and accounting costs through
[17] Stripe Backs Non-Prot Decentralized Payment Net-
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[5] Computer Security - ESORICS 2014: 19th European inal on 19 September 2011.
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100 CHAPTER 5. EXCHANGES
5.12.3 References
[1] Bitcoin Charts / Markets. www.bitcoincharts.com. Re-
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6.1 Text
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6.1. TEXT 105
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bot, Obiwankenobi, Connormah, Bongwarrior, Waacstats, Thibbs, Gwern, Ontarioboy, GrahamHardy, Ruukasu2005, Natg 19, DFRussia,
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Bender the Bot and Anonymous: 19
Gavin Andresen Source: https://en.wikipedia.org/wiki/Gavin_Andresen?oldid=795126149 Contributors: Lquilter, Samw, Bearcat, Pulp-
Spy, Shiftchange, YUL89YYZ, Koavf, Ysangkok, Back ache, Hmains, Jtbobwaysf, Derek R Bullamore, Timtrent, Cydebot, Obi-
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Anonymous: 16
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Power~enwiki, Phil Boswell, David Gerard, Ysangkok, Xoloz, P The D, Mattythewhite, Beetstra, N2e, Penbat, Medovina, Obi-
wankenobi, Waacstats, Ontarioboy, Fences and windows, Lamro, Chrisarnesen, Andreic777, Yobot, AnomieBOT, Sanpitch,
Tom.Reding, Beyond My Ken, BG19bot, Daveman16, ChrisGualtieri, Pintoch, TortoiseWrath, Jodosma, DavidLeighEllis, Mer-
curys Stepson, YubbaDoo, Augusto192, Ferenstein, Yousefak123, Handpolk, Creationlayer, Tourorist, KasparBot, Pendletonian,
1Wiki8Q5G7FviTHBac3dx8HhdNYwDVstR, Flo626, Bender the Bot, PrimeBOT, Looposhinakafomo and Anonymous: 14
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Xanzzibar, Discospinster, Night Gyr, Lauciusa, Art LaPella, Dgpop, BDD, Dandv, Benbest, Kmg90, Karam.Anthony.K, RichardWeiss, Sj,
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user ty12kl89jq10, NatGertler, George415, Mufka, Wikimandia, Agyle, Raivenblade, MBD123, GorillaWarfare, All Hallows Wraith,
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Kind Tennis Fan, Potenttomato, Frenchballmansquid, AbeFrohman1977, YubbaDoo, TropicAces, Script8man, TheMagikCow, Kshanti07,
BD2412bot, 1Wiki8Q5G7FviTHBac3dx8HhdNYwDVstR, Bender the Bot, Xuzsagon, None of your beezwax and Anonymous: 63
Mark Karpels Source: https://en.wikipedia.org/wiki/Mark_Karpel%C3%A8s?oldid=792147890 Contributors: Wjhonson, David Ger-
ard, Piotrus, Smyth, Smalljim, Saga City, Fragglet, DAJF, Deku-shrub, Jerome Charles Potts, Lenin and McCarthy, MagicalTux, Tbc42,
Jesse Viviano, Danrok, Obiwankenobi, Magioladitis, Waacstats, Ajfweb, Oshwah, Agyle, All Hallows Wraith, Willhwl, Underwaterbualo,
84user, AnomieBOT, Jonesey95, Ecafyelims, Dewritech, GoingBatty, Josve05a, ClueBot NG, Catlemur, Chisme, BG19bot, Squirelewis,
Jeremy112233, UNOwenNYC, Epicgenius, Taco Viva, Dontthrowaway, Markkarpeles, TheCockroach, KasparBot, , Equinox, ,
CAPTAIN RAJU, 1Wiki8Q5G7FviTHBac3dx8HhdNYwDVstR, InternetArchiveBot, JJMC89 bot, Bender the Bot, LexieLou, Mark
Karpeles and Anonymous: 44
Bitcoin Foundation Source: https://en.wikipedia.org/wiki/Bitcoin_Foundation?oldid=791572400 Contributors: The Anome, Shiftchange,
Jayjg, Smyth, MBisanz, Bgwhite, MSJapan, Tom Morris, Kamenev, Kendrick7, Robosh, Cydebot, DumbBOT, Mmortal03, Magi-
oladitis, DGG, Agyle, Clivemacd, Chrisarnesen, AnomieBOT, Erel Segal, Alvin Seville, Aoidh, Reaper Eternal, Tbhotch, Checking-
fax, Guest2625, BG19bot, Exercisephys, Safehaven86, Cyberbot II, Dexbot, Rezonansowy, Another John S, Doyouevenlift84, Mrp-
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1Wiki8Q5G7FviTHBac3dx8HhdNYwDVstR, Spendulus, InternetArchiveBot, Bender the Bot and Anonymous: 10
Bitcoin network Source: https://en.wikipedia.org/wiki/Bitcoin_network?oldid=795709910 Contributors: Canton, Collabi, Julesd, David
Gerard, Rchandra, Shiftchange, Closeapple, Neko-chan, Stesmo, Giraedata, Graingert, Wtmitchell, Benlisquare, Wavelength, Pburka,
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OgreBot, Divinity76, Mean as custard, Dree12, Xiangfu, Observer6, Mmeijeri, Dcirovic, Werieth, QuentinUK, Checkingfax, Coee-
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Gounis, Pjbynn, Tawkerbot2, FatalError, SkyWalker, JForget, CmdrObot, Bane004, Zarex, Miatatroll, Pmerson, GargoyleMT, Reques-
6.1. TEXT 107
tion, Lentower, Pgr94, Kennyluck, Cldnails, Arangana, Phatom87, Ooskapenaar, Jackiechen01, ECELonghorn, Krauss, Steel, Gogo Dodo,
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nompow, Lugia2453, Rcomrce, Razibot, Epicgenius, Pronacampo9, Tigstep, Maxwell bernard, Nshunter, Cp123127, EvergreenFir, Cecilia
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CBCompton, J grider65, Cespo4, Ppcoinwikipeercoin, Jkielty82, Fixuture, Saectar, SwiftCrimson, Rosesollere, Hard ToOp, Drkhata-
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bot, NoToleranceForIntolerance, Saghiri-optimus, Bender the Bot, PrimeBOT, Arthurwitts, Naeelradha, Kamaluddinqadri, Mandyosh1E,
BreakerOfChainz and Anonymous: 1138
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Mike Linksvayer, Robbot, DataSurfer, Cloud200, Matt Crypto, Bender235, Lycurgus, Tromp, Pearle, Pgimeno~enwiki, Oleg Alexan-
drov, MarkSteward, Julian Krause, Rjwilmsi, Helvetius, Flarn2006, Bgwhite, John Quincy Adding Machine, Dialectric, Avalon, Abune,
SmackBot, Rtc, Jon513, Frap, Dreadstar, Jhonan, Nishkid64, Camilo Sanchez, Petr Matas, CmdrObot, N2e, Acabtp, Kredal, Headbomb,
JustAGal, Davidhorman, Animarcus, SeanTater, Albany NY, Magioladitis, NoDepositNoReturn, Yakushima, Logictheo, David Eppstein,
Gwern, Ontarioboy, TreasuryTag, Giszmo~enwiki, Nicksh, Doublesuited, Mumiemonstret, SuzieDerkins, Chrisarnesen, Mehmud, Mi-
ami33139, XLinkBot, Addbot, AnomieBOT, Erel Segal, DannyAsher, Omnipaedista, Breadblade, Jesse V., RjwilmsiBot, Joeyhewitt,
Mmeijeri, Euloiix, Jonpatterns, H3llBot, L0ngpar1sh, Ipsign, 4368a, BG19bot, Cli12345, Gurmeet0108, 0x0F, Tuxayo, Wuchang,
Me, Myself, and I are Here, Adam2us, Play Money for Dummies, PostScarcity, Omninonsense, Saectar, Unicodesnowman, YubbaDoo,
Monkbot, MARIODOESBREAKFAST, FOXIBOX, Hannasnow, Vivi239, 1Wiki8Q5G7FviTHBac3dx8HhdNYwDVstR, JonBobbie,
GreenC bot, ACleaningPerson, CybFox and Anonymous: 63
SHA-2 Source: https://en.wikipedia.org/wiki/SHA-2?oldid=795699716 Contributors: Zundark, Paul Ebermann, Nealmcb, Haakon, Ci-
phergoth, Jeq, Giftlite, DavidCary, Ds13, Markus Kuhn, Jason Quinn, Hgfernan, Indolering, ArnoldReinhold, Smyth, Kwamikagami,
Sietse Snel, RoyBoy, SpeedyGonsales, Feezo, LOL, Dionyziz, Rjwilmsi, Ysangkok, Intgr, Prikryl, 121a0012, Bgwhite, Peterl, Wavelength,
Fgrieu, Jkg, CFSworks, Dsmouse, Ospalh, Arthur Rubin, Cedar101, Rtc, Caligatio, Yamaguchi , Thumperward, EncMstr, Sadads, Mal-
brain, Frap, Hl, PeterJeremy, Sjock, Loadmaster, Brajonrondo, Byrnejb, Snorkelman, Geremia, Jesse Viviano, Krauss, Ebrahim, NadirAli,
Jm3, Mojo Hand, Dawnseeker2000, Widefox, D V S, Doca, Erxnmedia, Od1n, Geniac, Xoneca, Magioladitis, AVRS, Jspiegler, Mau-
rice Carbonaro, Jesant13, Smite-Meister, Robertgreer, KylieTastic, Oconnor663, Quindraco, Rogerdpack, Andy Dingley, Cowlinator,
Neil Smithline, MacScoop, Sfan00 IMG, JJuran, Netvope, Borneq, Sun Creator, GlasGhost, DavidRabahy, Delt01, Addbot, Mortense,
Thomas.pornin, Grashoofd, Maslen, OlEnglish, Yobot, AnomieBOT, Citation bot, Aleph Innity, Quebec99, Digiphi, Octotron, Om-
nipaedista, Krisztin Pintr, Ialbrekht, MathsPoetry, Sep332, Fortdj33, Alxeedo, Mfwitten, John85, Jonesey95, Skyerise, Loresayer,
LiberatorG, Lotje, Wfunction, Timtempleton, TheInevitable, Noloader, Dewritech, RenamedUser01302013, Dcirovic, Quelrod, Nose-
binary, Westley Turner, Rushless, Quondum, Mmendez534, Jacosoft apps, Shnako, ClueBot NG, Proz, Nielsduif, Catlemur, Joefrom-
randb, Meganomic, Skoot13, Frietjes, Parsley1972, BG19bot, Jackbrear, Wkunkel, Maartenvanrooijen, Maver2909, Felidofractals, Tony
Tan, Pboudra, Cli12345, Cyberbot II, Napcae, AMRMHR, CuriousMind01, Nonnompow, Manishrw, Kotz, Juanal editor, Skeuomorf,
DD4235, Richieframe, Dwarvenux, Severyn.kozak, Ppcoinwikipeercoin, Willisius, Bad Dryer, CPU Terminator, ReadWriteWriteRead,
Claw of Slime, Maciej Czyewski, Enrique Santos L., TheMagikCow, CV9933, Megatherium, Thomas.matecki, Kurousagi, Luis150902,
ThePiGrepper, GreenC bot, Gulumeemee, Satharat, Kuckuckz, Sjfeenstra, AtErik1, Bender the Bot, Mabube, MinusBot, AurelioJuarez
and Anonymous: 127
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Shiftchange, BD2412, Vegaswikian, Bgwhite, Deku-shrub, Eclipsed, N2e, ONUnicorn, Casliber, Magioladitis, Keith D, LibStar,
AnomieBOT, Airon90, Onel5969, Mean as custard, BG19bot, Reddogsix, DPL bot, Dexbot, SJ Defender, John Marsh 701, Filedelink-
erbot, Dsprc, Walterlipolyu, Sunmist, Asia bun, Adam9007, , Ste Sasi, Rodney Linder, Jackbtcjack, Jackbtcjack123, Wikiwikipeter,
InternetArchiveBot, Brahiim123, SwiftyPeep, Bender the Bot, Ellygirlsun, Hyperbolick, ANX PRO and Anonymous: 6
BitInstant Source: https://en.wikipedia.org/wiki/BitInstant?oldid=793676413 Contributors: Bearcat, Shiftchange, Kdammers, Smyth,
108 CHAPTER 6. TEXT AND IMAGE SOURCES, CONTRIBUTORS, AND LICENSES
Stesmo, Andrewpmk, Geraldshields11, Malcolma, BiH, Narkstraws, Ccchambers, Cydebot, Kozuch, Magioladitis, JoeDeRose, Agyle,
Lamro, Jonahtrainer, Chrisarnesen, AnomieBOT, PabloCastellano, Bernie44, MusikAnimal, Erik.Bjareholt, Mogism, Cmannatt, Bmrg567,
MasturbatingCow, Xrt6L, JexsterB312, Vdrey, MrGiantEditor, 1Wiki8Q5G7FviTHBac3dx8HhdNYwDVstR, InternetArchiveBot, Ben-
der the Bot and Anonymous: 15
Bitstamp Source: https://en.wikipedia.org/wiki/Bitstamp?oldid=794687424 Contributors: Roybadami, Edward, Bearcat, Rpyle731, Pi-
otrus, Shiftchange, Smyth, King of Hearts, Benlisquare, Dialectric, Tamfang, Obiwankenobi, Magioladitis, Jhirsch41, Black Kite,
Agyle, VanishedUser sdu9aya9fs787sads, Chrisarnesen, Yobot, 4th-otaku, AnomieBOT, Erel Segal, RevelationDirect, Sargdub, Atilla000,
Emisanle, Erik.Bjareholt, ChrisGualtieri, Dexbot, Citation Needed, Ildottoreverde, Wuerzele, Ginsuloft, Ssanchezd, Wolololol, PirateBut-
tercup, Wasill37, 1Wiki8Q5G7FviTHBac3dx8HhdNYwDVstR, Bender the Bot and Anonymous: 15
BTC-e Source: https://en.wikipedia.org/wiki/BTC-e?oldid=795830112 Contributors: Cloud200, Piotrus, Hierarchypedia, Dcsuther-
land, Eclipsed, AjaxSmack, N2e, KrakatoaKatie, Smartse, Repku, Oshwah, TheCatalyst31, Drmies, AnomieBOT, Ptrinh18, Kras-
sotkin, EmausBot, Grottenolm42, Compgenius, Bamyers99, GermanJoe, ClueBot NG, Satellizer, Wgolf, Emisanle, BG19bot,
TranslucentCloud, Aisteco, Cyberbot II, 0x0F, Telfordbuck, FallingGravity, Wolololol, Gladamas, Bongan, , RebelOfBabylon,
1Wiki8Q5G7FviTHBac3dx8HhdNYwDVstR, Mbevand, Anareth, Quantomworks, StanceGarmstrong, Kiroxler, Jawtired and Anony-
mous: 26
BTC China Source: https://en.wikipedia.org/wiki/BTC_China?oldid=795474974 Contributors: Shiftchange, Pmsyyz, Anthony Ap-
pleyard, Benlisquare, Kozuch, Obiwankenobi, Malvineous, Magioladitis, Ontarioboy, Black Kite, Agyle, Chrisarnesen, C933103,
I dream of horses, Sargdub, YFdyh000, Citation Needed, Jamesmcmahon0, CNMall41, Wasill37, Chenyijia001, Jackbtcjack,
1Wiki8Q5G7FviTHBac3dx8HhdNYwDVstR, Bender the Bot and Anonymous: 4
Buttercoin Source: https://en.wikipedia.org/wiki/Buttercoin?oldid=793243031 Contributors: Shiftchange, BD2412, Black Falcon, N2e,
Kozuch, Obiwankenobi, Vanished user ty12kl89jq10, DGG, Malik Shabazz, Agyle, Eeekster, Chrisarnesen, ZTebaykina, Yobot, BattyBot,
1Wiki8Q5G7FviTHBac3dx8HhdNYwDVstR, Bender the Bot and Anonymous: 6
Coinbase Source: https://en.wikipedia.org/wiki/Coinbase?oldid=795420715 Contributors: Edward, Gabbe, Dbabbitt, Guanaco,
Shiftchange, Dennis Brown, Vipul, Stesmo, Sj, Wjfox2005, Black Falcon, Arthur Rubin, Abune, Egsan Bacon, Mitchumch, Matthew
hk, Jjjjjjjjjj, Robosh, Nagle, N2e, Cydebot, Kozuch, MainlyTwelve, Obiwankenobi, Magioladitis, Hwbehrens, QuackGuru, Mercury-
woodrose, Agyle, Df747jet, Mentor397, VanishedUser sdu9aya9fs787sads, ImageRemovalBot, Jeynesey, Vishtany, Chrisarnesen, Gnick-
ett1, Jytdog, Mortense, Download, 84user, Yobot, 4th-otaku, AnomieBOT, Ulric1313, LilHelpa, Bliljerk101, Jugadormta, Mean as custard,
Sargdub, Timtempleton, Dcirovic, Komodore, ClueBot NG, Frietjes, Jeraphine Gryphon, Mark Arsten, Cky2250, Cli12345, BigButter-
y, Darylgolden, NathanielBlack12, MarcoPolo419, Ascom99, Werneravr, RaphaelQS, Quenhitran, Makkachin, Sam Sailor, Jayaguru-
Shishya, Xrt6L, Pinetreecrush, Gavleson, Bad Dryer, Innitycoin, TheDragonFire, Josh DeBruycker, BitcoinWiki, I.eat.Gox, Gwlady,
Spfcraze, Sanjev Rajaram, DCLukas, Genegri, Bdarmtrong, Daylen, Coinbasescam, 1Wiki8Q5G7FviTHBac3dx8HhdNYwDVstR,
Brahiim123, Dimmer2222, Bender the Bot, BulkData, BitcoinFrance, StudyAbroadGaza, LiqoUTC, SandroAlex, Merst792, Devexit,
Baltazari, Connectbn, TrezorHunt and Anonymous: 49
Huobi Source: https://en.wikipedia.org/wiki/Huobi?oldid=774188057 Contributors: Shiftchange, Hierarchypedia, Whoisjohngalt,
Eclipsed, N2e, Yobot, AnomieBOT, Foledman, 1Wiki8Q5G7FviTHBac3dx8HhdNYwDVstR, InternetArchiveBot, Bender the Bot and
Anonymous: 4
ItBit Source: https://en.wikipedia.org/wiki/ItBit?oldid=793364500 Contributors: Bearcat, David Gerard, Piotrus, Shiftchange, Mal-
colma, Eclipsed, Black Falcon, Derek R Bullamore, Cydebot, Kozuch, Obiwankenobi, Magioladitis, Juliancolton, Black Kite, Agyle,
ChicagoRob78, Arjayay, Chrisarnesen, SwisterTwister, AnomieBOT, Sargdub, Slightsmile, Meatsgains, Citation Needed, Nv 225,
Nyc10009, Itbit Exchange, Mrphobos123, , 1Wiki8Q5G7FviTHBac3dx8HhdNYwDVstR, Atlantic306, Natashagural and Anonymous:
4
LocalBitcoins Source: https://en.wikipedia.org/wiki/LocalBitcoins?oldid=794372391 Contributors: Graeme Bartlett, Piotrus,
Shiftchange, BD2412, GSK, Magioladitis, Joshua Issac, Bonadea, Black Kite, Chrisarnesen, AnomieBOT, Nickmeet, LiberatorG, John
of Reading, Dewritech, Jonpatterns, Jeraphine Gryphon, BG19bot, Northamerica1000, Daveman16, 0x0F, Citation Needed, Jerguismi,
Sr.ganador, BitcoinUser, Chapipipopo, Peraurico, Ywecur, Liance, ToonLucas22, InternetArchiveBot, GreenC bot, Bender the Bot and
Anonymous: 14
Mt. Gox Source: https://en.wikipedia.org/wiki/Mt._Gox?oldid=794846178 Contributors: Edward, Delirium, Julesd, Timwi, Furrykef,
Tea2min, David Gerard, SoWhy, DNewhall, AndrewKeenanRichardson, Thincat, Mike Rosoft, Shiftchange, Discospinster, Hydrox,
Smyth, Deathawk, Ociallyover, SnowFire, Tabletop, Runarb, Fresheneesz, DVdm, Pburka, Resolute, Tweet, Frap, Ianmacm, Na-
gle, Optakeover, Norm mit, Kencf0618, Doceddi, Matthieu Houriet, Jesse Viviano, N2e, Gafter, Danrok, Medovina, Kozuch, PamD,
Saintrain, Mojo Hand, Widefox, Obiwankenobi, Yellowdesk, Global Cerebral Ischemia, Kk5000, Acroterion, Magioladitis, Gwern,
Maproom, Ontarioboy, Atama, Ajfweb, Maxxyme, Donjrude, B1db2, Agyle, CheloVechek, L32007, Jonahtrainer, SimonTrew, Svick,
Trustable, Pianoman320, Trivialist, SkE, Chrisarnesen, NittyG, Tassedethe, Yobot, Mmacdon6, 4th-otaku, AnomieBOT, Erel Segal,
Hard700, Brightgalrs, Quebec99, Crookesmoor, , FrescoBot, Surv1v4l1st, Djetelina, Sjcjoosten, Stephanefr, Aoidh, Dewritech,
Wikipelli, Dcirovic, K6ka, NicatronTg, Jack Sebastian, Brandmeister, Ego White Tray, ClueBot NG, Geoburke, Catlemur, Hpersh, Widr,
Newyorkadam, Lowercase sigmabot, BG19bot, McZusatz, Mark Arsten, Meatsgains, Blaspie55, Cli12345, Shirudo, Grahvity, BattyBot,
Cyberbot II, Esszet, Neoconfederate, Melonkelon, Soredo, Wuerzele, ChaseAm, Brianen2, NorthBySouthBaranof, Makkachin, Tiban75,
Archlinux, Bitkoof, Verjohnpike, Xrt6L, Vidmastb, Kubrixcube, Eliteware, TheWiki122, Hakanwk, Aniapie, OKNoah, I.eat.Gox,
Ross.PokerVIP, Mollyjohn1436, Ddoback, Liance, Crito10, Equinox, 1Wiki8Q5G7FviTHBac3dx8HhdNYwDVstR, Mbevand, Inter-
netArchiveBot, Kithblurs, GreenC bot, Bender the Bot, Jon Kolbert, Slavikme and Anonymous: 83
OKCoin Source: https://en.wikipedia.org/wiki/OKCoin?oldid=753569215 Contributors: Stesmo, BenM, Bgwhite, Deku-shrub, N2e,
Timtrent, Magioladitis, StAnselm, XLinkBot, Yobot, AnomieBOT, LilHelpa, Sargdub, Newzack, Pastafarianist, BattyBot, Zekesonxx,
Salvationist2nd, OKCoin, Rayna Jaymes, Redartsina, SAnthonyR, Eric Pode lives, 1Wiki8Q5G7FviTHBac3dx8HhdNYwDVstR,
AaronD9933 and Anonymous: 4
6.2 Images
File:10elqpi.jpg Source: https://upload.wikimedia.org/wikipedia/commons/9/93/10elqpi.jpg License: CC BY-SA 3.0 Contributors:
Transferred from en.wikipedia to Commons. Original artist: The original uploader was Ladislav Mecir at English Wikipedia
6.2. IMAGES 109
Credits:
File:Flag_of_Thailand.svg Source: https://upload.wikimedia.org/wikipedia/commons/a/a9/Flag_of_Thailand.svg License: Public do-
main Contributors: Own work Original artist: Zscout370
File:Flag_of_Turkey.svg Source: https://upload.wikimedia.org/wikipedia/commons/b/b4/Flag_of_Turkey.svg License: Public domain
Contributors: Turkish Flag Law (Trk Bayra Kanunu), Law nr. 2893 of 22 September 1983. Text (in Turkish) at the website of the
Turkish Historical Society (Trk Tarih Kurumu) Original artist: David Benbennick (original author)
File:Flag_of_Vietnam.svg Source: https://upload.wikimedia.org/wikipedia/commons/2/21/Flag_of_Vietnam.svg License: Public do-
main Contributors: http://vbqppl.moj.gov.vn/law/vi/1951_to_1960/1955/195511/195511300001 http://vbqppl.moj.gov.vn/vbpq/Lists/
Vn%20bn%20php%20lut/View_Detail.aspx?ItemID=820 Original artist: Lu Ly v li theo ngun trn
File:Flag_of_Zimbabwe.svg Source: https://upload.wikimedia.org/wikipedia/commons/6/6a/Flag_of_Zimbabwe.svg License: Public
domain Contributors: Own work after www.flag.de Original artist: User:Madden
File:Flag_of_the_Czech_Republic.svg Source: https://upload.wikimedia.org/wikipedia/commons/c/cb/Flag_of_the_Czech_Republic.
svg License: Public domain Contributors:
-x-'s le
-x-'s code
Zirlands codes of colors
6.2. IMAGES 113
Original artist:
(of code): SVG version by cs:-x-.
File:Flag_of_the_Netherlands.svg Source: https://upload.wikimedia.org/wikipedia/commons/2/20/Flag_of_the_Netherlands.svg Li-
cense: Public domain Contributors: Own work Original artist: Zscout370
File:Flag_of_the_People{}s_Republic_of_China.svg Source: https://upload.wikimedia.org/wikipedia/commons/f/fa/Flag_of_the_
People%27s_Republic_of_China.svg License: Public domain Contributors: Own work, http://www.protocol.gov.hk/flags/eng/n_flag/
design.html Original artist: Drawn by User:SKopp, redrawn by User:Denelson83 and User:Zscout370
File:Flag_of_the_Philippines.svg Source: https://upload.wikimedia.org/wikipedia/commons/9/99/Flag_of_the_Philippines.svg Li-
cense: Public domain Contributors: The design was taken from [1] and the colors were also taken from a Government website Original
artist: User:Achim1999
File:Flag_of_the_Republic_of_China.svg Source: https://upload.wikimedia.org/wikipedia/commons/7/72/Flag_of_the_Republic_of_
China.svg License: Public domain Contributors: [1] Original artist: User:SKopp
File:Flag_of_the_United_Kingdom.svg Source: https://upload.wikimedia.org/wikipedia/en/a/ae/Flag_of_the_United_Kingdom.svg Li-
cense: PD Contributors: ? Original artist: ?
File:Flag_of_the_United_States.svg Source: https://upload.wikimedia.org/wikipedia/en/a/a4/Flag_of_the_United_States.svg License:
PD Contributors: ? Original artist: ?
File:Folder_Hexagonal_Icon.svg Source: https://upload.wikimedia.org/wikipedia/en/4/48/Folder_Hexagonal_Icon.svg License: Cc-by-
sa-3.0 Contributors: ? Original artist: ?
File:Free_and_open-source_software_logo_(2009).svg Source: https://upload.wikimedia.org/wikipedia/commons/3/31/Free_and_
open-source_software_logo_%282009%29.svg License: Public domain Contributors: FOSS Logo.svg Original artist: Free Software Portal
Logo.svg (FOSS Logo.svg): ViperSnake151
File:Freewallet_Monero_Wallet_UI.png Source: https://upload.wikimedia.org/wikipedia/commons/3/37/Freewallet_Monero_Wallet_
UI.png License: CC BY-SA 4.0 Contributors: https://freewallet.org/press-kit Original artist: Freewallet Team
File:History_of_Bitcoin_difficulty.svg Source: https://upload.wikimedia.org/wikipedia/commons/4/4b/History_of_Bitcoin_difficulty.
svg License: BSD Contributors: Own work Original artist: Ladislav (talk) (Uploads)
File:Hitbtc_terminal_window.png Source: https://upload.wikimedia.org/wikipedia/commons/e/ef/Hitbtc_terminal_window.png Li-
cense: CC BY-SA 4.0 Contributors: Own work Original artist: Aldgodjer
File:ItBit2016logonew.png Source: https://upload.wikimedia.org/wikipedia/commons/5/52/ItBit2016logonew.png License: CC BY-SA
4.0 Contributors: Own work Original artist: Natashagural
File:Lancelot-A_FPGA_based_bitcoin_mining_board.jpg Source: https://upload.wikimedia.org/wikipedia/commons/f/f0/
Lancelot-A_FPGA_based_bitcoin_mining_board.jpg License: CC0 Contributors: Sent to me personally Original artist:
File:Lock-green.svg Source: https://upload.wikimedia.org/wikipedia/commons/6/65/Lock-green.svg License: CC0 Contributors: en:File:
Free-to-read_lock_75.svg Original artist: User:Trappist the monk
File:Mergefrom.svg Source: https://upload.wikimedia.org/wikipedia/commons/0/0f/Mergefrom.svg License: Public domain Contribu-
tors: ? Original artist: ?
File:MtGox.png Source: https://upload.wikimedia.org/wikipedia/commons/d/dc/MtGox.png License: Public domain Contributors: Mt-
Gox.com Original artist: MtGox
File:Nxt_SecureAE_Asset_Exchange_view.png Source: https://upload.wikimedia.org/wikipedia/commons/f/fb/Nxt_SecureAE_
Asset_Exchange_view.png License: CC0 Contributors: Own work Original artist: Thomas Veil
File:Office-book.svg Source: https://upload.wikimedia.org/wikipedia/commons/a/a8/Office-book.svg License: Public domain Contribu-
tors: This and myself. Original artist: Chris Down/Tango project
File:P2P-network.svg Source: https://upload.wikimedia.org/wikipedia/commons/3/3f/P2P-network.svg License: Public domain Contrib-
utors: Own work Original artist: User:Mauro Bieg
File:People_icon.svg Source: https://upload.wikimedia.org/wikipedia/commons/3/37/People_icon.svg License: CC0 Contributors: Open-
Clipart Original artist: OpenClipart
File:Portal-puzzle.svg Source: https://upload.wikimedia.org/wikipedia/en/f/fd/Portal-puzzle.svg License: Public domain Contributors: ?
Original artist: ?
File:Proof_of_Work_challenge_response.svg Source: https://upload.wikimedia.org/wikipedia/commons/5/55/Proof_of_Work_
challenge_response.svg License: Public domain Contributors: Own work by the original uploader Original artist: Fabien Coelho
(http://www.coelho.net/)
File:Proof_of_Work_solution_verification.svg Source: https://upload.wikimedia.org/wikipedia/commons/2/24/Proof_of_Work_
solution_verification.svg License: Public domain Contributors: Own work by the original uploader Original artist: Fabien Coelho
(http://www.coelho.net/)
File:Question_book-new.svg Source: https://upload.wikimedia.org/wikipedia/en/9/99/Question_book-new.svg License: Cc-by-sa-3.0
Contributors:
Created from scratch in Adobe Illustrator. Based on Image:Question book.png created by User:Equazcion Original artist:
Tkgd2007
File:SHA-2.svg Source: https://upload.wikimedia.org/wikipedia/commons/7/7d/SHA-2.svg License: CC-BY-SA-3.0 Contributors: Own
work Original artist: User:kockmeyer
File:Server-based-network.svg Source: https://upload.wikimedia.org/wikipedia/commons/f/fb/Server-based-network.svg License:
LGPL Contributors: derived from the Image:Computer n screen.svg which is under the GNU LGPL Original artist: User:Mauro Bieg
File:Sha-family.svg Source: https://upload.wikimedia.org/wikipedia/commons/d/d7/Sha-family.svg License: CC BY-SA 4.0 Contribu-
tors: Own work Original artist: Uwe Martens
114 CHAPTER 6. TEXT AND IMAGE SOURCES, CONTRIBUTORS, AND LICENSES