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The Claims That The NSA Designed Bitcoin Are Unfounded - TDV Week In Review: August 24, 2014
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Originally appeared at Bitcoinomics
A common hypothesis submitted by members of the bitcoin community argues that the National Security Agency (NSA), or some other government alphabet agency, invented bitcoin. Many bitcoiners laugh this suggestion off as “impossible,” but, on the contrary, there is precedent for such an assertion. But, that doesn’t make it true…
It’s not as if the government or its agencies have never invented technology. In particular, the US defense industries, dubbed by Dwight D. Eisenhower as the “military-industrial complex.” Government research – generally conducted by the military or intelligence complexes and academia – has resulted in some of the most compelling technologies of our age, including the internet. The Tor project (the anonymous online network) was created by DARPA (Defense Advanced Research Projects Agency) and currently receives 80% of their funding from the US Government.
An NSA paper, written in 1996 and entitled “How To Make A Mint: The Cryptography of Anonymous Electronic Cash”, represents an interesting anecdote in the history of crypto-currencies and government agency. Here is the table of contents of the document:
1. WHAT IS ELECTRONIC CASH?
1.1 Electronic Payment
1.2 Security of Electronic Payments
1.3 Electronic Cash
1.4 Multiple Spending
2. A CRYPTOGRAPHIC DESCRIPTION
2.1 Public-Key Cryptographic Tools
2.2 A Simplified Electronic Cash Protocol
2.3 Untraceable Electronic Payments
2.4 A Basic Electronic Cash Protocol
3. PROPOSED OFF-LINE IMPLEMENTATIONS
3.1 Including Identifying Information
3.2 Authentication and Signature Techniques
3.3 Summary of Proposed Implementations
4. OPTIONAL FEATURES OF OFF-LINE CASH
4. 1 Transferability
5. SECURITY ISSUES
5.1 Multiple Spending Prevention
5.2 Wallet Observers
5.3 Security Failures
5.4 Restoring Traceability
The report does not exactly describe bitcoin, with key differences in the NSA researchers envisaging, in 1996, how a crypto-currency would work, and what bitcoin is today. It does accurately pinpoint the abuse such a medium of exchange could endure, and which bitcoin solves; that is, double-spending.
Tatsuaki Okamoto, one of the referenced authors at the bottom of this report by the NSA’s cryptology division, has been of particular interest to bitcoiners investigating what’s possibly the newest age-old question: “Who is Satoshi Nakamoto?” Many bitcoiners have highlighted that this person’s name is very similar to that of Satoshi Nakamoto, the alleged inventor of bitcoin. Mr. Okamoto wrote a paper entitled “An Efficient Divisible Electronic Cash Scheme“, leading many people to suggest that perhaps this individual is Satoshi Nakamoto indeed. By the time this paper had been written, the general consensus that an “electronic currency” would enable a user to withdraw these coins from a bank or other centralized institution. Even the above-mentioned NSA paper makes the same assumption. Obviously, this is not how Bitcoin functions. At this point a direct connection between Okamoto, the NSA and bitcoin eludes any diligent researcher. But circumstantial evidence remains. For instance, the Wikipedia page for Sha-1, of which sha-256 is a function (the hash function used by bitcoin), explains the hash functions origin:
In cryptography, SHA-1 is a cryptographic hash function designed by the United States National Security Agency and published by the United States NIST as a U.S. Federal Information Processing Standard. SHA stands for “secure hash algorithm”. The four SHA algorithms are structured differently and are distinguished as SHA-0, SHA-1, SHA-2, and SHA-3. SHA-1 is very similar to SHA-0, but corrects an error in the original SHA hash specification that led to significant weaknesses. The SHA-0 algorithm was not adopted by many applications. SHA-2 on the other hand significantly differs from the SHA-1 hash function.
Other stories online seeking to connect bitcoin with intelligence agencies evokes In-Q-Tel. According to Wikipedia:
In-Q-Tel… is a not-for-profit venture capital firm that invests in high-tech companies for the sole purpose of keeping the Central Intelligence Agency, and other intelligence agencies, equipped with the latest in information technology in support of United States intelligence capability.
A basic premise of individuals holding the belief that bitcoin was created by a government agency is that bitcoin was created as an pseudonymous currency, passed on as an anonymous currency, for the sole purpose of tracking criminals attempting to launder money. Towards this end of tracking criminals, In-Q-Tel exists, making it a prime suspect to invest in bitcoin related startups if indeed bitcoin were a law enforcement project.
But, the most in-depth connection between In-Q-Tel and bitcoin is via Google, a by-no-means-whatsoever concrete affiliation. Google’s connection to In-Q-Tel is not public. But, in 2006, ex-CIA officer Robert David Steele told Home Security Today that Google “has been taking money and direction for elements of the US Intelligence Community, including the Office of Research and Development at the Central Intelligence Agency, In-Q-Tel, and in all probability, both the National Security Agency (NSA) and the Army’s Intelligence and Security Command.”
The year before In-Q-Tel sold more than 5,000 shares of Google stock. In 2010 Google announced it was working directly with the National Security Agency so as to secure its electronic assets. Also in 2010 Wired reported that In-Q-Tel and Google had jointly provided venture capital funding to Recorded Future Inc, a temporal analytics search engine company that analyzes tens of thousands of web sources in order to predict trends and events.
But Google has itself not yet invested in bitcoin. The conglomerate does not accept bitcoin for any of its products or services. What’s more, it has invested in alternative digital currencies other than bitcoin.
Paltry is the evidence regarding the claim that a government agency is directly responsible for bitcoin. Instead, what’s more likely, is that government researchers and the possible player or players referred to as “Satoshi Nakamoto” attended similar gatherings and perhaps shared acquaintances. Before the arrival of bitcoin, at the very beginning of this new century, financial cryptology conferences were not well attended but by perhaps twenty people. Attendees at these conferences might give us an idea into the minds participating in a dialogue that ultimately led to bitcoin. With this said, it is entirely possible still that Satoshi Nakamoto’s experiences outside this clique saved him from many of the fallacies early researchers internalized, such as centralized "banks" for the “electronic currency.”
All-in-all, those who claim bitcoin was designed by "The Man" do not have adequate proof.
Justin O'Connell, TDV Head Researcher
Justin O'Connell is the Head Researcher at Dollar Vigilante and Chief Executive Officer of GoldSilverBitcoin. He is also the author of the first full-length bitcoin book, Bitcoinomics, and administrator of the Bitcoinomics website. Justin is also a co-host at Our Very Own Special Show, a lifestyle podcast about music, news, life and other topics. He lives in San Diego, California. His writings mostly deal with gold, silver, bitcoin, technology and culture.
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On to the review…
Monday August 18
Jeff Berwick with a look at the USSA’s culture of imprisonment.
“As we watch the military-style police roll out in Missouri this week I have some bad news - we are all at risk for being kidnapped and thrown in a cage. We know we usually harp on how bad it is getting in the US, but all over the western world people are being thrown in jail for what would be laughable reasons if this were not real life.”
Tuesday August 19
Wendy McElroy on defining “rich”.
“Bellwether was the word in my mind as I finally reviewed a study that, in the words of one reporter, has ‘gone viral.’ The study masquerades as a voice for “the people”' in reality, it serves the interests of the politically elite. It says exactly what those in power wish to be heard. The study and the awed response of the media indicate what to expect as America's political narrative in coming years. The rich are to blame for everything; the rich are the oppressors of the people. This is predictable but there is a dramatic and dangerous twist.”
Wednesday August 20
Jeff on the chaos in Missouri.
“Long time Dollar Vigilante (TDV) readers have probably noticed that TDV is rarely the first to report on non-financial current events. While many including those in the alternative media often jump right on a story and add their views to it we tend to watch, analyze and do more research before putting our view on things out into the ether. This isn't to say that those who jump immediately on a story aren't doing good work or add a lot of value but you will always find a more tempered and more analytical view of things here... often days or weeks after an event has begun so as we can take in more of a bigger picture. Now, after a week of watching the events transpire in Ferguson we are prepared to give our vigilante view on what we have seen so far.”
Thursday August 21
Chris Horlacher on FATCA and its implications for Canadians.
“Many Canadians, referred to as snowbirds, spend 3 to 6 months each year in the United States. If they think to consult a tax adviser at all they're usually told that so long as they spend less than 183 days per year in the USA, they can rest assured that they will not be triggering any tax consequences. A brief reading of the US tax code would appear to verify this statement; however there is a nuance that threatens to trap snowbirds in the IRS's web.”
Friday August 22
Jeff Clark on why you should be investing in silver.
“Silver is selling at less than half its 2011 high, is ignored more than gold, and as you’ll see, has explosive fundamentals that point to a possible runaway price scenario.
To assess silver’s potential, let's first ignore short-term factors that you might see in mainstream headlines, such as net short/long positions, fluctuations in weekly ETF holdings, or the latest open interest. Data like these fluctuate regularly and rarely have long-term bearing on the price.”
Saturday August 23
THE WEEKEND VIGILANTE
Jeff Berwick with his weekly address to TDVers.
Have a look at our wide array of informative videos featuring interviews, opinions, and analysis on TDV’s media page.
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