Tuesday, September 20, 2016

BITCOIN: provisional note 2

A hypothetical situation has come to mind so I’m going to pose a couple of question based on that.

First, with respect to the launch of Bitcoin technology, why would an individual associate his name with the published code and not take credit for the technology? Second, in the same vein, why would someone that produced such an invention—patentable by any standard—assign a pseudonym as the name of the person releasing the discovery to the world? Third, why would the name be a Japanese name? Considering that the NSA has the world’s foremost capacity in cryptology and limitless computing power, it would not only be a natural byproduct of the activities of the NSA to produce something along these lines--even in simply investigating the potentialities for such a technology that anyone could develop eventually--especially if they were requested to by another agency, such as the CIA. It would also be a technology that they could readily exploit to cyber mint their crypto currency in large amounts should it achieve acceptance. That could also serve as a possible source of funding for covert operations that wouldn’t even have to be disclosed to the U.S. Congress, so long as the existence of such a program was not acknowledged. Hey, it would beat smuggling and peddling cocaine to arm the Contras, right? Are you too young to know about the Iran-Contra Affair?

Considering that Japan seems to have overtaken the US in terms of the transactional volume of Bitcoins (http://cryptohustle.com/bitcoin-trading-volume-japan-on-the-rise), there are a number of questions that arise related to the use of Bitcoin in Japan.

The next individual to be examined on his blog is Yusuke Otuka (大塚雄介), the CMO of Coincheck who misrepresents himself as having co-founded its mother company, ResuPress. In this interview in Japanese (https://www.green-japan.com/company/4484), Otsuka claims that the transactional volume at Coincheck was more than 16 billion yen/month as of February 2016, approximately 18 months after the service was launched in August 2014:


Coincheck was launched in August, 2014, and the monthly volume of Bitcoin transactions after about a-year-and-a-half exceeds 16 billion yen, making us the largest Bitcoin exchange in Japan.

Otsuka also suggests that many of their users are young men in their 20s-30s with internet literacy.


At present, many of the people in Japan that are interested in Bitcoin and/or actually conducting transactions in Bitcoin are young men in their 20s-30s that have internet literacy. Accordingly, many of the businesses that have introduced systems enabling them to accept Bitcoin are businesses that cater to such young men.

Let’s put that into perspective. Accordingly to Otsuka, Coincheck services about $160 million in Bitcoin transactions per month, on the one hand, and claims that many of its customers are IT savvy young men in their 20s-30s. While it is reasonable to assume that institutional investors must be active in trading Bitcoin Japan (would they be using Coincheck?), it is hard to imagine what types of transactions could be being conducted to account for such a high volume, especially if the customers are mainly young men in their 20s-30s. $160 million dollars is not a trivial amount of money. I will cover Coincheck in a separate post, but this is a screenshot (https://coincheck.com/info/fee) of their fee schedule in English:

In the above-linked article from online publication “Crypto Hustle”, Alan Struna (who?) states the following:

The high trading volume in Japan likely increased market demand for bitcoin. []
Japan is looking to create a stimulus package for the banks with $100 Billion of helicopter money to bring interest rates back to 0%. In other words, banks will literally print money out of thin air as a last resort to stabilize the economy.
What does this mean for Bitcoin? As we’ve seen in China, when local currencies fall people look to hedge against the economy and banks. While the news hasn’t been officially released yet, Japanese investors may look to bitcoin as a hedge against the inflation of the Yen.

Struna echoes the same Wall St. party line with respect to “helicopter money” as suspected CIA officer William Pesek, who writes for Bloomberg and the Japan Times. While it’s true that the stimulus packages primarily benefit large corporations and the stock market, it is not true that the use of such stimulus packages necessarily equates with a devaluation of the yen, or that a devalued yen wouldn’t negatively impact the value of Bitcoin, rendering the suggestion that it be used as a hedge ridiculous. The yen is so strong because international investors see Japan as a “safe haven” from global market turmoil.

While Struna focuses on the Japan Times articles mentioning the function similar to money, the more important quote is the following:

The latest bills on virtual currencies recognize them as asset-like values that can be used in making payments and be transferred digitally.

Here, it bears mentioning that Bitcoin is taxed with a capital gains-like tax in some places, and in other ways as well (https://bitcoinmagazine.com/articles/tax-day-is-coming-a-primer-on-bitcoin-and-taxes-1459786613). There have been calls to make Bitcoin “tax-free” in Japan, but there would not seem to be a rational basis for doing so, as that would only make Japan a sort of Bitcoin tax haven. This an old article on the scenario in Japan: http://financegreenwatch.org/?p=11993. The government has yet to address the question, but it is clear that Bitcoin poses a number of finance sector funny-money chicanery issues. The most recent news is this: https://bitcoinmagazine.com/articles/japan-debates-bitcoin-sales-tax-stricter-rules-for-exchanges-1457633456. That set of proposals seems to have been stalled due to complaints from Japanese "digital assets" investors regarding the EU Court declaring Bitcoin to be a currency instead of a commodity, which is what the US had defined Bitcoin as a month earlier. Clearly, there is no international accord yet, and the EU ruling seems a little strange, to say the least. Apparently, the EU Commission has now taken notice (http://www.newsbtc.com/2016/07/06/european-commission-targets-bitcoin-tax-evasion-clampdown/), and legislative measures may be introduced overriding the Court’s ruling or implementing a regulatory regime similar to this: http://www.newsbtc.com/2016/05/29/bitlicense-did-good-by-bitcoin-sector/.

While I’m far from up to speed with the minutiae of cryptocurrencies, the big-picture issues are fairly clear with respect to the use thereof to avoid taxation and perform large scale illicit transactions that are essentially untraceable.

This blog intends to shed light on the involvement of intelligence agencies in the propagation of cryptocurrencies, since it has come to my attention that the CIA appears to be involved, and perhaps the Japanese Public Security Intelligence Agency  (公安省:  (https://en.wikipedia.org/wiki/Public_Security_Intelligence_Agency). On the other hand, that agency seems more akin to the FBI, not the CIA, which the Japanese government has been rumored to be establishing a version of, but maybe that is a fact that could itself be considered classified with the passage of the State Secrets Act . 

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