RAKUTEN, BITCOIN AND E-BUSINESSES IN JAPAN

E-BUSINESS AND POPULAR WEBSITES IN JAPAN

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The most visited websites in January 2007 in Japan were: 1) Yahoo.co.jp; 2) fc2.com; 3) Rakuten.co,jp; 4) Google.co.jp; 5) Nifty.com; 6) Infoseek.co.jp; 7) Goo.ne.jp; 8) Microsoft.com; 9) Amazon.co.jp; BIGLOBE.ne.jp.

After the United States, Japan is YouTube’s biggest market. You Tube is working with several companies in Japan t boost its presence there,

The overall online advertising market in Japan had sales of 706.9 billion yen ($8.5 billion) in 2009. As of late 2005, online shopping was a $47 billion market in Japan.

Japan’s major service providers include @nifty, OCN, Biglobe and Son-net, managed by subsidiaries of Fujitsu, NTT, NEC and Sony respectively.

Domain names with Japanese script debuted in September 2009.

See Cell Phones

Rakuten

Rakuten is Japan’s largest online retailer. It has been growing at a rate of about 60 to 70 percent a year and owns the Japan League’s newest baseball team. Amazon is pretty well-established in Japan. It operates an online shopping mall. Rakuten posted a ¥55 billion loss for fiscal 2008 even though is increases ales by 16.8 percent. In 2007 it posted a profit of ¥36.9 billion, Most of the losses in 2008 were attributed to losses from its sales in Tokyo Broadcasting Systems, who share price plummeted in 2008.

Hiroshi Mikitani, Rakuten's founder and chief executive and a Harvard Business School graduate, founded Rakuten here in 1997 and took it public in 2000. His Internet vending business has grown on the popularity and efficiency of its business model. [Source: Reuters, New York Times, September 15, 2010]

The company, with 64 million customers in Japan and sales of 298 billion yen ($3.54 billion) in 2009 has not set up its own warehouses or carried its own inventory. Instead, it serves as a portal to nearly 36,000 merchants from around Japan that sell a diversity of products, like cosmetics and sporting equipment. And Rakuten's overseas activities are likewise based on playing the digital middleman, little encumbered by physical products or real estate.

After setting up shop in Taiwan in 2008 and Thailand in 2009, Mr. Mikitani has picked up the pace. In January 2010, Rakuten announced a joint e-commerce venture with the Chinese search giant Baidu. In May and June 2010 it has acquired the American online retailer Buy.com for $250 million and paid a similar amount for a European Web shopping site and announced a joint venture in Indonesia. The PriceMinister deal, in June, gave Rakuten access to customers in France, Britain and Spain, and plans are under way to bring the service to more European countries.

At Rakuten, the strong yen is helping propel the company toward its goal of entering more than two dozen overseas markets in the next three to five years. Although the company has branched out into a small universe of online services---like a travel site, an auction site and Internet stock trading---the potential for further growth in Japan is limited, compared with the opportunities overseas, Mr. Mikitani says. Rakuten is also flush with cash after earning a record operating profit of $336.5 million in the first half of 2010, up 20.6 percent from the same period last year.

And yet, while dominant in Japan, the company is still dwarfed almost everywhere else by Amazon, whose sales are about five times Rakuten's. Mr. Mikitani knows it will take more than a high-flying currency to help him build a more global company. Earlier this year, he shocked corporate Japan by declaring that Rakuten's working language would henceforth be English, even for conversations between Japanese employees.

''We're going to see many American managers, many European managers, many Chinese managers here in this office,'' Mr. Mikitani said in the interview. ''And we're going to send Japanese managers abroad. This is going to be a global organization,'' he said. ''If you don't want to learn English, you should just leave.''

2channel Managed by a Dummy Singaporean Corporation

2Chanel is Japan’s largest Internet bulletin board. As of March 2007, the operator the 2Chanel had 43 civil lawsuits imposed on it for things like libel and failing to delete sensitive information or slanderous remarks made on 2Chanel. It owed more than $3 million fines which he refused to pay.

Yoichiro Tanaka wrote in the Yomiuri Shimbun, A Singaporean company supposedly in charge of managing the 2channel online bulletin board was found to be a paper company existing only in name. The Metropolitan Police Department has been investigating 2channel on suspicion of facilitating drug deals by failing to delete a post soliciting such transactions on its bulletin board. [Source: Yoichiro Tanaka, Yomiuri Shimbun, March 28, 2012]

The headquarters of Packet Monster Inc., a company that is supposed to manage 2channel, is registered at a building on Selok Ayer Street in a central part of Singapore surrounded by Chinese restaurants. [Ibid]

However, Effendy Ahmed Rikun Harith Merican, 31, director of Packet Monster, told The Yomiuri Shimbun at a suburban shopping center in Singapore that he only had the company use his name. He added that he had never heard of the name of 2channel. Believing that 2channel is managed in Japan, the MPD has been trying to find out who actually runs the site.According to books written by former 2channel administrator Hiroyuki Nishimura, the website was sold to Packet Monster in 2009 and it is the website's operator. The fees for Rikvin's services are wired from Koriyoshi to Rikvin, Effendy said. [Ibid]

The MPD suspects a person involved with 2channel's board in Japan is the de facto 2channel administrator. The MPD is trying to determine who is in charge of deleting bulletin board posts, it said. "I think [Nishimura sold 2channel to a Singapore company], to avoid a lawsuit," a senior police official said. The MPD plans to specify the person who asked Effendy to go through the procedure at Rikvin. It also plans to further investigate how money was provided to Packet Monster. [Ibid]

Bitcoin and its Mysterious Inventor Satoshi Nakamoto

Joshua Davis wrote in The New Yorker: “There are lots of ways to make money: You can earn it, find it, counterfeit it, steal it. Or, if you're Satoshi Nakamoto, a preternaturally talented computer coder, you can invent it. That's what he did on the evening of January 3, 2009, when he pressed a button on his keyboard and created a new currency called bitcoin. It was all bit and no coin. There was no paper, copper, or silver---just thirty-one thousand lines of code and an announcement on the Internet. [Source: Joshua Davis, The New Yorker, October 10, 2011]

Nakamoto, who claimed to be a thirty-six-year-old Japanese man, said he had spent more than a year writing the software, driven in part by anger over the recent financial crisis. He wanted to create a currency that was impervious to unpredictable monetary policies as well as to the predations of bankers and politicians. Nakamoto's invention was controlled entirely by software, which would release a total of twenty-one million bitcoins, almost all of them over the next twenty years. Every ten minutes or so, coins would be distributed through a process that resembled a lottery. Miners---people seeking the coins---would play the lottery again and again; the fastest computer would win the most money. [Ibid]

Interest in Nakamoto's invention built steadily. More and more people dedicated their computers to the lottery, and forty-four exchanges popped up, allowing anyone with bitcoins to trade them for official currencies like dollars or euros. Creative computer engineers could mine for bitcoins; anyone could buy them. At first, a single bitcoin was valued at less than a penny. But merchants gradually began to accept bitcoins, and at the end of 2010 their value began to appreciate rapidly. By June of 2011, a bitcoin was worth more than twenty-nine dollars. Market gyrations followed, and by September the exchange rate had fallen to five dollars. Still, with more than seven million bitcoins in circulation, Nakamoto had created thirty-five million dollars of value. [Ibid]

And yet Nakamoto himself was a cipher. Before the debut of bitcoin, there was no record of any coder with that name. He used an e-mail address and a Web site that were untraceable. In 2009 and 2010, he wrote hundreds of posts in flawless English, and though he invited other software developers to help him improve the code, and corresponded with them, he never revealed a personal detail. Then, in April, 2011, he sent a note to a developer saying that he had "moved on to other things." I Ie has not been heard from since. When Nakamoto disappeared, hundreds of people posted theories about his identity and whereabouts. Some wanted to know if he could be trusted. Might he have created the currency in order to hoard coins and cash out? "We can effectively think of 'Satoshi Nakamoto' as being on top of a Ponzi scheme," George Ou, a blogger and technology commentator, wrote. [Ibid]

It appeared, though, that Nakamoto was motivated by politics, not crime. He had introduced the currency just a few months after the collapse of the global banking sector, and published a five-hundred-word essay about traditional fiat, or government-backed, currencies. "The root problem with conventional currency is all the trust that's required to make it work," he wrote. "The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve.” [Ibid]

Developing Bitcoin

Joshua Davis wrote in The New Yorker: “Banks, however, do much more than lend money to overzealous homebuyers. They also, for example, monitor payments so that no one can spend the same dollar twice. Cash is immune to this problem: you can't give two people the same bill. But with digital currency there is the danger that someone can spend the same money any number of times. Nakamoto solved this problem using innovative cryptography. Hie bitcoin software encrypts each transaction---the sender and the receiver are identified only by a string of numbers---but a public record of every coin's movement is published across the entire network. Buyers and sellers remain anonymous, but everyone can see that a coin has moved from A to B, and Nakamoto's code can prevent A from spending the coin a second time. [Source: Joshua Davis, The New Yorker, October 10, 2011]

Nakamoto's software would allow people to send money directly to each other, without an intermediary, and no outside party could create more bitcoins. Central banks and governments played no role. If Nakamoto ran the world, he would have just fired Ben Bernankc, closed the European Central Bank, and shut down Western Union. "Everything is based on aypto proof instead of trust," Nakamoto wrote in his 2009 essay. [Ibid]

Nakamoto posted a nine-page technical paper describing how bitcoin would function. That document included direct references to the work of Stuart Habcr, a researcher at H.P. Labs, in Princeton. Haber is a director of the International Association for Cryptologic Research and knew all about bitcoin. "Whoever did this had a deep understanding of cryptography," Haber said when I called. "They've read the academic papers, they have a keen intelligence, and they're combining the concepts in a genuinely new way."

Nakamoto had good reason to hide: people who experiment with currency tend to end up in trouble. In 1998, a Hawaiian resident named Bernard von Notllaus began fabricating silver and gold coins that he dubbed Liberty' Dollars. Nine years later, the U.S. government charged Notllaus with "conspiracy against the United States." He was found guilty and is awaiting sentencing. "It is a violation of federal law for individuals... to create private coin or currency systems to compete with the official coinage and currency of the United States," the F.B.I, announced at the end of the trial. [Ibid]

Online currencies aren't exempt. In 2007, the federal government filed charges against e-Gold, a company that sold a digital currency redeemable for gold. The government argued that the project enabled money laundering and child pornography, since users did not have to provide thorough identification. The company's owners were found guilty of operating an unlicensed money-transmitting business and the C.E.O. was sentenced to months of house arrest The company was effectively shut down. [Ibid]

Nakamoto seemed to be doing the same things as these other currency developers who ran afoul of authorities. He was competing with the dollar and he insured the anonymity of users, which made bitcoin attractive for criminals. This winter, a Web site was launched called Silk Road, which allowed users to buy and sell heroin, LSD, and marijuana as long as they paid in bitcoin. [Ibid]

Still, Lewis Solomon, a professor emeritus at George Washington University Law School, who has written about alternative currencies, argues that creating bitcoin might be legal. "Bitcoin is in a gray area, in part because we don't know whether it should be treated as a currency, a commodity like gold, or possibly even a security," he says. Gray areas, however, are dangerous, which may be why Nakamoto constructed bitcoin in secret. It may also explain why he built the axle with the same peer-to-peer technology that facilitates the exchange of pirated movies and music: users connect with each other instead of with a central server. There is no company in control, no office to raid, and nobody to arrest. [Ibid]

Trying to Break Bitcoin

Joshua Davis wrote in The New Yorker: “Bitcoin, however, was doomed if the code was unreliable. Earlier this year, Dan Kaminsky, a leading Internet-security researcher, investigated the currency and was sure he would find major weaknesses. Kaminsky is famous among hackers for discovering, in 2008, a fundamental flaw in the Internet which would have allowed a skilled coder to take over any Web site or even to shut down the Internet. Kaminsky alerted the Department of Homeland Security and executives at Microsoft and Cisco to the problem and worked with them to patch it. He is one of the most adept practitioners of "penetration testing," the art of compromising the security of computer systems at the behest of owners who want to know their vulnerabilities. Bitcoin, he felt, was an easy target. [Source: Joshua Davis, The New Yorker, October 10, 2011]

"When I first looked at the code, I was sure 1 was going to be able to break it," Kaminsky said, noting that the programming style was dense and inscrutable. "The way the whole thing was formatted was insane. Only the most paranoid, painstaking coder in the world could avoid making mistakes.” [Ibid]

Kaminsky lives in Seattle, but, while visiting family in San Francisco in July, he retreated to the basement of his modi-cr's house to work on his bitcoin attacks. In a windowless room jammed with computers, Kaminsky paced around talking to himself, trying to build a mental picture of the bitcoin network. I Ie quickly identified nine ways to compromise the system and scoured Nakamoto's code for an insertion point for his first attack. But when he found the right spot, there was a message waiting for him. "Attack Removed," it said. The same thing happened over and over, infuriating Kaminsky. "1 came up with beautiful bugs," he said. "But every time 1 went after the code there was a line that addressed the problem.” [Ibid]

He was like a burglar who was certain that he could break into a bank by digging a tunnel, drilling through a wall, or climbing down a vent, and on each attempt he discovered a freshly poured cement barrier with a sign telling him to go home. "I've never seen anything like it," Kaminsky said, still in awe. Kaminsky ticked off the skills Nakamoto would need to pull it off. "He's a world-class programmer, with a deep understanding of the C++ programming language," he said. "He understands economics, cryptography, and peer-to-pecr networking." "Either there's a team of people who worked on this," Kaminsky said, "or this guy is a genius.” [Ibid]

Using the Bitcoin System

Joshua Davis wrote in The New Yorker: “Bitcoins can be used online to purchase beef jerky and socks made from alpaca wool. Some computer retailers accept them, and you can use them to buy falafel from a restaurant in Hell's Kitchen. In late August, I learned that bitcoins could also get me a room at a Howard Johnson hotel in Fullerton, California, ten minutes from Disneyland. I booked a reservation for my four-year-old daughter and me and received an e-mail from the hotel requesting a payment of 10.305 bitcoins. [Source: Joshua Davis, The New Yorker, October 10, 2011]

I set up an account with Mt. Gox, the leading bitcoin exchange, and transferred a hundred and twenty dollars. A few days later, I bought 10.305 bitcoins with the press of a button and just as easily sent them to the Howard Johnson. It was a simple transaction that masked a complex calculus. In 1971, Richard Nixon announced that U.S. dollars could no longer be redeemed for gold. Ever since, the value of the dollar has been based on our faith in it. We trust that dollars will be valuable tomorrow, so we accept payment in dollars today. Bitcoin is similar: you have to trust that the system won't get hacked, and that Nakamoto won't suddenly emerge to somehow plunder it all. Once you believe in it, the actual cost of a bitcoin---five dollars or thirty---depends on factors such as how many merchants arc using it, how many might use it in the future, and whether or not governments ban it. [Ibid]

My daughter and I arrived at the Howard Johnson on a hot Friday afternoon and were met in the lobby by Jefferson Kim, the hotel's cherubic twenty-eight-year-old general manager. "You're the first person who's ever paid in bitcoin," he said, shaking my hand enthusiastically. Kim explained that he had started mining bitcoins two months earlier. He liked that the currency was governed by a set of logical rules, rather than the mysterious machinations of the Federal Reserve. A dollar today, he pointed out, buys you what a nickel bought a century ago, largely because so much money has been printed. And, he asked, why trust a currency backed by a government that is fourteen trillion dollars in debt?

The truth is that most people don't spend the bitcoins they buy, they hoard them, hoping that they will appreciate. Businesses are afraid to accept them, because they're new and weird---and because the value can fluctuate wildly. (Kim immediately exchanged the bitcoins 1 sent him for dollars to avoid just that risk.) Still, the currency is young and has several attributes that appeal to merchants. Robert Schwarz, the owner of a computer-repair business in Klamath Falls, Oregon, began selling computers for bitcoin to sidestep steep credit-card fees, which he estimates cost him three per cent on every transaction. "One bank called me saying they had the lowest fees," Schwarz said. "1 said,' No, you don't. Bitcoin does.' " Because bitcoin transfers can't be reversed, merchants also don't have to deal with credit-card charge-backs from dissatisfied customers. Like cash, it's gone once you part with it. [Ibid]

Bitcoin Miner

Joshua Davis wrote in The New Yorker: “I travelled to Glasgow, Kentucky, to see what bit-coin mining looked like. I had come to visit Kevin Groce, a forty- two-year-old bitcoin miner. His uncles had a garbage-hauling business and had let him set up his operation at their facility. The dirt parking lot was jammed with garbage trucks, which recked in the summer sun. [Source: Joshua Davis, The New Yorker, October 10, 2011]

"I like to call it the new moonshining," Groce said, in a smooth Kentucky drawl, as he led me into a darkened room. One wall was lined with four-foot-tall homemade computers with blinking green and red lights. The processors inside were working so hard that their temperature had risen to a hundred and seventy degrees, and heat radiated into the room. Each system was a jumble of wires and hacked-together parts, with a fan from Walmart duct-taped to the top. Groce had built them three months earlier, for four thousand dollars. Ever since, they had generated a steady flow of bitcoins, which Groce exchanged for dollars, averaging about a thousand per month so far. He figured his investment was going to pay off. [Ibid]

Groce was wiry, with wisps of gray in his hair, and he split his time between working on his dad's farm, repairing laptops at a local computer store, and mining bitcoin. Grace's father didn't understand Kevin's enthusiasm for the new currency and expected him to take over the farm. "If it's not attached to a cow, my dad doesn't think much of it," Groce said. Groce was engaged to be married, and planned to use some of his bitcoin earnings to pay for a wedding in Las Vegas later in the year. He had tried to explain to his fiancee how they could afford it, but she doubted the financial prudence of filling a room with bitcoin-mining rigs. "She gets to cussing every time we talk about it," Groce confided. Still, he was proud of the powerful computing center he had constructed. The machines ran non-stop, and he could control them remotely from his iPhone. The arrangement allowed him to cut tobacco with his father and monitor his bitcoin operation at the same time. [Ibid]

Nakamoto knew that competition for bitcoins would eventually lead people to build these kinds of powerful computing clusters. Rather than let that effort go to waste, he designed software that uses the processing power of the lottery players to confirm and verify transactions. As people like Groce try to win bitcoins, their computers arc harnessed to analyze transactions and insure that no one spends money twice. In other words, Groce's backwoods operation functioned as a kind of bank. [Ibid]

Trying to Discover the Identity of Bitcoin’s Creator

Joshua Davis wrote in The New Yorker: “Soon after creating the currency, Haber noted that the community of cryptographers is very small: about three hundred people a year attend the most important conference, the annual gathering in Santa Barbara. In all likelihood, Nakamoto belonged to this insular world. If I wanted to find him, the Crypto 2011 conference would be the place to start. Here we go, team!" a cheerleader shouted before two burly guys heaved her into the air. [Source: Joshua Davis, The New Yorker, October 10, 2011]

This was Crypto 2011, and the list of attendees included representatives from the National Security Agency, the U.S. military, and an assortment of foreign governments. Cryptographers are little known outside this hermetic community, but our digital safety depends on them. They write the algorithms that conceal bank files, military plans, and your e-mail. [Ibid]

Nakamoto's extensive online postings have some distinctive characteristics. First of all, there is the flawless English. Over the course of two years, he dashed off about eighty thousand words---the approximate length of a novel---and made only a few typos. He covered topics ranging from the theories of the Austrian economist Ludwig von Mises to the history of commodity markets. Perhaps most interestingly, when he created the first fifty bitcoins, now known as the "genesis block," he permanendy embedded a brief line of text into the data: "The Times 03/fan/2009 Chancellor on brink of second bailout for banks.” [Ibid]

This is a reference to a Times of London article that indicated that the British government had failed to stimulate theeconomy. Nakamoto appeared to be saying that it was time to try something new. The text, hidden amid a jumble of code, was a sort of digital batde cry. It also indicated that Nakamoto read a British newspaper. He used British spelling ("favour," "colour," "grey," "modernised") and at one point described something as being "bloody hard." An apartment was a "flat," math was "maths," and his comments tended to appear after normal business hours ended in the United Kingdom..I stared at the attendee list... I ran my finger past dozens of names and addresses, circling residents of the United Kingdom and Ireland. There were nine. [Ibid]

I soon discovered that six were from the University of Bristol, and they were all together at one of the conference's cocktail parties. They were happy to chat but entirely dismissive of bitcoin, and none had worked with peer-to-pccr technology. "It's not at all interesting to us," one of them said. The two other cryptographers from Britain had no history with large software projects.

Is Michael Clear Bitcoin’s Creator?

Then I started looking into a man named Michael Clear. Clear was a young graduate student in cryptography at Trinity College in Dublin. Many of the other research smdents at Trinity posted profile pictures and phone numbers, but Clear's page just had an e-mail address. A Web search turned up three interesting details. In 2008, Clear was named the top computer-science undergraduate at Trinity. The next year, he was hired by Allied Irish Banks to improve its currency-trading software, and he co-authored an academic paper on peer-to-peer technology. The paper employed British spelling. Clear was well versed in economics, cryptography, and peer-to-peer networks. [Ibid]

I e-mailed him, and we agreed to meet the next morning on the steps outside the lecture hall. Shortly after the appointed time, a long-haired, square-jawed young man. I told him I had read about his work for Allied Irish, as well as his paper on peer-to-peer technology, and was interested because I was researching bitcoin. I said that his work gave him a unique insight into the subject. He was wearing rectangular Armani glasses and squinted so much 1 couldn't see his eyes. [Ibid]

"My area of focus right now is homomorphic encryption," he said. "I haven't been following bitcoin lately." He responded calmly to my questions. I Ie was twenty-three years old and studied theoretical cryptography by himself in Dublin---there weren't any other cryptographers at Trinity. But he had been programming computers since he was ten and he could code in a variety of languages, including C++, the language of bitcoin. Given that he was working in the banking industry during tumultuous times, I asked how he felt about the ongoing economic crisis. "It could have been averted," he said flady. [Ibid]

I told him I had been looking for Nakamoto and thought that he might be here at the Crypto 2011 conference. He said nothing. Finally, I asked, "Are you Satoshi?" He laughed, but didn't respond. There was an awkward silence... I then took one more opportunity to question him and to explain all the reasons that I suspected his involvement. Clear responded that his work for Allied Irish Banks was brief and of "no importance." He admitted that he was a good programmer, understood cryptography, and appreciated the bitcoin design. But, he said, economics had never been a particular interest of his. "I'm not Satoshi," Clear said. "But even if I was I wouldn't tell you.” [Ibid]

The point, Clear continued, is that Nakamoto's identity shouldn't matter. The system was built so that we don't have to trust an individual, a company, or a government. Anybody can review the code, and the network isn't controlled by any one entity. That's what inspires confidence in the system. Bitcoin, in other words, survives because of what you can see and what you can't. Users are hidden, but transactions arc exposed. The code is visible to all, but its origins are mysterious. The currency is both real and elusive---just like its founder. [Ibid]

'You can't kill it," Clear said, with a touch of bravado. "Bitcoin would survive a nuclear attack.” Over the summer, bitcoin actually experienced a sort of nuclear attack. Hackers targeted the burgeoning currency, and though they couldn't break Nakamoto's code, they were able to disrupt the exchanges and destroy Web sites that helped users store bitcoins. The number of transactions decreased and the exchange rate plummeted. Commentators predicted the end of bitcoin. In September, however, volume began to increase again, and the price stabilized, at least temporarily. [Ibid]

Is Vil Lehdonvirta Bitcoin’s Creator?

A week after the Crypto 2011 conference, I received an e-mail from Clear. He said that he would send me his thoughts on bitcoin in a day. He added, '1 also think I can identify Satoshi.” The next morning, Clear sent a lengthy e-mail. "It is apparent that the person(s) behind the Satoshi name accumulated a not insignificant knowledge of applied cryptography," he wrote, adding that the design was "elegant" and required "considerable effort and dedication, and programming proficiency." But Clear also described some of bitcoin's weaknesses. He pointed out that users were expected to download their own encryption software to secure their virtual wallets. Clear felt that the bitcoin software should automatically provide such security. He also worried about the system's ability to grow and the fact that early adopters received an outsized share ofbitcoins. "As far as the identity of the author, it would be unfair to publish an identity when the person or persons has/have taken major steps to remain anonymous," he wrote. "But you may wish to talk to a certain individual who matches the profile of the author on many levels.” [Ibid]

He then gave me a name. For a few seconds, all I could hear on the other end of the line was laughter. "I would love to say that I'm Satoshi, because bitcoin is very clever," Vil Lehdonvirta said, finally. "But it's not me." Lehdonvirta is a thirty-one-year-old Finnish researcher at the HIelsinki Institute for Information Technology. Clear had discovered that Lehdonvirta used to be a video-game programmer and now studies virtual currencies. Clear suggested that he was a solid fit for Nakamoto. [Ibid]

Lehdonvirta, however, pointed out that he has no background in cryptography and limited C++ programming skills. "You need to be a ctypto expert to build something as sophisticated as bit-coin," Lehdonvirta said. "There aren't many of those people, and I'm definitely not one of them.” [Ibid]

Still, Lehdonvirta had researched bitcoin and worried about it. "The only people who need cash in large denominations right now are criminals," he said, pointing out that cash is hard to move around and store. Bitcoin removes those obstacles while preserving the anonymity of cash. Lehdonvirta is on the advisory board of Electronic Frontier Finland, an organization that advocates for online privacy, among other things. Nonetheless, he believes that bitcoin takes privacy too far. "Only anarchists want absolute, unbreakable financial privacy," he said. "We need to have a back door so that law enforcement can intercede.” [Ibid]

But Lehdonvirta admitted that it's hard to stop new technology, particularly when it has a compelling story. And part of what attracts people to bitcoin, he said, is the mystery of Nakamoto's true identity. "Having a mythical background is an excellent marketing trick," Lehdonvirta said. [Ibid]

Image Sources:

Text Sources: New York Times, Washington Post, Los Angeles Times, Daily Yomiuri, Times of London, Japan National Tourist Organization (JNTO), National Geographic, The New Yorker, Time, Newsweek, Reuters, AP, Lonely Planet Guides, Compton’s Encyclopedia and various books and other publications.

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© 2009 Jeffrey Hays

Last updated January 2013

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