OpenBazaar lead backend developer Chris Pacia joins us in-studio. India’s demonetization gone wrong. The Italian government may have to bail out the banks. The IMF chief is guilty of crimes, but too big to jail. A former NY State retirement fund manager charged with taking $180,000 in bribes plus strippers and blow! We talk with Chris about OpenBazaar’s recent VC funding, ShapeShift integration, and dreams for OpenBazaar 2.0! Hackers are using your phone number to steal your crypto! SECURITY ALERT: Ethereum.org forums database compromised. Ethereum Geth client awakens the Swarm. Zcash malware is mining on compromised phones and computers. Bitcoin mining gets a mention on Huffington Post.
All this and more on the Neocash Radio podcast, episode 187 — Wednesday December 21st, 2016!
We’ve written out short overviews of the topics discussed on today’s show below! Be sure to listen in to the whole podcast to get more information, insights, and thoughts on each of them from JJ, Darren, and Randy!
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or Direct Download the podcast as an MP3 – Neocash Radio episode 187
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|Traditional Markets||Crypto Markets|
|Gold $1,132||Bitcoin (BTC) $825|
|Silver $15.93||Litecoin (LTC) $3.57|
|Oil $52.60||Zcash (ZEC) $36.16|
|Dow Jones 19,941 points||Ethereum (ETH) $7.89|
|30Y UST Yield 3.112%||DASH $9.80|
|Euro (EUR) $1.04||Monero (XMR) $8.41|
|Chinese Yuan (CNY) $0.14||Augur REP $2.81|
|British Pound (GBP) $1.24||1 Doge = 1 Doge|
India’s Prime Minister Narendra Modi’s secret plan to secure a payday for the Central Bank of India seems to have flopped. Targeting the black market – or in this case the untaxed – with the excuse of terrorism, PM Modi announced a phase-out of 500 and 1000 rupee notes on November 8th. Note holders have until December 30th to exchange the old notes for newly printed ones at banks across the country. The plan projected a profit for the Central bank of roughly $45 billion dollars. Some ignorant bureaucrats estimated that 21% of the currency would not be exchanged even after studies concluded that only 6% of India’s black market wealth is held in cash. In 2012 India’s Central Board of Direct Taxes advised against the demonetization scheme as well.
PM Modi went ahead with his plan nonetheless, and countless Indians have suffered because of it. The economy has slumped as consumers are struggling to get a hold of enough of the new notes. As expected the plan was poorly executed and there were not enough new notes printed to meet initial demands.
Bitcoin has seen a dramatic increase in adopting in India as individuals look to other methods to ease the currency crunch. Many bitcoin startups have seen a boost in interest and users as a result. The short-term ramifications are not dazzling for bitcoin but the long-term outlook is very good as more and more people not only become familiar with the cryptocurrency but have experience using it.
Alleged tax-evaders have been targeted in raids by the country’s Income Tax department with bureaucrats at the top of the list. Rumors have been circulating that India may ban gold imports but there is little merit. India culture is one where gold is a critical part of weddings and the main store of long-term value.
Make no mistake, this is not about terrorism or black-markets or money laundering. It is strictly about the Tax authority getting their piece of the pie and the Central bank getting another payday off the backs of hardworking Indians. As if the insidious inflation tax and fractional reserve banking were not enough. These are truly some of the worst people in the world.
Related reading: Pakistan is now also demonetizing, looking to withdraw 5000 rupee note over the next 3-5 years.
Italian Government Wins Vote on Debt Boost for Banks; Bailout Likely for Banca Monte Piaschi di Siena
In Episode 178, we talked about how the world’s oldest bank—Banca Monte dei Paschi di Siena—was involved in creating false accounts to hide losses from derivative gambling. In Episode 185, we covered the news surrounding Italy’s rejection of a Constitutional Referendum. Well, it turns out that Italy’s parliament can move pretty fast after all; they’ve agreed to raise the public debt by €20 billion, with speculation that some of that will be used to bail out Banca Monte now that news has broken of the bank failing to raise $5 billion from private investors. That should come as no surprise given that bank’s stock value has fallen more 87% this year with the total value at less than €500 million.
Shares in the oldest bank in the world were temporarily halted from trading in Milan this morning after Banca Monte dei Paschi’s stock plummeted by 17%.
IMF chief Christine Lagarde found guilty for past $425mln payout to French tycoon; no fine or sentence imposed
The International Monetary Fund is part of a triumvirate of International Control and Consolidation Villains when combined with the World Trade Organization and the World Bank. These secretive institutions have virtually no accountability and carry out sinister scandals. At the core what the IMF does is offer or coordinate very attractive loans to governments and municipalities with a high risk of default. Sometimes one loan, sometimes a series. Once default has occurred the IMF’s real agenda comes alive: Policy manipulation and austerity. The IMF then makes demands of the government policy including determining trade rates and partners as well as austerity measures meant to shift funding away from welfare and healthcare services and toward private banking and corporate entities. India’s shift away from farming is a good example of the policy influence. By making a country with billions of people dependent on food from the north, the villains have created a situation where India has a weaker bargaining position. By having countries in the North focus on farming export we see a transfer of wealth from the weaker importing countries to the stronger exporting countries.
The latest news concerns the leader of the IMF—Ms. Christine Lagarde—who was found guilty of “negligence by a person in a position of public authority.” The verdict surrounds the case of Bernard Tapie, a flamboyant french businessman, and his stock in Adidas. In 1993 Mr. Tapie used a bank called Credit Lyonnais to sell the shares at a specific price. Credit Lyonnais was nationalized in 1945 and at this point was only part state-owned. The bank was on the verge of bankruptcy and defrauded Mr. Tapie by selling his shares for more and keeping the profits.
Mr. Tapie sued Credit Lyonnais and the court case went on for many years. During the length of the case Credit Lyonnais was fully privatized in 1999 and by 2003 had merged with another banks. Two name changes later it is now called LCL or Le Credit Lyonnais.
Here’s where the story gets interesting. Bernard Tapie had been elected as a Socialist Minister and had been a member of the Radical Party of the Left. In 2007 after 14 years of court battles he swings his political support over to then Minister of the Interior Nicholas Sarkozy who went on to become the 23rd President of France. Not long after the election Sarkozy’s pick for Finance Minister Christine Lagarde intervenes in the 14 year-long court case and calls for a binding arbitration.
On July 7th, 2008, the Arbitration found in favor of Bernard Tapie for €404 million (~$425 million USD). The French Finance Ministry was on the hook and the public was outraged at the judgement. Then-Ministry head Christine Lagarde did not challenge the judgement because it would have cause costly new lawsuits for Bernard Tapie… who had just helped get her boss elected.
Ultimately, this latest decision set the facts straight, but will have no real effect on Ms. Lagarde. The court decided not to impose a sentence or fine on her, citing her “good reputation” and “international standing” — reaffirming the class system in play. Judge Martine Ract Madoux also threw another favor to the guilty but unpunished: “The context of the global financial crisis in which Madame Lagarde found herself in should be taken into account.” Bernard is going to have to repay that money he was awarded, but this just underscores the divide between the rulers and the ruled.
The IMF stands behind Ms. Lagarde and retains “full confidence” in her … but JJ thinks the only thing you can be confident of is that Lagarde will continue to carry out her duties as an economic hitman.
NY State Pension Fund’s $2bln Pay-to-Play Scandal Fueled by Bribes, Drugs, Lavish Trips, and Prostitutes
Navnoor Kang, once responsible for managing over $53 billion in New York State employee retirement funds, has been accused of taking at least $180,000 in bribes after directing over $2 billion in pension business to two brokers—Gregg Schonhorn and Deborah Kelley. The brokers earned millions of dollars in commissions for themselves and their firms, according to an indictment filed in federal court this week.
The alleged bribes weren’t just cash; the court papers mention cocaine, strippers, nightclub bottle service, prostitutes, a $17,000 watch, weekend Montreal getaways, a Utah ski trip, plus tickets to a Paul McCartney concert in New Orleans, several Broadway shows, and the U.S. Open.
New York State Common Retirement Fund is the nation’s third largest state pension fund, holding some $184 billion in assets. Kang served as Director of Fixed Income and Head Portfolio Strategist there for just over two years before being fired in February according to the state comptroller’s office.
This is not the first time this has happened to this particular office either, and it comes after so-called safeguards were put in place in 2010, when former NY comptroller Alan Hevesi pleaded guilty to felony charges of “receiving reward for official misconduct.” A four-year investigation revealed that Hevesi received nearly $1 million in bribes for state pension business; that scandal led to criminal charges for eight people, with another 24 individuals and companies agreeing to civil settlements totaling $170 million. Hevesi was released from jail after serving 20 months of a maximum four-year sentence.
Hevesi had resigned in 2006 after it was found he was using four state employees to run personal errands and chauffeur his wife around; he paid $206,000 in restitution to the state and a $5,000 fine, but received no jail time or probation for those charges.
OpenBazaar 1.1.10 Released – Make Purchases with Ether, Dash, Monero and More via ShapeShift.io Integration
OpenBazaar lead backend developer Chris Pacia joins us once again in the Neocash Radio studio! OpenBazaar is an open-source peer-to-peer marketplace that is powered by Bitcoin. (Think of it like a decentralized eBay that uses cryptocurrency.) They’ve recently raised $3 million in new funding and announced a ShapeShift integration to allow users to pay for their purchases with altcoins.
Chris talks with us about his plans and dreams for OpenBazaar 2.0, including improved networking/IPFS functionality, a Bitcoin wallet built into the app, big performance upgrades, and a user interface more similar to those we see at traditional e-commerce sites. (In browser, perhaps?)
Chris has previously appeared on Neocash Radio episode 151 (4/10/16) and took part in a special bonus episode from 12/9/15 titled “Matt Whitlock and Chris Pacia Debate Replace by Fee Proposals” moderated by Neocash Radio co-host Dr. Darren Tapp.
Hackers are using social engineering to take control of people’s phone numbers, emails, and cryptocurrency wallets. Forbes writer Laura Shin takes a look at how malicious actors are able to get a phone company to port your number into their control, then reset the passwords on your email using the two-factor authentication codes that are sent to what used to be your phone number.
This article looks at early Bitcoin adopter Jered Kenna, and how he lost millions of dollars’ worth of BTC in this kind of social engineering scam:
“Within seven minutes of being locked out of his first account, Kenna was shut out of of up to 30 others, including two banks, PayPal, two bitcoin services — and, crucially, his Windows account, which was the key to his PC.”
Shin says Kenna is “one of a spate of recent hackings of high-profile cryptocurrency industry players such as venture capitalists, entrepreneurs, C-level executives and others who have had their phone numbers hijacked.”
There are several great tips to help protect your phone and email accounts from social engineering on the Kraken blog that are well worth checking out.
Related update: On last week’s podcast episode, we talked a little bit about Augur & Ethereum supporter Bo Shen getting his REP & ETH accounts getting drained in a similar way. Augur’s Jack Peterson later updated to say that Changelly was able to return about a third of the stolen funds to Shen in BTC.
Ethereum developer Hudson Jameson reported that someone had gotten unauthorized access to one of the databases from http://forum.ethereum.org. Some 16,500 forum users were affected, with the hackers gaining access to usernames, email addresses, IP addresses, public and private messages, profile info, and hashed passwords.
All forum users’ passwords have been reset, and users who may have had their information compromised are being contacted via email. The Ethereum team is also implementing additional security measures including encrypting sensitive data (this wasn’t already being done?!), and removing recovery phone numbers from email accounts.
The attacker claims to be the same person(s) that hacked Bo Shen, and used social engineering to gain control of a mobile phone number to get access to other accounts, including one which had access to this ETH forum database backup.
Ethereum’s recent geth 1.5 client release includes an alpha version of Swarm, “a distributed storage platform and content distribution service; a native base layer service of the Ethereum web3 stack.” Swarm is similar to an FTP server that allows users to upload/download/share files, but Swarm does so in a way that is completely decentralized and peer-to-peer, with a built-in incentive system that allows participants to sell bandwidth and storage against Ether.
The alpha version of Swarm can be tested in Ethereum’s Ropsten testnet, though the incentive system is not enabled during testing. To show how Swarm works, Ethereum is running the Swarm homepage using a 35-strong decentralized cluster on the Azure cloud.
Earlier this month, Kaspersky Lab security researcher Aleks Gostev made a blog post detailing the return of “botnet mining” — hidden malware that uses infected computers to mine cryptocurrencies and channel the rewards to the attacker’s wallet. Just days after the launch of new cryptocurrency Zcash—which we covered on Neocash Radio episode 180—Kaspersky Labs began noting several incidents where Zcash mining software was installed on users’ computers without their permission.
Now, Kaspersky Labs has identified around 1,000 unique users who have some version of the Zcash miner installed on their computers—but running under a different name like system.exe, taskmngr.exe, or svchost.exe—which suggests the computers were likely infected without the owners’ knowledge. This type of malware is often hidden and bundled with pirated software downloaded from peer-to-peer torrent networks and other untrusted publishers.
With Zcash, an average computer can mine at about 20 hashes per second; extrapolate that out to a thousand infected computers, and now you’re mining at about 20,000 hashes a second, which would rack up around $30,000 a year for the attacker at current market prices. And while the infected users may not know the program was installed on their computer or smartphone, they’ll likely see a rise in their electric bill and can see a sizeable slowdown in their computer speed as the mining software can eat up to 90% of the device’s RAM.
Bitcoin mining bots were of concern several years ago, but they became unprofitable and largely dried up with the advent of ASICs—specialized chips that are exceptionally efficient at mining Bitcoin. But Zcash is touted by its creators as being ASIC-resistant, allowing for CPU and GPU mining to stay potentially profitable, even for slower machines or even a smartphone.
“This may make Zcash mining less resource-intensive and thus more decentralized, but, somewhat ironically, it may also have the unintended side effect of making botnet mining a consistently attractive option, despite diminishing returns.” —Jordan Pearson, for Motherboard
Zcash CEO and founder Zooko Wilcox tells Motherboard: “Unfortunately, we have no way to prevent this kind of thing, since Zcash is an open source network, like Bitcoin, that nobody (including us) controls. Our recommendation to security companies that detect this kind of activity, like Kaspersky, is that their software should alert users when potentially malicious software (like that described in their blog post) is detected, and give the user the option of shutting it down or, if it was deliberately installed by the user, allowing it to run.”
Upcoming event: Zcash core devs will be hosting a “Technical AMA” in their forums on Thursday, Dec 22 from noon-2pm PST
Bitcoin Mining Becoming More Mainstream
The Huffington Post is not a place where we would expect to see an article about Bitcoin, much less an article explaining Bitcoin mining… so we were happy to see this article doing just that! This piece on HuffPo is a soft introduction to the core components of Bitcoin mining, and will expose the idea of cryptocurrency to more people whom may have had no real understanding previously.
Want to learn more about Bitcoin, mining cryptocurrencies, and blockchains? Check out our intro video: “Decrypting Bitcoin: Blockchain Technology Explained”
We will be producing more in-depth videos to explain Ethereum, Dash, and the Federal Reserve soon! We’re also building a video podcast room here at Neocash Radio HQ! Until that’s finished, we’ve started uploading our audio feed to our new YouTube channel! We hope to have video added to the podcast by year’s end! Construction is moving along nicely!