Crypto’s Big Questions

What was once a passing interest of Bitcoin inventor Satoshi Nakamoto, zero-knowledge-proof technology is now a major part of the crypto world.

From privacy coins to shiny iris-scanning orbs, zero-knowledge proofs have become synonymous with crypto, scalability and privacy.

In 2022, investors gave over $700 million in funding to companies pushing the envelope with zero-knowledge proofs. This year, ZK-proofs has arguably become one of the biggest blockchain trends, with several major Ethereum scaling protocols hitting mainnet.

ZK-proofs are a cryptographic protocol that allows one party to prove the truth of a statement to another party without sharing any of the statements contents. 

An often-cited example is proving to a bartender that youre old enough to drink without showing your ID or even telling them your birthdate.

Well, it seems that Satoshi Nakamoto, the pseudonymous creator of Bitcoin, once found the technology pretty interesting.

A better version of Bitcoin

In August 2010, the user Red on the online forum Bitcointalk asked whether there could be a way to improve the privacy of Bitcoin transactions. 

One of the things that bugs me about bitcoin is that the entire history of transactions is completely public, the forum-goer said. Another member piped in, suggesting that zero-knowledge proofs could be the solution. 

This is a very interesting topic, replied Nakamoto.

If a solution was found, a much better, easier, more convenient implementation of Bitcoin would be possible.

However, Nakamoto wasnt convinced the tech could get around the double-spending problem a fundamental flaw that exists in all digital cash protocols where a bad actor could spend the same digital tokens more than once.

Its the need to check for the absence of double-spends that requires global knowledge of all transactions, said Nakamoto.

Its hard to think of how to apply zero-knowledge-proofs in this case. Were trying to prove the absence of something, which seems to require knowing about all and checking that the something isnt included, he argued.

Years later, someone cracks the code

Little did Nakamoto know that the cypherpunks would eventually find a way to solve the problem.

Privacy-focused cryptocurrency Zcash was launched in October 2016 by Electric Coin a firm made up of computer scientists from the formative years of Bitcoin. Zcash was built by modifying Bitcoins original source code.

It was also the first time zero-knowledge proofs were used in a real peer-to-peer cryptocurrency, allowing users to hide or shield the crypto wallet address sending or receiving funds. 

The founding scientist of Zcash, Eli Ben-Sasson, would then go on to found StarkWare, a company known today for using zero-knowledge proofs to scale Ethereum through rollups. 

Ben-Sasson tells Magazine that the early enthusiasm from Bitcoin core developers for ZK-proofs played a pivotal role in his eventual co-founding of StarkWare.

The Bitcoin 2013 conference in San Jose marked my Eureka moment.

Mike Hearn, a then-Bitcoin developer and one of the earliest Bitcoin adopters, went as far as to declare my talk on ZK-proofs as the most crucial of the event due to its potential impact on the future of blockchain. 

It was there that I realized the transformative potential of the Validity Proofs I was developing, says Ben-Sasson.

Fast forward to today, Bitcoin itself now stands ready to enter the world of ZK-proofs.

ZeroSync, a nonprofit founded by three computer scientists (and sponsored by StarkWare), is developing the worlds first ZK light client for Bitcoin.

Long-term, we hope to bring mass scalability to Bitcoin using STARK Proofs, said Robin Linus, co-founder of ZeroSync. 

Linus said that ZeroSync has designed and is currently implementing a layer-2 protocol that could allow Bitcoin to process more than 100 transactions per second while bringing privacy properties to Bitcoin.

This could be a major feat in bringing Bitcoin toward the scalability it needs.

So what would Nakamoto think?

Its evident from Satoshis past remarks that he strongly favored the use of ZK-proofs for privacy, says Ben-Sasson. 

Nakamoto was a stickler for anonymity. His public interactions on Bitcointalk and his emails were all reportedly done using the IP-masking browser, Tor. Its the main reason his public IP address could never be traced back to him. 

The Bitcoin creator even dedicated a section to privacy in the Bitcoin white paper, suggesting users keep their public keys anonymous so that, even though the public can see transactions occurring, they dont know who is involved, like a stock exchange.

Its clear that Satoshi would have been intrigued by the privacy innovations my peers and I contributed to at Zcash, says Ben-Sasson.

Unfortunately, Nakamoto never approached the subject again before he vanished from the public eye on Dec. 12, 2010 the date of his last post on Bitcointalk. 

Ben-Sasson, however, believes if Nakamoto had continued to be active, he would have likely pushed to bring ZK-proofs to Bitcoin. 

While they have recently found their way into Bitcoin through ZeroSync, I believe Satoshi would have been inclined to make the necessary adjustments to integrate them further, he says. 

After all, for Bitcoin to realize its vision as a global currency, the imperative to scale cannot be ignored, especially considering its current state of ossification.

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Stuffed down toilets, dismembered in suitcases — crypto has been the common denominator for several gruesome murders and mysterious deaths this year.

Last month, Bulgarian plumbers were called to clear a blocked drain at an apartment block in the capital of Sofia.

The blockage turned out to be the decomposing remains of 41-year-old United States crypto mogul Christian Peev suspected to have been battered to death with a dumbbell by a friend out of jealousy.

Weeks earlier, a group of children stumbled across the body of missing cryptocurrency millionaire Fernando Prez Algaba in a river in the Buenos Aries province. Police say he was shot three times before being stuffed into a suitcase, pointing the finger at organized crime.

Its only the two most recent cases in a 10-month-long stretch of crypto-related deaths including a helicopter crash in France, a fatal stabbing in the U.S., and a suspected suicide in South Korea, to name a few.

So, whats connecting all of these grizzly deaths around the world?

Organized crime to blame

Ken Gamble, the co-founder and executive chairman of financial crime intelligence firm IFW Global, tells Magazine that many of these kinds of deaths are likely linked to the rise of organized crime and money laundering using crypto. 

Crypto-related crime has become bigger than ever before. And money laundering using cryptocurrency is now the number one way for every organized crime group on the planet.

In May, Gambles organization took down a billion-dollar call center scam syndicate in Malaysia. His firm has investigated a number of criminal organizations across Asia and Europe over the years. 

Whats happening is that these organized crime groups, particularly the Chinese, have suddenly come into masses of money. They have had more money now than theyve ever had traditionally, said Gamble.

Theyre making so much money that its become extremely dangerous now […] they have to now reach out to more groups and more people to try and move the money broadening their money laundering capabilities, he added. 

Gamble argues this has inevitably led to crypto holders getting mixed up with the wrong crowds.

Retribution for deals gone south

Matt Hussey, former editorial director of Near Protocol and a founder of crypto media firm Decrypt, has also been trying to make sense of the murders.

In a May 19 blog on LinkedIn, Hussey argued that some of the killings are the result of disgruntled investors simply taking matters into their own hands and blamed the fuzzy area crypto continues to operate.

Because crypto straddles the legal and illegal worlds, it is regarded by many as a place where law enforcement does not tread. As a result, retribution and revenge are, for some, the only recourse they have, he said. 

In April, a 48-year-old woman was abducted and murdered in the affluent Gangnam District in Seoul, with her assailants suspected of trying to get revenge over a failed crypto investment scheme.

In March, a self-proclaimed Candian crypto king was kidnapped and beaten over three days after he reportedly scammed investors out of millions of dollars. At least one of his alleged captors was one of the dozens of investors who lost money to the alleged scam. Fortunately, the man survived. 

There are people being targeted because they hold crypto or theyve been involved in some shady deals […] There are robberies, there are people that are getting murdered because they hold crypto, added Gamble. 

Crypto holders are easy targets

Some of the deaths could simply be because rich crypto millionaires are seen as easy targets amid a time when the cost of living continues to drive upward. 

Crypto is easy to move and easy to steal. Try walking into a bank and taking some money. Yeah, good luck with that. But beat the crap out of someone and drill holes in them? Youve got a chance of getting away with it, wrote Hussey.

Gamble said there is no doubt that organizations out there are targeting and issuing hits on people who hold a lot of crypto. 

Organized crime figures are going after crypto because its not money in the bank; it’s crypto that you can take off someone like cash.

You can steal their credentials and pack their laptop, and if youve got their passphrase, youve actually got their money.

Or, it has nothing to do with crypto

Of course, there is also a good chance that most of the deaths have nothing to do with crypto or nefarious people at all. 

Out of the 10 reported deaths since November 2022, only the Gangnam womans murder in Seoul was seen as the direct result of her connection to crypto. None of the reports have mentioned any cryptocurrency being stolen by their suspected assailants either. 

Not to mention, three of the deaths arent even being treated as potential homicide.

At the same time, one could also argue that the rise in reported deaths is simply a result of more mainstream coverage of crypto.  

The number of crypto deaths reported by mainstream media went from less than one a year to at least 10 since November 2022, when the crypto industry witnessed the collapse of crypto exchange FTX. 

Data compiled by public relations firm Vuelio shows that the total number of crypto stories pushed by traditional media outlets surged after the collapse of Sam Bankman-Frieds crypto exchange, sometimes even beating out the number of stories written by crypto media outlets. 

It stands to reason that news desks have become more aware of cryptocurrencies over the past year. Someone dying or being murdered somewhere in the world isnt likely to make a headline, but someone dying due to their connection to a purportedly shady world of crypto? You bet itll make a headline. 

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Is Bitcoin the biggest intel honeypot in history? A former NSA agent says “they absolutely have the capability” but others ridicule the idea.

Over the 15 years since Bitcoin was created, there has been no shortage of crazy conspiracy theories about how it was made and where it came from. 

Some believe Bitcoin was the work of a bunch of engineers in the Chinese Communist Party presumably for world domination; others claim Bitcoin is the work of benevolent aliens to help humans evolve.

But one theory with circumstantial evidence supporting it has persisted over the years and it involves one of Americas most secretive intelligence-gathering agencies. 

Theres a small sect of Bitcoiners that believes Satoshi Nakamoto the creator of Bitcoin is, in fact, the United States National Security Agency in disguise.

Many more, of course, think the idea is ridiculous and point out there’s no absolutely no solid evidence to support it.

But where does the theory stem from? Well, one only needs to look into Bitcoins source code.

Its in the code

What makes Bitcoin so secure lies in its use of Secure Hash Algorithm 256, or SHA-256 (read as sha), which is used for everything from deriving transaction IDs and block hashes to addresses and Merkle trees.

Put simply, its a mathematical formula that garbles data into a string of seemingly random text, and its why Bitcoin is basically impossible to crack.

Well, it just so happens that this algorithm is the direct work of Glenn M. Lilly, a mathematician who, under the direction of the NSA, designed and eventually published the algorithm in 2001. Lilly later became the NSAs chief of mathematics research.

The NSA was also one of the first organizations to describe a Bitcoin-like system in a 1996 paper titled How To Make A Mint: The Cryptography Of Anonymous Electronic Cash.

In the paper, the authors proposed a system that uses public-key cryptography to allow users to make anonymous payments without revealing their identity. 

Satoshi Nakamoto is code for the CIA?

Of course, some Bitcoiners don’t think the NSA invented Bitcoin…. they reckon it was the Central Intelligence Agency.

The name of Bitcoins pseudonymous creator, Satoshi Nakamoto, can be interpreted as a reference to the U.S. spy agency. Nakamoto, loosely translated from Japanese, means central, while the name Satoshi means intelligent. 

Speaking of Satoshi, their identity has never been uncovered, prompting some to believe they are likely to have had some form of intelligence training. 

In an interview with Impact Theorys Tom Bilyeu in June, former Goldman Sachs executive and Real Vision CEO Raoul Pal revealed hes believed for years that Bitcoin could be the result of the NSA and the United Kingdoms government experimenting with potential ways to get out of future potential financial disasters. 

I dont think its a coincidence it came out in the financial crisis. I dont think its a coincidence that the halving cycle and all of this is all related.

So, did the NSA create Bitcoin?

Jeff Man, a former NSA cryptanalyst, tells Magazine that its feasible that the NSA could have created Bitcoin as a means to gather intelligence about its enemies, but is doubtful. 

Man joined the NSA in 1986 at the tail end of the Cold War between the Soviet Union and the United States. At the time, the NSA was hiring around 100 people a week to fill roles in critical skills, including engineering, mathematics and computer science, he says.

One of the NSAs main missions is to gather signals (or communications) intelligence necessary for the countrys defense. This became an even higher priority following the September 11, 2001, terror attacks on the World Trade Center.

Asked about whether Bitcoin could have been created to gather intelligence about foreign agents and powers, Man said the agency certainly had the resources to do so. 

Its certainly a possibility. Its certainly feasible, says Man.

Its not outside of the realm of possibility that there would be a concerted effort to set up something like this.

However, Man has strong doubts about it, based on his experience at the agency. He notes that one of the outcomes of the Watergate scandal in 1972 put a congressional spotlight on Americas three-letter agencies, which were found spying on American citizens without proper warrants.

Man believes, at least based on his years at the NSA, that the agency had since been very cautious not to breach its charter and that devising Bitcoin could be seen as spying on its own citizens. 

Historically, in my experience, NSA takes very seriously its charter to only do what NSA does to foreigners, and not U.S. citizens.

Because it would be hard to prove or disprove perhaps who the targets were, or who were the potential targets. It would be hard to say definitively: We did not do any of this capability we did not set it up and target any U.S. citizens. That makes me doubt that it happened.

Man, however, noted that he left the agency back in 1996 and conceded that the 2001 terror attacks and the subsequent Patriot Act may have changed this. 

The Edward Snowden leaks in 2013 alleged the NSA had been gathering data on domestic internet communications without the proper warrants, an idea the U.S. government has denied. 

No, the whole idea is silly

Of course, most Bitcoiners completely dismiss the idea the NSA invented Bitcoin.

While SHA-256 is used in Bitcoin, it also just happens to be one of the most widely used hash algorithms, making its presence in anything from digital signatures to password authentication. 

The fact it was made public in 2001 means that everyone had access to it long before Bitcoin was invented. And no one has ever identified a secret backdoor into the SHA-256 algorithm or suggested a credible way it could be cracked.

Silicon Angles Mellisa Tolentino addressed the notion that Satoshi Nakamoto could be a veiled reference to “Central Intelligence”, writing that the argument is not very compelling. Satoshi Nakamoto is a fairly common Japanese name, and spy agencies don’t tend to leave easter eggs calling attention to the fact theyre involved.

Would the NSA really have given the creator of its secret project such an obvious name? If the NSA really is behind Bitcoin, naming it Central Intelligence would not be a very intelligent move.

Others have argued that Bitcoins first proof-of-concept software was more of a clever patchwork of old cryptography algorithms, which wouldnt be something an organized intelligence behemoth would come up with. 

And the idea that Nakamoto must have intelligence-training credentials, given that he has remained anonymous all these years also falls apart the closer you look at it.

It ignores the fact that thousands (if not millions) of people manage to remain anonymous online everyday, Ian DeMartino wrote in a Cointelegraph editorial.

I have had internet friends that I talked to for years, on message boards and elsewhere, without ever meeting or talking on the phone. I suspect many reading this have had similar experiences. I don’t suspect all of them are CIA agents.

Will we ever find out if the NSA invented Bitcoin?

It seems unlikely well ever know for certain whether the NSA was involved in Bitcoin, at least not in our lifetime, says Man.

You will never get the answer to that definitively until it doesnt matter anymore.

If its this honeypot type of scenario, where its a resource for information […] and its still providing results and information, youre never going to get the definitive answer, he adds.

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