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Colorado high speed rail project could cost more than $30 billion
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Bitcoin: The digital currency that became a target for speculators
Whether you see Bitcoin as the future of finance or a reckless gamble, the digital currency has become headline news over the past year, even as its origins remain shrouded in mystery.
Bitcoin began as a means of payment but quickly became a target for speculators. Faced with wildly fluctuating prices, the recent closure of exchange platforms and government demands for regulation, its future is uncertain.
Here are some facts about the controversial currency.
Q: What is Bitcoin?
A: The name derives from "bit" -- as in a unit of information in computing. Bitcoin is a system of online payment, while bitcoins are the virtual coinage used on the system.
First appearing in 2009, bitcoins are "mined" by networks of linked computers that carry out extremely complex mathematical tasks.
There are currently around 12 million bitcoins in circulation and the system is set up so that it becomes increasingly difficult to produce them, with a maximum limit of 21 million expected by around 2140.
Bitcoin keeps a public register of every unit in existence and the network means that there is no need for a central authority.
The computer power required to carry out the mathematical tasks is so great that it is currently impossible for any single computer to create bitcoins on its own, ensuring that the network remains in control.
Q: Who created Bitcoin?
A: The online software launched in February 2009 was credited to "Satoshi Nakamoto".
For years, it was widely assumed that Nakamoto was nothing more than a pseudonym, but Newsweek magazine said on Thursday that it had discovered the real Satoshi Nakamoto, a Japanese-American ex-physicist aged 64 living as a recluse in California. He however denied having a role in the virtual currency, telling reporters he was not involved.
Q: What are the uses of Bitcoin?
A: Bitcoin allows users to make purchases from anyone who accepts bitcoins. They can also be exchanged against real currencies.
Currently only around 20,000 merchants accept bitcoins worldwide -- and almost no mainstream stores, although in some countries it has become possible to pay for a taxi, book a hotel room or even receive your salary in bitcoins.
Unlike other forms of online payment, such as Paypal, there are no charges for using bitcoins and no commission is paid.
The "miners" that help run the system meanwhile earn bitcoins as they work. Whichever member of the network is first to validate a transaction receives several bitcoins as payment.
Q: How much is a bitcoin worth?
A: Their value has fluctuated wildly, particularly over the last year as it has become better known and attracted mainstream speculators.
Several platforms offer different values at the same time. On March 7 at 1200 GMT, an average of five platforms put the value of one bitcoin at 475 euros ($650).
When it was first launched, it was worth only a few cents, while at one point last year, the value peaked at over $1,000.
Reporters chase alleged Bitcoin creator around Los Angeles
By Aron Ranen and Brandon Lowrey
TEMPLE CITY, California (Reuters) - A Japanese American man thought to be the reclusive multi-millionaire father of Bitcoin emerged from a modest Southern California home and denied involvement with the digital currency before leading reporters on a freeway car chase to the local headquarters of the Associated Press.
Satoshi Nakamoto, a name known to legions of bitcoin traders, practitioners and boosters around the world, appeared to lose his anonymity on Thursday after Newsweek published a story that said he lived in Temple City, California, just east of Los Angeles.
Newsweek included a photograph and a described a short interview, in which Nakamoto said he was no longer associated with Bitcoin and that it had been turned over to other people. The magazine concluded that the man was the same Nakamoto who founded Bitcoin.
Dozens of reporters, including a sprinkling of Japanese media, encircled and camped outside the man's two-story house on Thursday morning, accosting the mailman and repeatedly ringing the doorbell, to no avail. Police cruisers drove by several times but did not stop.
Several times, someone pulled back the drapes on an upstairs window.
In the afternoon, the silver-haired, bespectacled Nakamoto stepped outside, dressed in gray sport coat and green striped shirt, with a pen tucked in his shirt pocket. He was mobbed by reporters and told them he was looking for someone who understood Japanese to buy him a free lunch.
Newsweek estimates his wealth at $400 million.
"I'm not involved in Bitcoin. Wait a minute, I want my free lunch first. I'm going with this guy," Nakamoto said, pointing at a reporter from AP.
"I'm not in Bitcoin, I don't know anything about it," the man said again while walking down the street with several cameras at his heels.
He and the AP reporter made their way to a nearby sushi restaurant with media in tow, before leaving and heading downtown. Los Angeles Times reporter Joe Bel Bruno followed the pair and described the chase in a running stream of tweets. Eventually, the pair dashed into the Associated Press offices in downtown Los Angeles, where reporters are still waiting for Nakamoto to emerge.
WEIRD
Fans see Bitcoin as a digital-world currency beyond the government interference, while critics, whose ranks swelled with the recent close of major bitcoin exchanges Mt. Gox, see a risky investment whose anonymity aids drug dealers and other criminals.
Nakamoto kept a low profile in part to avoid attention of authorities, Newsweek said, and indeed on Thursday the office of Benjamin Lawsky, superintendent of New York's Department of Financial Services, was keen on speaking with him, a source familiar with the situation told Reuters.
Bitcoin is bought and sold on a peer-to-peer network independent of central control. Its value soared last year, and the total worth of bitcoins minted is now about $7 billion.
In the Newsweek article, Nakamoto was credited by Bitcoin's chief scientist, Gavin Andresen, in working out the first codes behind the currency.
A man of few words who refused to discuss anything beyond the currency or even communicate outside of email, Nakamoto was described by his brother in the Newsweek article as "fickle and has very weird hobbies," including a penchant for model trains.
The Japanese-born Nakamoto displayed an unusual aptitude for math as a child. He immigrated with his mother to California in 1959. He was worked for defense and electronics company Hughes Aircraft, but never discussed work because much of it was classified, according to Newsweek interviews with several friends and relatives.
"He's very focused and eclectic in his way of thinking. Smart, intelligent, mathematics, engineering, computers. You name it, he can do it," Newsweek quoted Arthur Nakamoto, his younger brother, as saying.
(Reporting by Brandon Lowrey; and Aron Ranen, writing by Edwin Chan, editing by Peter Henderson)
[Image: A man widely believed to be Bitcoin currency founder Satoshi Nakamoto is surrounded by reporters as he leaves his home in Temple City, California March 6, 2014. By David McNew for Reuters.]
Federal judge rejects Apple's bid to ban Samsung devices
A federal judge Thursday rejected Apple's request to ban an array of Samsung smartphones and tablets found to have infringed on patents held by the U.S. tech giant.
U.S. District Judge Lucy Koh, who oversaw the blockbuster patent trial, finalized the damage award to be paid by the South Korean electronics giant at $929 million.
But in a separate order, the judge denied Apple's request to ban 23 Samsung devices, saying there was no evidence that consumer demand was driven by the infringing elements.
"To persuade the court to grant Apple such an extraordinary injunction -- to bar such complex devices for incorporating three touchscreen software features -- Apple bears the burden to prove that these three touchscreen software features drive consumer demand for Samsung's products," the judge wrote. "Apple has not met this burden."
A jury last year awarded more than $1 billion to Apple for patent infringement, but the judge threw out some of that award and ordered a partial retrial. The final amount awarded was $929 million.
Samsung said in a statement it was "pleased with the court's ruling against an injunction" and agreed "that a few software features alone don't drive consumer demand for Samsung products."
But Samsung said it would appeal the damage award, saying it was "based on erroneous calculation methods."
Apple declined to comment Thursday. But in November, after the latest jury award, the company said "this case has always been about more than patents and money," and that it was "about innovation and the hard work that goes into inventing products that people love."
Both sides have been appealing various aspects of the case, which is likely to be tied up in courts for some time barring an agreement between the two companies.
But because of the fast-moving nature of the business, the devices at issue in the case are no longer being sold.
Judge Koh noted that "the only new fact is that Samsung represents that no infringing units are currently in the marketplace."
She added that "Apple presents no evidence that any current Samsung devices incorporate the patented features. As such, it appears that the public interest slightly favors Samsung."
[Image via Agence France-Presse]
Satoshi Nakamoto: Enigmatic bitcoin creator revealed as Japanese-American physicist
Newsweek said Thursday it had found the enigmatic creator of the online currency bitcoin, a reclusive Japanese-American physicist and model train fan whose name is actually Satoshi Nakamoto.
After years of speculation that the name was a pseudonym for another person or a collective, a Newsweek reporter said 64-year-old Dorian S. Nakamoto, who lives in a modest two-story home in suburban Los Angeles, is the creator of the crypto-currency that has rocked the banking world.
Nakamoto did not admit to being behind the online phenomenon that, since its launch five years ago, has sparked enthusiasm as a financial revolution and scandals over its use to trade drugs and launder money.
And he called the police when the magazine's reporter knocked on his door.
But the magazine said the man, whose quiet career often involved classified work as a systems engineer for the US government and private companies, tacitly acknowledged his role.
"I am no longer involved in that, and I cannot discuss it," he said. "It's been turned over to other people."
In a scoop that heralds the relaunch of its print edition on Friday after two years only online, Newsweek said Nakamoto was born in Japan in 1949 and immigrated to the United States 10 years later.
He studied physics at California State Polytechnic University and worked for a number of different companies, but has apparently not had a steady job since 2002.
He spends much of his time on his model train hobby -- and has apparently not tapped the millions of dollars of bitcoin wealth Newsweek says comes from authoring the computer code behind it.
- A libertarian streak -
His family -- including two younger brothers who are also scientists -- did not know of his link to bitcoin.
"He's a brilliant man," his brother Arthur Nakamoto told Newsweek. "He's very focused and eclectic in his way of thinking. Smart, intelligent, mathematics, engineering, computers. You name it, he can do it."
But they described a man with a deep libertarian streak, intensely private and distrustful of the government and banks.
Ilene Mitchell, one of Nakamoto's six children from two marriages, said he taught her while growing up to "not be under the government's thumb."
Nakamoto's 2008 manifesto for bitcoin stressed the need for an online, electronic cash system that did not go through a financial institution, which requires both trust in the institution and payment for its role as an intermediary.
"What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other," he said.
Analysts have called his structure brilliant in the way it issues bitcoin without a central bank authority, and keeps a record of transactions but also protects users' anonymity via distributed computing.
Gavin Andresen, chief scientist of the Bitcoin Foundation, said he had corresponded online with a man called Satoshi Nakamoto over one year as they refined the computer code that underpins the currency.
He never spoke on the phone to Nakamoto and did not learn anything about his personal life.
"He went to great lengths to protect his anonymity," Andresen told the magazine. "All we talked about was code."
The success of that code has made many wealthy: after trading for cents per bitcoin for the first two years of its existence, in 2011 it began to gain strength as online users increased, rising to $40 a coin by the end of 2012.
Then last year investors and speculators poured in, driving it over $1,100 a coin before falling off to the current $650 level.
With the writers of the original code all having been paid in bitcoin, Newsweek said Nakamoto is now likely worth $400 million.
Newsweek published a picture of Nakamoto and his home and car, a Toyota Corolla, in Temple City, California, east of downtown Los Angeles.
Readers fiercely blasted the author, Leah McGrath Goodman, for revealing the identity and whereabouts of someone who wanted to remain private.
Goodman defended the article, saying via Twitter that "this man invented something that shaped the world."
"We felt showing he lives humbly, despite his achievement, was both telling and inspiring."
Justice Department confirms antitrust probe of Comcast-TWC deal
The US Justice Department said Thursday it has launched an antitrust probe of the mega merger of Comcast and Time Warner Cable.
The $45.2 billion tie-up would unite the largest US cable companies, which also are among the largest broadband Internet providers.
Justice Department spokeswoman Gina Talamona said the agency's antitrust division "is looking at the proposed acquisition involving Comcast and Time Warner."
She said in a statement that Assistant Attorney General Bill Baer would be recused and that "the investigation will be overseen by two experienced antitrust practitioners," principal deputy assistant attorney general Renata Hesse and deputy assistant attorney general David Gelfand.
The deal announced last month raised concerns about the reach of Comcast, which owns NBCUniversal's film and television assets and is one of the largest providers of cable Internet.
Even with a planned divestment, the merger would create a colossus with 30 million customers and some 30 percent of the US pay television market.
The companies said the deal would save $1.5 billion in operating costs and help facilitate the deployment of new technologies for video and Internet.
Backers of the deal claim Comcast and other cable firms are positioning themselves for a new landscape and competing against services like Netflix and telecom operators such as AT&T and Verizon, which offer packages of services to those of Comcast.
Analysts have said regulators would carefully scrutinize the deal, not only due to the creation of a dominant cable television operator but because of Comcast's ownership of one of the major television networks and Hollywood studios.
Comcast, in acquiring NBCU, agreed to abide by so-called net neutrality rules that bar discrimination against competing online services.
But Comcast raised eyebrows last month with a separate deal with Netflix in which the streaming video service would pay for smoother delivery, which could set a precedent for other online services.
Canadian police investigating cyber attack after online bitcoin bank Flexcoin folds
By Julie Gordon and Leah Schnurr
VANCOUVER/TORONTO (Reuters) - Canadian police have launched an investigation after online bitcoin bank Flexcoin, which closed its virtual doors this week, said that it had lost about $600,000 worth of the digital currency in a hacker attack.
The Edmonton, Alberta-based company reported the theft of 896 bitcoins on its website on Monday and said it "does not have the resources (or) assets ... to come back from this loss." It blamed the attack on hackers who had targeted its online wallet.
Bitcoins stored in Flexcoin's cold storage facility, which is basically an offline bank, were not affected by the hack and will be returned to customers, the company said.
The Edmonton Police Service (EPS) said on Wednesday they were investigating the issue.
"I can confirm that detectives from the EPS Economic Crimes Section and Technological Crimes Unit are following up with Flexcoin, and the matter is currently under investigation," said police spokesman Chad Orydzuk.
Flexcoin's demise comes close on the heels of the collapse of Mt. Gox, once the world's dominant bitcoin exchange, which filed for bankruptcy last week after it said it had lost some 850,000 bitcoins.
Bitcoin is a digital currency that is bought and sold on a peer-to-peer network, independent of any central bank or government. Its value soared last year, and the total worth of bitcoins minted is now about $7 billion.
Flexcoin had earlier on Wednesday complained that local authorities were not taking the theft seriously, Tweeting: "My attempts to file a police report were laughed at, I was advised #bitcoin is a scam." But it later Tweeted that it had been in touch with police and would provide more information on Thursday.
While bitcoins are an unregulated currency, a hacker that breaks into a computer to steal bitcoins can be charged with unauthorized access to a computer and mischief to data.
LITTLE RECOURSE
Flexcoin users who lost bitcoins in the hack will likely have little recourse to recoup their funds, though one option may be a class action lawsuit like the one being considered against Mt. Gox, said Stuart Hoegner, a Toronto-based lawyer and general counsel for the Bitcoin Alliance of Canada.
"Short of a class action, people might find the burden of pursuing litigation to be something that's not very attractive," he said.
Another option might be through any potential bankruptcy proceedings for the company, though the outcome of either possibility would likely depend on the state of Flexcoin's books, said Hoegner.
Flexcoin was incorporated in Alberta in 2012 and registered to a rented mailbox in the city of Edmonton, according to provincial records. Its sole director and voting shareholder is James Andrew Gray, who also gave the rented mailbox as his address.
The corporate data did not include a phone number or other means of contacting Gray. He did not respond to queries sent to the Flexcoin Twitter account and the Flexcoin email address or efforts to reach him through social media.
An online forum posted on BitcoinTalk.org in March 2012 said Gray bought Flexcoin from U.S. firm Yooter Interactive Marketing.
Yooter posted a message on its website on Tuesday saying it had not had any contact with Flexcoin or Gray since the deal closed and had exited the bitcoin business entirely.
Flexcoin's website directed users who had lost funds to its terms of service, which state that the company will take every precaution to defend client bitcoins, but "is not responsible for insuring any bitcoins stored in the Flexcoin system."
It further states: "You agree to not hold Flexcoin Inc, or Flexcoin Inc's stakeholders, or Flexcoin Inc's shareholders liable for any lost bitcoins."
THE WILD WEST
The very public downfalls of Mt. Gox and Flexcoin come as bitcoin inches ever closer to the mainstream, with major online retailers like Overstock.com and TigerDirect.com now accepting the digital currency.
As more investors pile in, there's a strong case to be made for regulating crypto-currencies and virtual banks, said Jean-Paul Lam, associate professor of economics at the University of Waterloo, who said that in Canada, the Office of the Superintendent of Financial Institutions (OSFI) should step in.
"I think they will have to step in and try to regulate either the exchange of bitcoins or put an end to the trading of bitcoins," he said.
"The only solution to regulate the market is really to go in and say if you want to be treated like a currency, like a bank, then you're subject to the same regulations as the financial institutions of the land."
Canada's government said last month it will toughen rules targeting money laundering and terrorist financing to keep a closer eye on the use of bitcoin and other virtual currencies.
(Additional reporting by Louise Egan and Randall Palmer in Ottawa; Editing by Cynthia Osterman)
N.C. officers busted for sharing racist video game about shooting 'wetback breeders'
The Department of Justice has accused deputies at one North Carolina sheriff's office of sharing a video game that allows the player to kill pregnant immigrants and other "wetbacks."
Documents filed by the U.S. Department of Justice this week indicated that deputies, including some in leadership positions, in Alamance county emailed links to the video game, The Associated Press reported on Wednesday.
"Captain Mario Wiley emailed several other ACSO employees a link to a game premised on shooting stereotypical Mexican figures, including pregnant women and children, as they attempt to cross the U.S. border," the document explains. “Blood splatters on the screen as the figures are shot, and the final screen of the game shows how many ‘wetbacks’ one has killed.”
The Justice Department also found that deputies told each other racist jokes while discussing the video game over email.
"Sergeant Darryl Myers and Lieutenant Wesley Anderson each forwarded an email joking that when Davey Crockett saw ‘hordes of Mexicans’ approaching the Alamo, he asked ‘are we having landscaping done today?’" the motion notes.
"Makes you feel better anyway, I did my part today, I kept several from coming over!!!" one deputy allegedly wrote after killing virtual immigrants in the game.
The Justice Department argued that Alamance County Sheriff Terry Johnson's failure to stop deputies from sharing the game was part "a total lack of discipline for expressing anti-Latino sentiment."
In December, the DOJ filed a lawsuit against Johnson after two studies determined that Hispanic drivers were six times more likely to be stopped in Alamance County. Lawyer for the DOJ moved on Monday for a summary judgement, saying that the volume of evidence made a trial unnecessary.
Watch the video below from WFMY, broadcast March 5, 2014.
Tesla planning aggressive European expansion
Tesla Superchargers should cover most of Europe by the end of 2014, according to Elon Musk, with 30 new Tesla stores planned for the Old World as well. It’s part of a plan to aggressively market the Model S to foreign customers, with Musk expecting…
Bloomberg predicts solar market will grow more than 20 percent in 2014
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Structure of the Internet under pressure as DDoS cyber attacks get bigger and smarter
By Peter Apps
LONDON (Reuters) - Crashing websites and overwhelming data centers, a new generation of cyber attacks is costing millions and straining the structure of the Internet.
While some attackers are diehard activists, criminal gangs or nation states looking for a covert way to hit enemies, others are just teenage hackers looking for kicks.
Distributed Denial of Service (DDoS) attacks have always been among the most common on the Internet, using hijacked and virus-infected computers to target websites until they can no longer cope with the scale of data requested, but recent weeks have seen a string of particularly serious attacks.
On February 10, internet security firm Cloudflare says it protected one of its customers from what might be the largest DDoS documented so far.
At its height, the near 400 gigabyte per second (gbps) assault was about 30 percent larger than the largest attack documented in 2013, an attempt to knock down antispam website Spamhaus, which is also protected by Cloudflare.
The following day, a DDoS attack on virtual currency Bitcoin briefly took down its ability to process payments. [ID:nL2N0LG1Y8]
On February 20, Internet registration firm Namecheap said it was temporarily overwhelmed by a simultaneous attack on 300 of the websites it registers, and bit.ly, which creates shortened addresses for websites like Twitter, says it was also knocked out briefly in February.
In a dramatic case of extortion, social networking site Meetup.com said on Monday it was fighting a sustained battle against hackers who brought down the site for several days and were demanding $300 to stop. It would not pay, Meetup CEO Scott Heiferman told Reuters.
DDoS attacks were at the heart of attacks blamed on Russian hackers against Estonia in 2007 and Georgia during its brief war with Russia in 2008. It is unclear if they played a role in the current stand-off between Moscow and Ukraine in which communications were disrupted and at least one major government website knocked out for up to 72 hours.
A report this month by security firm Prolexic said attacks were up 32 percent in 2013, and a December study by the cyber-security-focused Ponemon Institute showed them now responsible for 18 percent of outages at U.S.-based data centers from just 2 percent in 2010.
The average cost of a single outage was $630,000, it said.
"It's really a game of cat and mouse," said Jag Bains, chief technology officer of Seattle-based DOSarrest, a firm that helps government and private-sector clients protect their sites.
"I'd like to say we are ahead, but I just don't think it's true."
As well as growing in volume, he said attacks were becoming much more sophisticated in targeting the most vulnerable parts of websites, making even a small attack much more effective.
The aims of attackers include extortion, political activism, providing distraction from data theft and, for "hobbyist" hackers, just testing and showcasing their skills, security experts say.
Other victims in recent months have included the Federal Bureau of Investigation, Royal Bank of Scotland and several major U.S. banks, which analysts believe were targeted by Iran in response to sanctions. Iran denies the charge.
HIJACKING PRINTERS, SMARTPHONES
Many attacks, however, appear to be homegrown. The most popular point of origin for DDoS attacks in the last three months of 2013, Prolexic said, appeared to be the United States, followed by China, Thailand, Britain and South Korea.
As well as hijacking computers, Prolexic said attackers are increasingly targeting smartphones, particularly those using Google's Android operating system, which by the third quarter of 2013 accounted for more than 80 percent of new phones.
Even wireless printers, experts say, have sometimes been co-opted into attacks, packed together in botnet groups. That, they warn, can put previously unprecedented cyber firepower in the hands of relatively unskilled hackers, who increasingly include teenagers.
Last year, British police arrested a 16-year-old as part of their investigations into the attack on Spamhaus, while German police arrested an 18-year-old after a DDoS attack paralyzed the Saxony government website.
DDoSarrest says some of the most recent attacks it has dealt with were on U.S. universities and largely blamed on students showing off or protesting against high tuition fees.
The sheer volume of attacks means many perpetrators are never traced, and some computer security experts complain law-enforcement authorities remain reluctant to prosecute the youngest offenders.
Until recently, DDoS attacks were seen less of a threat than attempts to steal customer data or intellectual property. That, however, is changing fast.
SLOWING THE INTERNET
Last year's Spamhaus attack was described by some as slowing the entire global Internet, and most experts agree the largest attacks can slow access across entire regions. Cloudflare says there were anecdotal reports of slowness in Europe during the latest attack.
Crashing data centers can wreak havoc with other services based there, including phone systems and vital industrial facilities.
The Ponemon report showed DDoS attacks are now the third largest cause of outages after power system failure and human error, outstripping traditional causes such as weather events.
Even if attacks do not succeed, the cost of mitigating them is rising fast, providing many millions of dollars of business for firms such as Cloudflare and Prolexic, taken over last month by Akamai Technologies for about $370 million.
Namecheap, which aims to offer cut-price hosting for websites, said it had already spread its data centers across five countries and three continents to better handle constant attacks but was still overwhelmed by the roughly 100 Gbps incident.
Attacks on that scale, Prolexic says, now occur several times a month and are now frequently so complex and fast moving that automated systems can no longer tackle them.
Prolexic itself runs a permanently manned operation centre at its headquarters in Florida, allowing it to keep one step ahead and instantly move material between data centers.
"It's very hard to know what to do," said Alexander Klimburg, a cyber security expert at the Austrian Institute for International Affairs currently on exchange at Harvard Kennedy School of Government. "The tools to do this can be purchased online incredibly cheaply, while the damage they can do and the cost of mitigating it is exponentially higher."
(Editing by Will Waterman) nL6N0LV2WR
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