Month: October 2015

Bitcoin in the Headlines: Blockchain Scores Economist Cover

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Who’s said what and where? CoinDesk has rounded up the hottest bitcoin and blockchain related headlines from across the globe.

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Scam Prevention and Finalizing Early

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Scamming has, and always will be, a huge issue for any Dark Net Market user. How do you know you’re going to receive the product that’s described in a listing? There are many trains of thought on this issue and many people have vocalized the simple solution “Don’t Finalize Early! Don’t give them money until you get your product!” which is a wonderful piece of advice. When placing an order on a marketplace, there will be an escrow system that holds onto your funds until you authorize the release to the seller.

It’s a classic system, one that has been used even since before Silk Road came to life – the trusted middleman holds onto the funds while the deal is taking place to avoid one person from pulling some kind of scam on the buyer/seller. However, there are still risks involved, and many ask themselves “Why do people finalize early?”

When it comes down to it, someone may be so inclined to finalize an order that hasn’t made it to them yet (or even worse, before the vendor even confirms the order) because of a foundation of trust. Putting your trust into a seller who has provided quality products and has quality feedback makes the escrow system look pointless. When a buyer is staring at 5/5 reviews, with hundreds of orders, there won’t be a single doubt in that buyers mind that anything could possibly happen.

This is where the critical judgment error occurs. Exit scamming has turned into an art – a lucrative and manipulative one, at that. Let’s look back to the original Silk Road, and take a look at one vendor in particular – Tony76.

Now, the more experienced Dark Net users may have an idea of who this is already, but in case you don’t, I’ll give a brief summary. Tony76 registered an account on Silk Road on 10/01/2012, nearly 3 years ago. He was most prominently known for his high quality Heroin, allegedly the best on the market at that time, but also sold MDMA and other products. This vendor was doing everything right, and had great prices and a great army of supporters who would never doubt a thing he said. His prices were so good, he was making a huge name for himself, and it was showing. Customer satisfaction proved to be number one, and over time all buyers had no issues whatsoever buying “finalize-early only” listings, because, hey, it’s Tony! What could go wrong?

Needless to say, Tony disappeared after a massive sale and took his customers Bitcoin with him, never to return, never to ship another package. This is quite an elaborate exit scam, in the sense that it was the “long-con”, make everyone think exactly what you want them to think over the course of a few months and run. This is relevant now more than ever, as there are many FE-only vendors popping up with excellent prices.

History tends to, and will, repeat itself. Don’t get your money stolen by somebody you only know through the internet – it’s silly and when it happens you’ll ask yourself how you could have made such an error. Granted, the escrow system does have its flaws. What if the market goes down, or gets seized, what happens to your money? It’s gone. That’s the inherent risk of Dark Net Markets, and you must always be prepared for the worst. An alternative to this is taking advantage of marketplaces which use multisig escrow, for maximum buyer/seller security, which is implemented on several markets.

Many people will still choose to finalize orders on their own terms, and as long as you know what risk you’re taking by trusting an anonymous vendor, than it’s your call. Stay safe, everyone.

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Former Mt. Gox CEO Karpeles Re-arrested for Embezzlement Mainstream Media Misreports ‘Bitcoin CEO Arrested’

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Today, Tokyo police re-arrested former Mt. Gox CEO Mark Karpeles for the embezzlement of $166,000 worth of U.S. funds, according to local Japanese newspaper Yomiuri.

Karpeles is currently in custody for fraud and money-laundering allegations and will be held by Japanese police for further interrogation.

Over the past two months, the Karpeles investigation has developed into a national scandal, involving the Japanese government and various law enforcement agencies, due to the inaccurate reporting from both international and Japanese media networks including Yomiuri and MSN.

Since the beginning of the investigation, Microsoft news network MSN and a few other mainstream Japanese media outlets have misreported Karpeles as the “bitcoin CEO,” confusing viewers who are not fully aware of the situation.

This morning, MSN reported, “Bitcoin CEO spent embezzled funds on prostitutes,” infuriating many bitcoin entrepreneurs and developers.

In response, security expert, author and Let’s Talk Bitcoin podcast host Andreas Antonopoulos said, “If your local journalists are reporting about the “Bitcoin CEO” today, they understand neither bitcoin nor journalism.’

The post Former Mt. Gox CEO Karpeles Re-arrested for Embezzlement Mainstream Media Misreports ‘Bitcoin CEO Arrested’ appeared first on Bitcoin Magazine.

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