Can Iran use Bitcoin?

Can Iran use Bitcoin?

Tehran, Iran, Nov. 15

By Mehdi Sepahvand – Trend:

There is a lot of sensational talk in Iran about whether to use Bitcoin and other cryptocurrencies. The government cherishes hopes of circumventing a USD boycott through cryptocurrencies, but, it fears more sanctions, arguing that such currencies are used to fund terrorism.

Trend has asked Dario Azzopardi, the CEO of 3 Group, a University of Malta Information Technology graduate, and a Bitcoin miner to answer these concerns. Following is his answer:

"I can have a knife to kill a person and even I can have the same knife to cut a piece of cake. Everything is like this in life. In 2016, a Europol report found that there was no evidence of terrorists using Bitcoin and while it is evident ransomware extortionists and hackers prefer cryptocurrencies, it’s rare to see other crimes involve Bitcoin. Now, a report from the European Commission to the European Parliament and Council found that the risk of digital currencies being used to finance terrorism is 'moderately significant (level 2).' This is in a scale ranging from 'lowly significant (level 1)' to 'very significant (level 4)'."

"The report admits that terrorist groups could use virtual currencies to their advantage, and notes that cases in which these were used have been reported. On Twitter, supporters even attempt to spread instructions on how to use them, but nevertheless these are still not being widely adopted by bad actors. It reads: 'However, the technology is quite recent and in any case requires some knowledge and technical expertise which has a dissuasive effect on terrorist groups. The reliance on virtual currencies to fund terrorist activities has some costs and is not necessarily attractive.'"

"Money laundering possibilities are also addressed. Per the report, criminal organizations could use virtual currencies to gain access to ‘clean cash’ while hiding its transaction trail. The report states that so far cases of this happening are 'quite rare', the reason for this being the technical expertise required to use virtual currencies. Moreover, criminals don’t seem to be very interested in using cryptocurrencies like Bitcoin and ethereum because of their volatility."

"Notably, the report implies that terrorists and criminals aren’t smart enough to properly use digital currencies like Bitcoin and Ethereum. It reads: 'From a technical point, virtual currencies present some commonalities with e-money but the IT expertise at stake for virtual currencies means that organized crime would have lower capability to use them than e-money which is more widely accepted’."

"Microsoft users can use Bitcoin to purchase games, movies and apps in the Windows and Xbox stores, as well as the Microsoft online stores, Expedia.com, Subway, Wikipedia, so these are terrorist acts? Digital money is a new way of payment and it is here to stay."

"Bitcoin is often described as an anonymous currency because it is possible to send and receive Bitcoins without giving any personally identifying information. However, achieving reasonable anonymity with Bitcoin can be quite complicated and perfect anonymity may be impossible."

"Bitcoin is pseudonymous. Sending and receiving Bitcoins is like writing under a pseudonym. If an author’s pseudonym is ever linked to their identity, everything they ever wrote under that pseudonym will now be linked to them. In Bitcoin, your pseudonym is the address by which you receive Bitcoin. Every transaction involving that address is stored forever in the Blockchain. If your address is ever linked to your identity, every transaction will be linked to you."

"In the original Satoshi whitepaper, it was recommended that Bitcoin users use a new address for each transaction to avoid the transactions being linked to a common owner. This would be the equivalent of writing many books under different pseudonyms. Although this remains a best practice, it is not enough to guarantee full anonymity due to multi-input transactions."

"Nowadays MOST trusted wallets request identification, proof of address, and to increase limits of trading, you are required to submit more information like business information for due diligence. Due diligence is an every trusted wallet. It is easier to clean dirty money into the bank than to make use of Bitcoin. How? Bitcoin is a decentralized ledger, no one controls it. Bitcoin is like uTorrent download. You download from me and I do download from another person, everybody downloads from everybody, no one in the middle, no intermediary. Person A needs to send 0.003 btc to person B (does not make any difference which country) - only internet connection is required. Because person A needs to send 0.003 btc to person B around 30 verifications are needed to verify that person A really has 0.003 btc in his wallet. They all have to agree. This process is called mining. Let’s say person A needs to send now 1 btc to person B. So, 300 verifications are required."

"All cryptocurrencies are digital money. There are more than 700 cryptocurrencies in the world. Cryptocurrencies cannot be printed because they are not paper money. Cryptocurrencies are produced by a process called mining. Cryptocurrencies are not produced by banks."

"What is mining? Most computer software and the payments we do online are based on binary (1 × 101) + (8 × 100) = 10 + 8 = 18. Computer software engineers need this kind of sums to be worked out so that they will be able to develop more sophisticated software. Every binary sum solved is called a block and the process is called mining. If there is no mining there will no more new blocks, no more sophisticated software can be developed. Binary sums are not only used for software development but every electronic device works on binary."

"Satoshi Nakamoto started writing the Blockchain database called Bitcoin in 2007 and on August 18, 2008, the Bitcoin database solved the first sum (mined the first block) which is called the genesis block, Block Number 1. Every time a block is solved the database rewards tokens that Satoshi Nakamoto named Bitcoin. The token will be rewarded to that particular mining Bitcoin machine. Every mining machine has a wallet attached to it. The second binary sum was more difficult than the first one. Every block solved has to be verified by all on the network, the second binary sum was to be verified by the first block, and the third binary sum had to be verified by the first and the second blocks."

"Every time a block is created it has to be verified by on the network, to make sure that the answer is correct. Once it is verified, the Blockchain adds what is called the hash key. The hash key is like the 'very good' in homework! No one can cheat with answers because if there is no consensus by all mining machines about the answer of that new block, there would be no hash key, so you do not get rewarded. The Bitcoin Blockchain is like a teacher in class, giving problems to the students. Whoever makes the FIRST RIGHT ANSWER gets a star on his copybook. Nowadays because binary sums are so difficult to solve, you need to join a pool of miners and for every block solved that pool receives 12 Bitcoins. You get rewarded depending on the effort you put into the pool. If person A has 1 miner attached to the pool, he will be rewarded for 1 miner, but if person B has 10 miners attached to that pool he will get rewarded for 10 miners. Nowadays miners have a speed of terahertz/s (112). It takes around 10 minutes to create a new block. Every Bitcoin miner receives approximately 0.002 btc daily. When Bitcoin started as a token it had no value at all. People started trading it and nowadays it has become asset. There are only 21 million Bitcoins; the Bitcoins can be infinite very easily because they are digital assets, but all the truth behind it is that the binary sums will become so complex that they will be impossible to solve, so if no blocks are created the Blockchain will not pay! Now, will mining end when all gets mined, i.e. sometime between year 2110 and 2140? Surely not! Bitcoin is a way of payment from person A to person B, without intermediates EVERY transaction has to be verified by miners. Person A paying 1 btc to person B takes approximately 100 miners to verify the transaction, but if person A is going to pay 10 btc to person B 1000 miners are required to verify the transaction. The Bitcoin database will collect a very small fee from every transaction to be distributed to the miners."

"Millions of transactions are happening every day. This is what is called Blockchain, DECENTRALIZATION. No intermediates! Most cryptocurrencies are created the same way, except for the Ethereum Blockchain."

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