Thursday, November 29, 2018

The Nigerian Nakamoto Scam

Craig “Faketoshi” Wright and Bitcoin SV is running a variant of the Nigerian scam. Nigerian scams work because “by sending an email that repels all but the most gullible, the scammer gets the most promising marks to self-select, and tilts the true to false positive ratio in his favor.” [Cormac Herley, “Why do Nigerian Scammers Say They are From Nigeria”]. In other words, Nigerian scams work because it is a hyper efficient idiot finder. Only an idiot would engage with such a preposterous claim regarding a Nigerian prince. Most people will just ignore it, and this is good for the scammer because the scammer does not have to waste time engaging people with brains. Imagine if you were a scammer and you sent out a million emails. You don’t want to waste time corresponding with hundreds of people with normal intelligence, you want to find the stupidest of the bunch.
Craig Wright is basically a Nigerian prince (or as per the title of this article, a Nigerian Nakamoto). Only an idiot will actually believe that someone like Craig is Satoshi. He is in fact the exact opposite of Satoshi. A patent trolling, plagiarizer who uses 4chan insults and technobabble.

So called creator of Bitcoin rallying against soy boy committees

It would be a mistake however to believe that Faketoshi himself is an idiot, he is not. He is merely playing a character that attracts gullible idiots. Craig was smart to position himself into the Bitcoin Cash crowd because he correctly deduced that they had the right combination of gullibility and liquidity. He saw that they were eating up ridiculous conspiracy theories that revolved around Blockstream. It would not be that hard to convince them that he was Satoshi, especially if he was on their side of the fight against Bitcoin. I suspect that people in leadership position within Bitcoin Cash like Roger Ver were smart enough to know that Craig was a fraud. However, they were morally bankrupt enough and too short sighted to reject him because they thought that he was on their side. I’m surprised that Ver has so far received almost no backlash from the ABC camp from this ordeal. He 100% enabled the SV camp from gaining credibility within Bitcoin Cash. If you are a Bitcoin Cash conspiracy theorist who believe everyone is a Blockstream plant, you have to wonder whether Roger Ver himself isn’t a Blockstream plant.

Roger Ver sharing a drink with SV

Once Craig gained credibility within Bitcoin Cash, the next step was to splinter off the chain into Bitcoin SV. This step is equivalent to the phase where the Nigerian prince gives you a bank account number to wire the money to. With the financial backing of billionaire and online casino mogul Calvin Ayre, Bitcoin SV was created. Before and during the chain split, SV made a lot of noise regarding a hashwar where they threatened to 51% attack the ABC chain. Many people took the bait and believed that there would only be one chain that would remain after the split. However, this was all just a marketing ploy to give legitimacy to SV.

SV would gain nothing and probably lose by engaging in a hashwar against ABC which has the backing of mining giant Bitmain. What SV wanted was for the stupidest people within Bitcoin Cash to self select themselves onto a chain where they have 100% control. The next step is obvious. Once they have total control on the chain containing a bunch of stupid people that are members of the cult of Faketoshi, they are free to do whatever they want. Faketoshi has already hinted that they were going to be stealing burned coins, by changing the code to interpret them as miner rewards. There are also other creative ways to make money, especially if you control both the software development and mining on the chain. Bitmain showed that such a scheme was possible with their implementation of ASICBoost. I would also not be surprised if they decided to implement some inflationary scheme that enriches their own wallets at some point in the future.

I think the mastermind behind this idea can be traced to Calvin Ayre, who made his money running online casinos. He sees the blockchain as a poker table. And there’s two sure fire ways of making money in poker and that is a) to make sure you are the house and b) that you are always playing against terrible poker players. POW mining is like a game of chance after all. Being able to fully control the software development enables you to be the “house” and set the rules of the game. Kicking out Bitmain into their own chain also allows them to be the biggest player on the table. Now the only task remaining is to steadily dump the newly minted SV coins. I suspect that SV will be very good at doing this because the crypto market is mostly just a large unregulated online market for people to gamble their excess money away. Calvin Ayre is an expert in that market, and Faketoshi gave him the best customers.