After reading Daily Hodl’s piece about how Russia is about to ditch US dollars for Bitcoin, I decided to investigate the matter. The tweet by Vladislav Ginko implying that the Russian government is about to invest most of it foreign currency reserve holdings into Bitcoin, turned out to be a decoy. Kremlin is about to get into crypto, big time – but it wants to cover its tracks.
Crypto will help Russia escape sanctions
My source at the FinMin (Russian ministry of finance) in charge of strategic planning confirmed to me that Kremlin has been looking into crypto for a while now, as a way to bypass US-imposed sanctions. “The thing they’re most afraid of, is being cut off the SWIFT network”, as has happened with Iran (source: FT). “Should they be cut off SWIFT, their whole stash of foreign currency holdings, currently worth about $400 billion, would become useless.”
Having a stake in crypto, big enough to have substantial influence over the development process of a given network, has become a strategic priority for the Russian government, and the FinMin has been tasked with executing on such a plan.
My source told me that a special task force had been formed in March of 2018, and delivered their final report a couple of months ago. They stated that Russia should bet on Ethereum, not Bitcoin, because “Bitcoin’s mining was mostly controlled by China, and they were afraid that China could be forced to offer full access to the network’s transaction processing to Trump, should he excert any more pressure in the ongoing trade war”.
Ethereum, on the other hand, is set to become a proof-of-stake network, so having a big chunk of coins actually means something – you’re not just the miners’ bitch, and you receive dividends, too.
Russia will have trouble buying a big stake – but they have a plan
BUT (and that’s where things go crazy) Russia won’t buy Ethers outright, because they know that it would pump up the price so much that they will never be able to buy more than 10% of the marker cap. This is why they directed Vladislav Ginko to tweet about the supposed buying spree in Bitcoin – to divert attention. “If Vlad had just tweeted this on his own, nobody would have cared. So they instructed him to answer to the tweet of a verified account, in this case, Chris Burniske, for maximum effect.”
Chris, I believe sitting here in Moscow, Russia, that the real factor of Bitcoin apotion will be when Russian government I'm working for will start investing almost $470 billion reserves into Bitcoins. I expect that it'll be at least $10 billion in the first quarter of this year.— Vladislav Ginko (@martik) January 6, 2019
Instead, they’ve spent the last 4 months building stealth Ethereum mining capacity, in order to take over the network in a series of 51% attacks.
“I challenge you to try and buy any of these thousands of Nvidia GeForces who are apparently for sale on Ebay or Amazon”, my source told me. “You won’t be able to. The FinMin task force has been buying up all the spare GPU hash power they could get their hands on, replacing the ads with their own, so that nobody would notice.”
Why GPUs, and not specialised ASICs? Because Ethereum’s core devs are about to introduce an ASIC-resistant PoW algorithm. The moment this update is introduced and the network’s hash rate drops, Russia will attack, with all its GPU-based firepower.
How Russia will mitigate the adverse effects of the attack
When I asked him about the obvious – that a 51% attack would reduce the value of the network, making the attack pointless, my source just smiled.
“The FinMin’s task force is working with the Kremlin’s propaganda bureau”, he went on. “They know that if the attack happens at the same time as they buy coins on exchanges, the price will hold steady, and there won’t be any panic. Everyone will just assume that everyone still trusts the network, and go on with their lives.”
“Think this is bullshit? Look at ETC. This was a test run. Same hash algorithm, basically the same holder crowd, because it was a fork. They did exactly what they intend to do with Ethereum, and apart from a few Twitter shmucks who despaired about the coins not plunging, nothing happened”.
When Russia acquires enough Ether coins to exert some real political pressure on the Ethereum community, they’ll seal the door shut by forcing everyone to move into a proof-of-stake algorithm, and cement their stake in the network.
And then they’ll be able to proceed with their real plan.
The real target of the upcoming Ethereum attack
“You know the real point of it all?”, my source told me. “KryptoKitties. Putin can’t get enough of them. He just wants to catch them all. The FSB (ex-KGB) believes that he has them mixed up with Pokemon, but nobody has balls big enough to tell him.”
Vladimir Putin actually wanted to kidnap Vitalik Buterin and lock him up in a goulag where Vitalik would be forced to code him new KryptoKitties for the rest of his life. Thankfully, “top FSB generals managed to talk him out of this move, thanks in big part to the FinMin’s plan of taking over the Ethereum network with second-hand GeForce GPUs bought on Ebay and Craigslist.”
You’ve been warned.