North Korea is a country which fascinates many. In fact, those who have traveled through North Korea have documented their experience online to give others some insights on how it’s like being in the said country. However, North Korea has made headlines in the past few months. The country’s brewing political tension with other countries is posing a threat to several other countries across the world.
With all of these brewing, many are wondering where the source of funding for this intense military regime is coming from which has seen ballistic missiles being fired across Japan. The answer is potentially more unusual than you might think. Intelligence services have found that North Korea may be funding itself with cryptocurrencies such as bitcoin.
These digital currencies are created and used online, using a process known as mining. Over the past few months, North Korea’s bitcoin transactions have accelerated from almost nothing to thousands of transactions being made every day.
What is bitcoin mining?
Bitcoin mining is the process of verifying and adding transactions to a distributed ledger, known as a blockchain. For those who aren’t familiar with the terminology, it may be easier to imagine the ledger as a large excel spreadsheet, which can be remotely accessed around the world and is continually updated. Every transaction made using bitcoin is stored in a blockchain.
To acquire new bitcoin, individuals have to use their Computer Processing Power (CPU) to solve complex mathematical algorithms. This usually requires running complex computer software which uses a large amount of electrical energy and requires a specialized computer equipment. These algorithms are used to “lock” the blocks of data in the blockchain.
Once solved, the user is rewarded with bitcoin. For every block that is mined, a reward of 25 BTC is given. This figure has fallen considerably and miners were awarded 50 BTC just a few years ago. However, the rapid rate of consumption has resulted in this value being halved every four years.
It sounds as though after mining several blocks, the process becomes more straightforward. The mining difficulty is also adjusted depending on the number of people mining as well as the volume of their output. Every 2,016 blocks, which equates to approximately every two weeks, the difficulty of the bitcoin mining is adjusted. This is because there’s only a certain amount of bitcoins available in existence, accessible to be mined.
In total, there are 21 million bitcoins available to be mined. Of these, over 16 million have already been mined and are currently in circulation. Bitcoin mining has risen in popularity because the currency has soared in value. Only this month, the cryptocurrency reached record highs of over $4,000 per bitcoin.
The rising popularity of the currency has also resulted in an increasing number of online stores accepting the said digital currency as a payment method. At first, bitcoin was only used on a very limited number of websites, such as online gaming stores. Since then, it has become possible to pay for a number of services using bitcoin. The rising popularity of the currency has also made it possible for individuals to make money from bitcoin in a variety of ways including blogging and gaming.
How Is North Korea Mining Bitcoin?
So, how exactly is North Korea mining bitcoin to generate income? It’s said that North Korea has been mining bitcoin en masse since May 2017. This large-scale operation works in a similar manner to individuals mining bitcoin at home. However, the key difference is that it’s likely that they’re using their own mining pools to mine bitcoin on such a large scale.
Mining pools are constructed in a way in which large numbers of miners are able to work together, putting their collaborative computer energy together to solve the equations in the blockchain. At the moment, China accounts for most of the largest bitcoin mining pools in the world. The Chinese government has invested heavily in developing the technology, allowing rapid output of bitcoin within the country.
Although mining bitcoin is highly profitable, it’s also led to issues in the country. So much so, that bitcoin trading activity is having to be regulated to some extent—the ban of Initial Coin Offerings is the first step in this process.
The question of who’s mining bitcoin in North Korea still remains. However, North Korea provides limited access to the internet, so this large-scale bitcoin mining operation is almost certainly government led as opposed to individuals doing it. For the masses, bitcoin would be largely useless in North Korea as internet access is required to complete transactions.
Why Is North Korea Mining Bitcoin?
One of the possible reasons for North Korea’s sudden interest in cryptocurrencies is their desire to avoid trade restrictions and sanctions. The Security Council has recently approved trading sanctions as a direct response to the latest missile and nuclear tests carried out by the country. At present, North Korea’s textile exports have been reduced by 90%, which will significantly impact the country’s ability to generate “regular” currency.
As a result, North Korea could be building up a considerable “stock” of bitcoins as prices skyrocket. This will enable them to continue building their economy, even while under sanction.
Part of the reason cryptocurrencies have become so popular and valuable is due to their decentralized nature. This means that the currency is free from control by a central authority such as government or banks. This lack of state control makes bitcoin an ideal currency for a country under scrutiny and restriction.
At this point, it’s not known exactly what North Korea is using its bitcoin stock for. Many experts have suggested that it could be the source of the current military regime’s funding. The only thing we really know for certain is that there has been a sudden surge in bitcoin transactions within the country.
We don’t know how these are really being generated. One thing we know is that due to the increasing mining difficulty and the lack of available internet, it’s unlikely that bitcoin is being mined by individuals. In the future, it’s highly likely that North Korea will continue to mine bitcoin and become a dominant figure in the cryptocurrency industry.
Will is the Executive Managing Editor at Feedster. Will and his team from Content HOW work with venture capital, marketing co-ops, and companies to attract and gain qualified leads.
His primary focus on developing a sales funnel for a company and finding out of the box / growth hacking style ways to convert and drive traffic.