John C. Edmunds - Rogue Money and the Underground Economy: An Encyclopedia of Alternative and Cryptocurrencies

Rogue Money and the Underground Economy

AN ENCYCLOPEDIA OF ALTERNATIVE AND CRYPTOCURRENCIES

John C. Edmunds, Editor

Copyright 2020 by John C. Edmunds, Editor

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, except for the inclusion of brief quotations in a review, without prior permission in writing from the publisher.

Library of Congress Cataloging-in-Publication Data

Names: Edmunds, John C., 1947 editor.

Title: Rogue money and the underground economy : an encyclopedia of alternative and cryptocurrencies / John C. Edmunds, editor.

Description: Santa Barbara, California : Greenwood, [2020] | Includes bibliographical references and index.

Identifiers: LCCN 2019044029 (print) | LCCN 2019044030 (ebook) | ISBN 9781440864551 (hardback ; alk. paper) | ISBN 9781440864568 (ebook)

Subjects: LCSH: Cryptocurrencies. | Digital currency. | Informal sector (Economics)

Classification: LCC HG1710 .R64 2020 (print) | LCC HG1710 (ebook) | DDC 330dc23

LC record available at https://lccn.loc.gov/2019044029

LC ebook record available at https://lccn.loc.gov/2019044030

ISBN: 978-1-4408-6455-1 (print)

978-1-4408-6456-8 (ebook)

24 23 22 21 20 1 2 3 4 5

This book is also available as an eBook.

Greenwood

An Imprint of ABC-CLIO, LLC

ABC-CLIO, LLC

147 Castilian Drive

Santa Barbara, California 93117

www.abc-clio.com

This book is printed on acid-free paper

Manufactured in the United States of America

Contents

Alphabetical List of Entries

Adware

Air Drop

Alpha Version

Anonymity

ASICs (Application-Specific Integrated Circuits)

Assassination Market

Asynchronous Arbitrage

Austrian School

Avatar

Backdoor

Baltic Money Laundering Scandals

Bancor

Beta Version

Blockchain

Bots

Brute Force Attack

Burning a Coin

Buterin, Vitalik

Central Bank

Checksum

Collision and Collision-Resistant

Conflict Minerals

Counterparty Risk

Cybercurrency, International Response

Cybercurrency Exchanges

Cybercurrency Mining Farms

Cybercurrency Programming Languages

Cybercurrency Slang and Acronyms

Dark Web

Decentralization

Decentralized Application

Decentralized Exchange

Decentralized News Service (DNN)

Degree of Difficulty Adjustment

Digital Signature

Dogecoin (DOGE)

Double Spend Problem

Drug Trafficking

Eavesdropping

Elliptic Curve Cryptography

Encryption

Ether

Ethereum Classic (ETC)

Ethereum Virtual Machine

Fashion and the Arts

Feint

Fiat Money

51% Attack

Financing Terrorist Organizations

Fork

Fractional Reserve Banking

Front-Running

Genesis Block

Gold Standard

Golem

GPU Mining

Great Depression

Great Recession

Hack

Hardware Wallets

Hash and Hashing

Identity Theft

Information Sources

Invoice Fraud

Le Numeraire

Libra

Malware

Mining

Mining Puzzle

Monero

Monetary Rule

Money Laundering

Mt. Gox Hack

Multisig

Orphan Transactions

Ostracism

Panama Papers

Parity Bit

Public Key/Private Key

Pump and Dump

Random Number Generator

Repositories

Ripple (XRP)

Scripting Language

Sex Trade

SHA-256

Side Chains

Silk Road

Single Point of Failure

Smart Contracts

Sock Puppet

Software Wallets

Specie

Stellar (XLM)

Tether (USDT)

Token

Transaction Fees

Trapdoor Function

Trolling

TRON

Trustless

Turing Complete Programming Language

Underground Economy

VeChain (VET)

Virus

Wallets

Wash Trades

Watering Hole Attack

Wildcat Banking

Wildlife Trafficking

Worm

Zombie Computer

Introduction

Since 2009, cybercurrencies have emerged, spread all around the world, and become a hotly debated topic. Cybercurrencies are forms of currency that exist only on the Internet. The best known of these is Bitcoin, but many others have been launched over the last decade as well. Prices rose so quickly that many early adopters got rich and then some saw their holdings get hacked or lose value. Other people, with skill and a bit of luck, maneuvered successfully through the hurly-burly beginning stages of this largely unregulated new economic world and held onto some of their impressive gains.

For many purposes, cybercurrencies function like government-issued paper currency. However, cybercurrencies open up new economic possibilities, particularly in areas where existing financial institutions function poorly. Constructive applications have been launched and have brought tangible benefits. Those advances, however, have been overshadowed by the notorious scams and abuses of many devious, harmful, malicious, and illegal applications that have been launched and have caused harm. Cybercurrency advocates believe that informed citizens and participants in the world economy will have to learn to distinguish the wheat from the chaff because they assert that ignoring this burgeoning phenomenon is not an option. Proponents of cybercurrencies assert that every major innovation in any field undermines some existing institutions that were operating satisfactorily before a better way emerged. In Venezuelas well publicized economic crisis, for example, businesspeople expressed frustration and anger with the slow pace of traditional transactions with local banks at a time when the nations currency was losing value at an alarming rate. According to advocates, cybercurrency allows users to bypass these formerly functioning institutions. Historians of science also point out that every major innovation has had a tumultuous adolescence. In the view of proponents of cybercurrencies, this new form of money and the rapidly evolving environment in which its operates are living up to that tradition.

This encyclopedia opens up the entire world of cybercurrency by explaining all major concepts and important terminology. It enables the reader to leapfrog the tedious, time-consuming trek through blogs, news sites, texts, videos, and audio clips upon which people have hitherto relied to piece together an understanding of how the whole cybercurrency phenomenon works. Many of those sources use jargon and acronyms, as if the reader were already in the know. This book offers a better way to learn about the world of cybercurrencies. It explains the whole field piece by piece, so that the reader can quickly get beyond the barriers to understanding and grasp why the uses of cybercurrency have grown so rapidly. It also informs readers how the underground economy has become so intertwined and commingled with cybercurrency. Many underground economic activities, like smuggling or tax evasion, existed long before cybercurrencies, but cybercurrencies have made it easier to circumvent government controls, easier to hide money, easier to make illegal payments for criminal activities, and much easier to transfer large amounts of money. This book also surveys steps that governments have taken to try to regulate cybercurrency and how users play cat-and-mouse games with government regulators to evade those controls.

To cover the entire field, the book casts a wide net. It includes coverage of terms and phrases that are used in electronic games because the earliest cybercurrencies were tokens that competitors accrued in their quests to win the most popular games. Those tokens could be used to buy special weapons, gain access to fortresses, and otherwise conquer the enemy. Players started trading those tokens, and a brisk market quickly developed. It did not take long for players to realize that trading the tokens could be a profitable activityand that token transactions could actually be used to send money from one player to another.