OnePwaa 2018
WSC
Study Guide Social Studies: Black Markets
Contents
Contents Introducing Markets……………………………………………………………………………….........3 Contracts: Formalizing Exchanges ………………………………………………………….7 Black Markets…………………………………………………………………………………………………14 Cryptocurrency……………………………………………………………………………………………..24 Questions for Further Exploration Exploration…………………………………………………………29
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Introducing Markets Essential Questions Do all markets function the same way around the world? Yess an Ye and d no no.. In to toda day’ y’ss gl glob obal alis ised ed wo worl rld, d, ma mark rket etss of ofte ten n in inte tera ract ct in inte tern rnat atio iona nall lly, y, e. e.g. g. st stoc ock k ma mark rket etss and an d tr trad adin ing. g. Ho Howe weve verr th ther ere e ar are e al alwa ways ys di diff ffer eren ence cess si sinc nce e ma mark rket etss do no nott fu func ncti tion on on it itss ow own. n. It is largely affected by a country’s government and their regulations and influence on markets.
What (or who) determines the prices of goods and services? Usually in Economics, the prices of a good or se serrvice is de dettermined by the demand and sup upp ply diag di agra ram. m. Th The e eq equi uili libr briu ium m pr pric ice e is th the e po poin intt wh wher ere e th the e de dema mand nd cu curv rve e me meet etss th the e su supp pply ly cu curv rve. e. In a market econo nom my, whi hicch is wh whe en the herre is little to no government interference, th the e prices are dete de term rmin ined ed by th the e co cons nsum umer erss as the their ir de dema mand nd for a pr prod oduc uctt gi give vess pe perf rfec ectt in info form rmati ation on to th the e fi firm rmss and an d ho how w th they ey se sett th the e pr pric ices es,, oc occu curs rs du duri ring ng pe perf rfec ectt co comp mpet etit itio ion n of fi firm rms. s. Ho Howe weve verr th this is is not al alwa ways ys true since governments often intervene e.g. price ceilings.
What is money - and where do the different types of money derive their value? Money serves as a medium of exchange, a unit of accounting, and a store of value. Money is a medi me dium um of ex exch chan ange ge in th the e se sens nse e th that at we al alll ag agre ree e to ac acce cept pt it in ma maki king ng tr tran ansa sact ctio ions ns.. A va valu lue e of a curr cu rren ency cy de deri riv ves fr from om its su sup ppl ply y an and d de dem man and. d. If th the e de dem man and d fo forr on one e cu curr rre enc ncy y is hi high ghe er, th then en it itss external value (placed against another currency) will be higher.
To what degree can governments control prices or quantities of goods and services exchanged? exchanged? Alth Al thou ough gh we le lear arn n ab abou outt ma mark rket et an and d pl plan anne ned d ec econ onom omie iess in Ec Econ onom omic ics, s, th the e ma majo jori rity ty of co coun untr trie iess functi tio on in a mixed econ ono omy, whi hicch is a mixture of bo botth. Thi hiss refers to an econo nom my where the gove go vern rnme ment nt adj adjust ustss fo forr an any y ma mark rket et fai failu lure re or in inef effi fici cien enci cies es in al allo loca cati ting ng it itss re reso sour urce ces. s. In do doin ing g so so,, gove go vern rnme ment ntss se sett pr pric ice e ce ceil ilin ings gs,, pr pric ice e fl floo oors rs,, qu quot otas, as, ban bans, s, su subs bsid idie iess an and d re regu gula lati tion onss on pr prod oduc ucts ts to control its quantity and quality. However, this cannot be overdone as this puts pressure on government’s expenditure and may hurt the economy as it slows down due to too many restrictions.
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Key Terms to Learn Supply is the total amount of a specific good or service that is available to consumers Demand is the consumer's desire and willingness to pay a price for a specific good or service
This is seen in a supply and demand graph ( (www.economicshelp.org www.economicshelp.org): ):
The intersection of the supply curve and the demand curve is called equilibrium. Equilibrium is achieved when economic forces
are balanced.
Deadweight loss is also known as excess burden or allocative inefficiency. It happens when
equilibrium for a good or service is not achieved, and economic efficiency is lost. Regulation is when a third party, usually the government, intervenes to take control in economic
activity. An example would be price controls (eg. price ceilings and price floors) Perfect competition is when competition in a market is at its greatest possible level. Imperfect competition is, well, the opposite of perfect competition! It is a type of market
structure which shows some but not all features of competitive markets. An example of imperfect competition would be monopoly. Monopoly is when the market structure only consists of one single seller. Taxes are fees levied by the government on a product, income or activity. act ivity. Two types: ●
o r organisation. Some examples: Direct tax- directly levied from an individual or
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Income tax- levied from one’s income
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Corporate tax (company tax)- levied from income / capital of corporations
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Wealth tax- levied from personal capital
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Gift tax- imposed on the transfer of ownership of property
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Estate duty- tax on total market value of a person’s assets on the date of his/her death
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Expenditure tax- levied on total consumption expenditure of an individual
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Fringe benefit tax- (usually Australia / NZ) tax imposed on employees receiving extra benefits on top of their wages
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Indirect tax- imposed on goods and services but paid by consumers ○
Service tax- paid by service providers
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Excise duty- levied from produce, sale and manufacture of goods
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Value added tax (VAT)- levied from the amount by which the value of a product or service has been increased at each stage of production
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Custom duty- imposed on goods transported across international borders (tariff)
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Stamp duty- levied on legal documents
Tariffs are fees imposed on imported goods (goods from overseas). The aim of using tariffs is to
restrict imports to promote local business and economic growth. Embargoes are government orders that restrict commerce and exchange of a specific good with
another specific country. Usually created as a result of political / economic tensions between countries. Sanctions (economic sanctions) are commercial and financial penalties applied on a targeted
country. May include tariffs, trade barriers, restrictions etc. Arbitrage is simultaneously purchasing and selling an asset in order to benefit from the difference
in the price. This is done by exploiting the differences of identical/ similar financial instruments on different markets/ in different forms. A bazaar is a fundraising sale of goods. In middle eastern countries, it is also a marketplace. A dated definition of the word could also be a large shop selling miscellaneous goods. This term originates from the Persian word “b “bāzār”. A souk is the Arab version of a bazaar. It is a marketplace. An exchange is a market in which financial instruments (eg. securities, commodities, derivatives) d erivatives) are traded.
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Swap meets have a North American origin. It is a gathering of collectors, and they exchange items
of common interest. Also known as flea market. A boot sale (short for car boot sale) is basically an outdoor sale where people sell their unwanted possessions from their car boots. British version of a swap meet, basically. Stock market is where people buy and sell ownership of businesses. You buy a share, you own a %
of the firm. Futures market is where the trade of futures contracts (contracts to buy a specific quantity of a
commodity / financial instrument at a specified time in the future) occurs. A trade agreement negotiates the terms of acceptable exchange of goods and services between two sovereign states. Laissez-faire is the belief that economies and businesses function best when the government
doesn’t interfere. Capitalist countries usually follow this principle. “Laissez-faire” translates to “let them do it” in French. If something is at Optimal functionality, there’s nothing about it you need to fix. If it isn’t something needs to be improved or repaired.
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Contracts: Formalizing Exchanges Essential Questions Where do contracts derive their authority? • From intention and agreement • Authority can have differing meanings, but is generally the imposition of power from one body over another
• In the ‘public sphere’, authority is the constitutional validation of acts of public officials, whereby they hold the right to govern- they have the authority to make contracts and implement legislation that will best serve the people they represent
• In private contracting, authority is recourse to the state- one can enforce such rights and obligations set forth in the contract through the state system
• True contractual authority comes from the intention to contract, and then an agreement and exchange of value
• The intention of parties is a ‘test’ for giving the contract binding authority- not about the actual intentions of parties, but to an inference form the acts as to what would have be en the intentions of a reasonable person in the position of the parties
• By two parties agreeing to be bound in contracts the state will enforce the obligations you have agreed to
How do contracts vary between countries? • They generally vary in accordance with the laws and legal systems, along with local customs and legal procedures
• Important to note that legal realities differ from actual realities- if a legal system is too weak to enforce the standards that have been set, contracts will not stand as they would have if the legal system was competent enough
Do all contracts imply a transaction transaction of some sort? • Yes- the concept of quid pro quo and consideration means that the equity of contracts is enforced by both parties exchanging goods/services/etc of equal value in order for the contract to be legally enforceable
How are contracts negotiated? • Contract negotiation is the process of give and take that parties go through to reach an agreement- ‘you don't get what you deserve, you get what you negotiate’
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• Comes down to ‘risks and revenues’, where each party makes sacrifices in order to gain what it truly wants t hen legal terms • Usually negotiate business terms first, then
Does every contract have an offer and an acceptance? Does an offer need to be explicitly accepted for the contract to be binding? • Every contract must have an offer of fer and acceptance, even if the agreement between parties is deemed relatively mutual
• A contract can not stand in a court of law if it is not explicitly accepted
Are offers on a market contractual contractual obligations? obligations? • No- it is simply an intention to create a contractual relationship
Key Terms to Research Formation is when a contract arises when the parties agree that there is an agreement. It
generally requires an offer, acceptance, consideration, and a mutual intent to be bound. Not all agreements are necessarily contractual- parties must be deemed to have an intention to be b e legally bound.
• Agreement: • Consists of an ‘offer’ and an ‘acceptance’, involves a meetings/consensus between two parties
• Complex rules exist to determine if an offer and acceptance is valid • Must be certain in all material aspects, can not be vague or ambiguous • Consideration: • The price that is asked by the promisor in exchange for their promise, and is an essential requirement of a binding contract
• Intention to create legal relations: • For a contract to exist, the parties to an agreement must intend to create legal relations Offer is an expression of willingness to contract on certain terms, made with the intention that it
shall become binding as soon as it is accepted by the person to whom it is addressed ie. the statement that sets out the promises and obligations of the contract.
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It is the first of seven key elements of a legally bound contract (offer, acceptance, consideration, mutuality of obligation, competency and capacity, writing requirements, and legal contract formation) Acceptance refers to the acceptance and finalisation of agreements on the contracts terms where
one individual/body accepts the terms laid forth by the other. Acceptance occurs when the offeree agrees to be mutually bound to the terms of the contract by giving consideration or even a deposit to seal negotiations. Offer, acceptance, and consideration are the ‘glue’ that makes a contract binding
An agreement is a negotiated and typically legally binding arrangement between two parties as to a course of action. A contract is used interchangeably with the term agreement, but the agreement itself is technically the part of the contract two parties agree upon- i.e. what each one will give/receive/do A right is a moral or legal entitlement to have or obtain something or to act in a certain way. Rights are fundamental normative rules about what is allowed of people or owed to people.
• Natural rights: those which are natural (not man made), like the right to life or other so called ‘moral rights’
• Legal rights: those enforced by legislation and judiciary bodies, like the right to vote •
Claim rights: that which entails that another person has a duty to the right-holder, like completing a task or promised action, or refraining from one → “Person A has a claim that person B do something if and only if B has a duty to A to do that something."
• Liberty rights: ‘privilege’, or a freedom/permission for the right ho lder to do something, without obligation
• Positive rights: permission to do things, or entitlements to be bestowed • Negative rights: permissions not to do things, or entitlements to be left alone • Individual rights: those held by individual people regardless of their group membership •
Group rights: debatable, but are argued to exist when a group is seen as more than a simple assembly of individuals → seen more as an entity or even corporate body
Contractual liabilities are liabilities that one party assumes on behalf of another via a contract Public liabilities are the part of tort law that focuses on civil wr ongs, like a tort or breach of contract Generally, a liability is the state of being legally responsible for something something (Read more at https://www.investopedia.com/terms/l/liability.asp)) https://www.investopedia.com/terms/l/liability.asp
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A breach of contract is a binding course of action and a type of civil wrong, where a binding agreement or exchange is not honoured by one or more of the parties to the contract, usually by non performance or interference with the other party’s performance. This can occur when terms are not fulfilled, when intent to fail the obligation is communicated, or if a party appears not to be able to perform their obligation under the contract Estoppel is a judicial device in common law systems whereby a court may prevent (estop) a person
from making assertion for from going back on his word. This prevents someone from making a particular claim, especially if unsupported by consideration Duty of Care is a moral or legal obligation to ensure the safety and well-being of others to avoid
acts or omissions that can be foreseen that are likely to cause harm to others. It is the first element in preceding with a claim of negligence. The claimant must be able to show a duty of care imposed by law which the defendant has breached, and breaching a duty may subject an individual to liability. Duty of care may be considered a formalisation of the social contract, the implicit responsibilities held by individuals towards others within society. It is not a requirement that a duty of care be defined by law Condition is a clause in a contract or agreement which hold purpose to suspend, rescind, or modify
the principal obligation. Each of the parties are obligated to perform a duty under the contract, where the conditions of the contract determine the obligations of each party. It affects, annuls, or supports a party’s contractual duty Consideration is anything of value which each party must agree to exchange if the contract is to be
valid. If only one party offers consideration, the agreement is not a legally binding contract. Quid pro quo: something must be given or promised in return for the promise The capacity of natural and a nd juridical persons determines whether they make binding amendments to their rights/duties/obligations- getting married, merging businesses, entering into contracts, making gifts, or writing a will It is an aspect of legal status, being defined by personal law. When it comes to legally binding agreements, certain people will always be considered unfit to contract- legal minors, mentally ill, etc Implied Terms is the practice of setting down default laws for contracts, when terms that
contracting parties expressly choose are not valid. It is a duty of mutual trust and confidence.
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Express Terms are explicitly stated by the parties during negotiation or written in a contractual
document. Misrepresentation is an untrue or misleading statement of fact made during negotiations by one
party to another, the statement then inducing the other party into the contract. The misled party will then usually rescind the contract, and may be awarded damages. Duress: threats, violence, constraints, or other action used to coerce someone into doing
something against their will or better judgement. Operates in favour of those who commit crimes because they are forced or compelled to do so by the circumstances or threats of another. Collateral is something pledged in exchange for a loan in the case the loan is not repaid. Quid Pro Quo is a Latin phrase that means ‘something for something’. It used to mean an exchange
of goods or services in which one transfer is contingent upon the other- ‘favour for a favour’. This phrase indicates that an item or service has been traded for something of value, usually when the equity of the transaction is in question. If quid pro quo has been formalised, then the consideration of a contract is complete. In the United States, if the exchange appears excessively one sided, courts in some jurisdictions may question whether a quid pro quo did actually exist and the contract may be held void Caveat Emptor is the principle that the buyer and the buyer alone is responsible for checking the
quality and suitability of goods before the purchase is made. It is used as a disclaimer if warranties arise from the fact the th e buyers typically have less information about the good or service they are purchasing, while the seller has more information. Under the principle of caveat emptor, the buyer could not recover damages from the seller for defects on the property that rendered the property unfit for ordinary purpose. Force Majeure: unforeseeable circumstances that prevent someone from fulfilling a contract Smart Contracts involve computer protocol intended to digitally facilitate, verify, or enforce the
negotiation or performance of a contract. This allows the performance of credible transactions without third parties, through transactions that are trackable and reversible. It was first proposed by Nick Szabo in 1994, claiming that many kinds of contractual clauses may be made partially or fully self-executing, self-enforcing, or b oth. It provides security that is superior to traditional contract law, reducing transaction costs associated with contracting. Various cryptocurrencies have implemented types of smart contracts (ie. blockchain etc)
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Oral Contracts are enforceable.
They are usually not in the best interests of both parties, however, and all normal contract negotiation practices must have taken place (offer, acceptance, etc) Where the terms of the contract have been agreed upon by spoken communication, in contrast to a written contract, where the contract is a written document. Written Contracts are considered to be the ‘safest’ contracts, in which the interests of both
parties can be properly negotiated and then formalised in writing to avoid any conflict or miscommunication. They are usually binding and are easier to enforce than oral contracts. An adhesion Contract is also known as ‘Standard form contract’, ‘Boilerplate contract’ or ‘take-it-or-leave-it contract’. It contract’. It must be presented on a standard form basis, and gives one party no ability to negotiate because of their unequal bargaining position It is commonly used for matters involving insurance, leases, deeds, mortgages, automobile purchases, and other forms of consumer credit . Courts will always scrutinise adhesion contracts and may void certain permissions because of the possibility of unequal bargaining power and unfairness. Legal Regulations hold the same force as laws. While laws are the products of written statutes,
regulations are standards and rules adopted by administrative agencies that govern how laws will be enforces. Statutory Regulation is the process of checking by a government organisation that a business is
following official rules. It exists to protect the public against poor business practice. Sometimes it means that a corporate body is controlled by a government organisation, rather than being allowed to control itself In general usage, formalities are a customary or official procedure, but in the context of law, it is a requirement for obtaining a legal status. Main kinds of formality required by a statute is to put the transaction in writing, or to make a deed by registering it at a government registrar. Contracts and trusts can generally be created without formality, some transactions are thought to require formalities as it makes a person bind themselves to an agreement by thinking about their actions A legal remedy is the means with which a court of law (usually under civil law jurisdiction) enforces a right, imposes a penalty or makes another court impose its will. The law of remedies distinguishes between a legal remedy (like a specific amount of monetary payment) and an equitable remedy (a specific performance or relief, provide more flexible responses to changing social conditions, etc
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Freedom of Contract is the freedom of private or public individuals and groups to form contracts
without government restrictions. Sanctity of Contract is the general idea that once parties enter into a contract, they must honour
their obligations. Unless legally excused from performance, they must perform their respective duties under the contract- ‘pacta sunt servanda’ Reasonableness, ‘within reason’, refers to the level of care a reasonably reasonably prudent person would
observe under given circumstances in the context of negligence law. ‘Reasonable grounds’ means based on enough evidence (credible!) to lead a person of ordinary and prudent judgement to the grounds of judgement Negligence is the failure to behave with the level of care that somebody of ordinary prudence
would have exercised under the same circumstances.
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Black Markets Essential Questions What makes black markets necessary? Blac Black k mark marke ets and and the their coun counte terp rpar arts ts are are much much lik like the the yin yang yang of mode odern day day marke arketi ting ng.. On One e cannot exist without the other, however bad that may be. In this case, se, black markets serve a purpose as a platform where anyone can do what they wish by selling what they want. To be cons constr trai aine ned d by hund hundre reds ds of gove govern rnme ment nt-e -enf nfor orce ced d laws laws,, unab unable le to sell sell a prod produc uctt that that ever everyo yone ne in a coun countr try y desi desire res, s, that that is why why blac black k mark market etss must must exis existt in ever every y state state.. To give give peop people le an oppo opport rtun unit ity y to make their own, murky way in the world of marketing.
What distinguishes a black market from other kinds of markets—do they function differently? Ther There e are are many many feat featur ures es that that dist distin ingu guis ish h a blac black k mark market et from from othe otherr type types. s. Yet Yet perh perhap apss the the most most dist distin ingu guis ishi hing ng is the the fact fact that that blac black k mark market etss are are ille illega gal, l, eith either er in the the natu nature re of the the good goodss sold sold or in the the natu nature re of the the tran transa sact ctio ions ns.. In this this way way they they func functi tion on diff differ eren entl tly, y, you you cann cannot ot expe expect ct to simp simply ly stum stumbl ble e upon upon a blac black k mar market ket on the the web web (tho (thoug ugh h my fell fellow ow scho schollar som somehow ehow manag anage ed to do so) so) let let alon alone e make make a tran transa sact ctio ion. n. Ther There e are are cert certai ain… n… safe safety ty proc proced edur ures es that that need need to be unde undert rtak aken en before you can receive whatever illegal good you purchased.
Are black markets markets better suited suited for the offline offline or online worlds? worlds? The Th ere may have have bee been a time time wher where e phys physic ical al blac black k mar markets kets wer were acce accept ptab able le and and poss possib ible le eve even wide widesp spre read ad.. Yet Yet with with law law enfo enforc rcem emen entt now now bein being g seri seriou ouss abou aboutt illi illici citt exch exchan ange gess and and with with the web web prov provid idin ing g a perf perfec ectt disg disgui uise se to both both buye buyerr and and sell seller er,, the the onli online ne worl world d look lookss to be the the futu future re of the the blac black k mark market et.. Inde Indeed ed,, you you are are more more like likely ly to find find such such mark market etss with with an inte intern rnet et conn connec ecti tion on than than by meeting some shady guy in a dark alleyway nowadays.
What kinds of goods and services are traded on black markets? When When peop people le thin think k of “bla “black ck mark market ets” s”,, they they ofte often n conj conjur ure e imag images es of ille illega gall and and dang danger erou ouss good goodss bein being g exch exchan ange ged. d. Whil While e ther there e are are inde indeed ed many many blac black k mark market etss that that sell sell weap weapon ons, s, drug drugss and and othe otherr letha lethall subs substa tanc nces es;; ther there e are are also also many many unex unexpe pect cted ed prod produc ucts ts bein being g sold sold.. In Vene Venezu zuel ela a for for exam exampl ple, e,
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blac black k mark market etss sell sellin ing g norm normal al food food and and othe otherr edib edible le good goodss are are popp poppin ing g up, up, beca becaus use e the gove govern rnme ment nt is unab unable le to gain gain thes these e reso resour urce ces. s. In othe otherr part partss of the the worl world, d, valu valuab able le meta metals ls,, prec precio ious us artw artwor orks ks and even Japanese flight attendant uniforms (don’t ask) are being sold.
Is there a difference between a black market and an informal market? There are a few, though I wouldn’t be surprised if you thought the two were the same thing. Firs Firstl tly, y, an info inform rmal al mark market et is any any part part of a coun countr try’ y’ss econ econom omy y that that isn’ isn’tt taxe taxed d or regu regula late ted d by the the gove overnment (similar to a black market). t). As such, any profit fit gained from these markets is not incl includ ude ed in the the GDP GDP or GNP GNP of the the coun countr try y. Unli Unlike ke a blac black k mar market ket howe howeve ver, r, an infor nforma mall marke arkett has has littl ittle e or no nee need for for disc discrrete ete ope operati ration onss or elabo labora rate te safe safety ty proce rocedu durres. es. Whils hilstt you you mig might requ requiire a key code code and and appr approv oval al to buy buy stuf stufff on the the DeepWe DeepWeb, b, you you coul ould just just walt waltzz upto the the food food cart cart vend vendor or and and get get your yourse self lf a nice nice snack snack.. Furt Furthe herm rmor ore, e, the stuf stufff you you buy from from an info inform rmal al mark market et (suc (such h as that that juic juicy y snac snack k from from the the stre street et vend vendor or)) is lega legall (unl (unles esss that that snac snack k just just happ happen enss to cont contai ain n an illegal substance).
Do gove govern rnme ment ntss bene benefi fitt more more from from elim elimin inat atin ing g blac black k ma mark rket etss or from from regu regula lati ting ng them? Although they seem extremely negati ative, governments nts actually benef nefit slightly more from regula regulatin ting g black black market marketss as opp oppose osed d to comple completel tely y elimin eliminati ating ng them. them. Obv Obviou iously sly onc once e gov govern ernmen mentt inte interv rven enti tion on occu occurs rs it is no long longer er a blac black k mark market et.. This This is beca becaus use e gove govern rnme ment ntss can can prof profit it from from the the blac black k mark market ets, s, allo allowi wing ng thei theirr econ econom omie iess to beco become me more more powe powerf rful ul glob global ally ly.. Whil While e the the goods goods sold sold in the the blac black k mark market et are are cert certai ainl nly y ques questi tion onab able le,, the the gove govern rnme ment nt,, by regu regula lati ting ng the the quo quota tass of goods goods can limit the negative effects of their sales. Furthermore, the funding and investment into completely stomping out all black markets would be much higher than simply regulating them.
Is the the new new popu popula lari rity ty of cryp crypto tocu curr rren enci cies es in part part of a func functi tion on of thei theirr usef useful ulne ness ss on the black market? Certai Certainly nly,, with with the rise rise of crypto cryptocur curren rencie cies, s, their their useful usefulnes nesss on the black black marke markett has expone exponenti ntiall ally y incr increa ease sed. d. This This is beca becaus use e cryp crypto tocu curr rren enci cies es enab enable le much much more more secu secure re and and secr secret et tran transa sact ctio ions ns onli online ne,, thus thus expa expand ndin ing g the the abil abilit ity y for for the the blac black k mark market etss to oper operat ate e with withou outt need needin ing g to phys physic ical ally ly be active.
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Does Does the the term term ‘bla ‘black ck ma mark rket et’’ refe referr to a spec specif ific ic ma mark rket etpl plac acee in any any give given n co coun untr try, y, or can there be many black markets even in the same place? Just Just like like conv conven enti tion onal al mark market etpl plac aces es,, blac black k mark market etss can can refe referr to many many blac black k mark market etss in the the same same plac place. e. Just Just like like ther there’ e’ss a mark market etpl plac ace e for for food food,, mach machin iner ery y or auto automo mobi bile les, s, ther there’ e’ss a blac black k mark market et for for each each type type of ille illega gall good good sold sold.. Yo You u woul would d be surp surpri rise sed d how how many many sepa separa rate te,, inde indepe pend nden entt blac black k mark market etss can can oper operat ate e with within in a cert certai ain n sect sector or of a coun countr try. y. Ther There e migh mightt be seve severa rall blac black k mark market etss all all operating in the same neighborhood, or hardly any in some parts of a country at all.
Are there contracts in the black market? If so, are they legally enforceable, and who should be responsible for enforcing them? As the the tran transa sact ctio ions ns in blac black k mark market etss are are cond conduc ucte ted d with with extr extrem eme e secr secrec ecy y and and aren aren’t ’t reco record rded ed,, ther there e are are hardl hardly y any any phys physic ical al contr contrac acts ts you you can can find find about about deal dealss made made here here.. Most Most made made are are verb verbal al,, though there might be a few that have been recorded for the sake of trust and honoring the cont contra ract ct (don’ (don’tt ask ask me, me, I’ve I’ve neve neverr purc purcha hase sed d from from a blac black k mark market et befo before re). ). No one real really ly is mean meantt to be resp respon onsi sibl ble e for for enfo enforc rcin ing g them them beca becaus use e if the the were were brea breach ched ed,, then then taki taking ng that that matt matter er to cour courtt would just result in the black market being shut down.
Does anyone regulate black markets? No,, with No with no gove govern rnme ment nt inte interv rven enti tion on and and offic officia iall leade leaders rshi hip p team teams, s, blac black k mark market etss are are esse essent ntia iall lly y free markets where the consumers and producers decide what they can do.
Are there any countries in which black markets are formally endorsed by the authorities? In offi offici cial al reco record rds, s, no, no, thou though gh it is extr extrem emel ely y poss possib ible le that that some some coun countr trie iess secr secret etly ly coex coexis istt with with blac black k mar markets kets or even ven supp suppor ortt them them.. Th Then en agai again, n, the there are are many any parts arts of the the worl world d who who woul would d actu actual ally ly bene benefi fitt from from the the ope operati ration onss of the these blac black k mark market etss and and othe otherrs that that try try to crus crush h the them wherever they emerge.
Key Terms to Learn An underground economy is any illegal economic activity. Also known as shadow economy, informal economy and black market. The term “informal economy” was first used by Keith Hart in 1973 to describe how individuals in developing nations invented new economic devices in order to survive in a world with very few “regular” employment opportunities. Since then it has been a term
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employed to describe bottom-up efforts to generate a livelihood among those without secure financial footing in the global economy. Edgar Feige has broken the underground economy down d own into segments: the illegal economy, the unreported economy, the unrecorded economy, and the informal economy. An unreported economy is engaged in economic activities that find its way around codified fiscal rules (regarding government revenue) in the tax code. As in, they make money but don’t do n’t pay tax. Black markets involve economic activity that happens outside of government-sanctioned channels, and transactions are usually “under the table”. Grey markets (parallel markets) is where products are bought and sold outside of the manufacturer’s trading channels. White markets are legal, intended, official and authorised markets for the exchange of goods.
An import cycle is the system which a product has undergone to enter a certain marketplace, from production to transport to the market. Fluid supply is a cycle or condition of a black market where the supply of contraband is constant in relationship to demand for it. This can be beneficial if demand is consistent and sufficient in relation to supply, but a substantial fluctuation in demand or supply can disrupt supply fluidity. Compounding crime is the offense committed by the victim of a crime when he or she fails to prosecute the offender and instead agrees to hinder prosecution in exchange for a bribe. Commission-free exchange-traded funds is the exchange of currencies where the agent is not paid a commission. Counterfeiting is the imitation of a product or good (or even money) fraudulently. In black markets counterfeits are common -- fakes or replicas of certain products are made and sold at a much lower price than the original. Smuggling is the act of moving goods secretly in and out of a country. Black money refers to income that is illegally obtained and has not been declared for tax payment.
The concealment of illegally or illegitimately obtained money is known as money laundering. This usually involves transferring the money to bank accounts a ccounts in foreign countries or legitimate businesses or firms.
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Price ceilings are restrictions set by the government to regulate prices of goods and services. This controls the maximum price of a product or service.
Black markets are not regulated by the government. Therefore, there are no price ceilings in black markets -- products are sometimes sold to extremely high prices.
Market failure is a situation where the market has failed to allocate goods, services and resources efficiently. Underground economic activity take place without government regulation. Contraband refers to goods that have been imported and/or exported illegally.
Black Markets to Explore Organs ●
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Corneas $19 800 Skeleton $6600
WHO: illegal organ trade occurs when organs are removed from the body for the purpose of commercial transactions “Donors” of organs are usually flown to a foreign country where their organs are removed in makeshift clinic According to the American Transplant Foundation, 123,000 people in the United States are on the waiting list to receive an organ. Every 12 minutes a new name is added to the list and an average of 21 persons per day die due to a lack of organ availability.operating availability. operating rooms It is a criminal offense fo traffic body parts, or perform transplants from any source not legally affiliated with a hospital or other medical facility, but legality does not deter the donor -often desperate for money -- or the purchaser of the organ -often desperate for a transplant in order to survive
2 Lungs
$272 000 Kidney $138 700 Liver $137 000
Blood $630/L ($297/pint)
Skin $1.24/cm2 ($8/in2)
Bones & Ligaments
$4800
Gold ●
The Philippines, China, the United States, Australia and Russia are some examples of countries which having a thriving gold mining and gold production industry
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The exchange of gold in the black market exists in many gold mining countries and this has had interesting effects on the local economy and global trade. Market regulation affects the gold black market in different countries: For example, a smaller country with tax revenue from gold mining would ○ significantly impact government funding, and illegal unreported gold mining would hurt this funding since it is untaxed on the black market. Most black markets for gold exist in developing countries, as tax is increasingly imposed, and this places pressure on miners which causes them to sell their gold in the unreported economy where tax can be avoided Places like Hong Kong allow tax-free import of gold -- this helps the gold in the black market to move even more freely
Art ● ●
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The art black market is the 3rd largest black market in the world, after drugs and weapons According to the FBI, the art black market involves billions of dollars’ worth of art stolen every year -- it is extremely lucrative. To track stolen pieces of art, international databases have been set up, for example London-based Art Loss Register. Stealing art is an activity act ivity which is extremely appealing to criminals, especially terrorist groups like ISIS: Valuable pieces of art are worth thousands, or even millions of dollars, and they are ○ easy to remove from museums or homes. Forging famous art pieces is also relatively easy. ○ Many art buyers around the world do not care where the art comes from, so ○ criminals can easily sell art pieces to them.
Endangered animals ●
The world is dealing with an unprecedented spike in illegal wildlife trade, threatening to overturn decades of conservation gains
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Ivory estimated to weigh more than 23 metric tons (that’s 2,500 elephants) was seized in the 13 largest seizures of illegal ivory in 2011
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Rhino poaching has increased from 13 in 2007 to 1004 in 2013
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Common animals in the black market: ○
Elephants for their tusks (ivory)
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Tigers for their skin
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Oil ●
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Oil can be stolen by: ○
Bunkering, where the oil is pumped to small barges then delivered to tankers
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Tapping pipelines, diverting oil to other places
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Transferring from ship to ship
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Armed theft
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Corruption (bribing officials)
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Smuggling and laundering
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Adulteration
Problems with the oil black market and the illegal trade of oil: ○
It funds terrorism.
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It encourages corruption.
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Gas prices increase because supply (of oil that is rightfully purchased) purchased) has decreased.
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The environment is damaged.
An interesting infographic to refer to: http://www.visualcapitalist.com/global-black-market-fuel-theft/ Read more: https://www.reuters.com/article/us-singapore-oil-theft-southeast-asia-an/shady-triangle-southeast -asias-illegal-fuel-market-idUSKBN1F70TT
Cigarettes ●
The illegal trade of tobacco seems to be especially prevalent in Ireland and Australia lately
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The global black market for tobacco
A survey carried out in June found two-thirds of all cigarettes sold illegally in Dublin were being manufactured specifically for the black market.
provides 11.6% of the world’s consumption ●
Fake cigarettes: toxic chemicals are added to make them less expensive as compared to globally recognised brands like Marlboro Man
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People can avoid cigarette taxes by buying cigarettes illegally online, or in bulk from the black market in a low tax jurisdiction, jurisdiction, and then selling in a high tax jurisdiction
Video about this: https://www.youtube.com/watch?v=RgN11n6NSLI&feature=youtu.be
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Slave trade ●
The sale of human beings for slavery is still very prevalent nowadays.
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Slaves being transported illegally from Libya to Europe
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European and African leaders have attempted to stop this, along with the UN
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Many African refugees have fled to Libya in the hope that they will live a better life after being transported to Europe, but instead they are being abused, exploited and even trafficked
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Why is slave trade so prevalent in Libya? ○
Libya is the main transit point for refugees and migrants trying to reach Europe by sea.
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Easily exploited, and they are raped, robbed or murdered
Read more: https://edition.cnn.com/2017/11/14/africa/libya-migrant-auctions/index.html
Housing ●
Housing is become increasingly expensive
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Some people are attracted to “cheap deals” on the housing market -- actually “black market housing schemes”
Currency ●
Illegal market in foreign exchange
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Typical in countries with the following characteristics:
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Weak economic fundamentals: high inflation, few foreign exchange reserves
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Strict currency controls over foreign exchange currencies
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Fixed exchange rate regime
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Lack of confidence among citizens in the value of their local currency
Some countries where the currency black market is prevalent: ○
Egypt
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Since President Hosni Mubarak was toppled in 2011, the Egyptian currency depreciated by 13.4% against the US dollar in 2 years
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Foreign currency inflows were lost as tourism decreased in the country as a result of political instability
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People began to exchange foreign currencies on the black market
Iran ■
National currency fell when UN imposed sanctions
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The sanctions restricted Iran’s oil exports which reduced their foreign currency inflows
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Argentina ■
The black market began its operations when Argentina faced external debt in 2002
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Venezuela ■
High inflation and decreasing foreign exchange reserves
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Increased demand for USD
Read more: https://www.investopedia.com/articles/investing/031213/currency-trading-black-market.asp
Weapons ●
Weapons are commonly sold on the internet -- “the Dark Web”
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Serial numbers on guns are removed so that they cannot be tracked
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The Dark web (aka deep web / darknet) is not searchable by search engines like Google
Medicine ●
The black market of counterfeit medicine medicine is said to be controlled by criminal gangs exploiting the high costs of genuine medicines, endangering the lives of the most vulnerable
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Professional pharmacists and medicine wholesalers are often bribed to sell prescription-only prescription-only drugs to the black market
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Silk Road 1.0 - 3.1 ●
An online black market, the first ever modern darknet market selling drugs
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A Tor hidden service -- online users can browse anonymously
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The FBI shut down the website in October 2013, and the founder of the site was arrested. “Silk Road 2.0” was set up one month later
Darknet ●
a portion of routed, allocated IP space not running any services. Traffic arriving to such IP dark space is undesired since it has no active hosts
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Can only be accessed with special software and authorization
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Cannot be search-indexed
Acropolis ●
Darknet market
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Main products: books and digital services; recreational drugs
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Not as big as many other darknet markets but fast and well-designed
More interesting black markets to read about: ●
Cookies ○
https://www.scmp.com/video/hong-kong/1621335/most-notorious-black-mar ket-hong-kong-doesnt-involve-drugs-or-ivory-yummy
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Tide detergent ○
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http://www.businessinsider.com/the-tide-black-market-2013-1
Baby formula ○
https://nypost.com/2016/01/07/theres-a-thriving-black-market-for-baby-for mula/
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Sperm ○
http://www.globaltimes.cn/content/737321.shtml
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Cryptocurrency Essential Questions What is a cryptocurrency, and can a cryptocurrency be considered a form of money? If you you take take away away all all the the nois noise e arou around nd cryp crypto tocu curr rren enci cies es and and reduc reduce e it to a simp simple le defin definit itio ion, n, you you find find it to be just just limi limite ted d entr entrie iess in a data databa base se no one one can can chan change ge with withou outt fulf fulfil illi ling ng spec specif ific ic cond condit itio ions ns.. This This may may seem seem ordi ordina nary ry,, but, but, beli believ eve e it or not: not: this this is exac exactl tly y how how you you can can defi define ne a curr curren ency cy.. On Only ly the the owne ownerr of the the curr curren ency cy has has the the key key need needed ed to unlo unlock ck the the tran transa sact ctio ions ns and and send send the the curr curren ency cy.. As such such,, it is hard hard to coun counte terf rfei eitt cryp crypto tocu curr rren ency cy.. Beca Becaus use e ther there e is no need need for for a midd middle lema man, n, they they are immune to government interference or manipulation. Cryptocurrencies are already cons consid ider ered ed a for form of money oney,, bei being the the de fact facto o curr curre ency ncy in blac black k mark arkets ets and and wide widely ly regar egarde ded d across the world as a viable method of payment.
What does it mean for a currency to be decentralized and unregulated? A mark market et stru struct ctur ure e that that cons consis ists ts of a netwo network rk of vari variou ouss tech techni nica call devi device cess that that enabl enable e inve investo stors rs to crea create te a mark market etpl plac ace e with withou outt a cent centra rali lize zed d loca locati tion on.. No sing single le inst instit itut utio ion n cont contro rols ls the the netw networ ork. k. One major problem every payment network has to solve is to prevent the so-called double spendin ding: to prevent that one entity spe spends the same ame amount twice. Usually, this is don done by a cent centra rall serv server er who who keep keepss reco record rd abou aboutt the the bala balanc nces es.. In a dece decent ntra rali lize zed d netw networ ork, k, you you don‘ don‘tt have have this this serv server er.. So you you need need ever every y sing single le enti entity ty of the the netw networ ork k to do this this job. job. Ever Every y peer peer in the the netw networ ork k need needss to have have a list list with with all all tran transa sact ctio ions ns to chec check k if futu future re tran transa sact ctio ions ns are are vali valid d or an atte attemp mptt to double ble spend. A cryptocurrency like Bitcoin consists of a network of peers. Every peer has a record of the complete history of all transactions and thus of the balance of every account.
Who controls cryptocurrencies? cryptocurrencies? The trans ansaction is known almost immediately by the whole network. But only after a specific amou amount nt of time time it gets gets conf confir irme med. d. As long long as a tran transa sact ctio ion n is unco unconf nfir irme med, d, it is pend pendin ing g and and can can be forged. When a transaction is confir firmed, it is set set in ston tone. It is no longer forg orgeable, it can‘t be reve revers rsed ed,, it is part part of an immu immuta tabl ble e reco record rd of hist histor oric ical al tran transa sact ctio ions ns:: of the the so-c so-cal alle led d bloc blockc kcha hain in.. Only On ly mine miners rs can can conf confir irm m tran transa sact ctio ions ns.. This This is thei theirr job job in a cryp crypto tocu curr rren ency cy-n -net etwo work rk.. They They take take
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tran transa sact ctio ions ns,, stam stamp p them them as legi legitt and and spre spread ad them them in the netwo network rk.. After After a tran transac sacti tion on is conf confir irme med d by a mine miner, r, every very node node has has to add add it to its data databa base se.. It has has beco become me part part of the the bloc block kchai chain. n. Mine iners get rewarded with a small token of the transaction of bitcoins.
Why are people skeptical of cryptocurrencies? cryptocurrencies? Cryp Cryptoc tocur urre renc ncie iess are are digi digita tall gold gold.. Soun Sound d mone money y that that is secu secure re from from poli politi tica call infl influe uenc nce. e. Mone Money y that that promises to preserve and increase its value over time. Cryptocurrencies are also a fast and com comfor fortabl table e mean meanss of paym paymen entt with with a wor worldwi ldwide de scop scope e, and and they they are are priv privat ate e and and anon anonym ymou ouss enough to serve as a means of payment for black markets and any other outlawed economic acti activi vity ty.. But But whil while e cryp crypto tocu curr rren enci cies es are are more more used used for for paym paymen ent, t, its its use use as a mean meanss of spec specul ulat atio ion n and a store of value dwarfs the payment aspects.
What makes one cryptocurrency different to another? Each Each cryp crypto tocu curr rren enci cies es have have diff differ eren entt algo algori rith thms ms to prot protec ectt data data,, and and diff differ eren entt soft softwa ware ress to do what what it does does.. Much Much like like each each curr curren ency cy,, ever every y cryp crypto tocu curr rren ency cy also also has has its its own own valu value e and and popu popula lari rity ty in the world. As such that defines, what they can be used for and how easy it is to get into them.
Why is Bitcoin so volatile? What determines its value? Vola Volati tili lity ty is measu measure red d in trad tradit itio iona nall mark market etss by the CBOE CBOE Vola Volati tili lity ty Inde Index. x. Bad Bad pres presss in the the medi media a lowers confidence in Bitcoin so the value of it decreases. On the other hand good publicity incr increa ease sess the the valu value e of Bitc Bitcoi oin. n. Sinc Since e Bitc Bitcoi oin n is dece decent ntra rali lize zed, d, the the valu value e of it fluc fluctu tuat ates es grea greatl tly y with with public opinion.
What kinds of transactions would a cryptocurrency make possible (or easier) that a normal currency might not? One On e prim prime e exam exampl ple e of these these tran transa sact ctio ions ns is blac black k mark market et purc purcha hase ses, s, wher where e cryp crypto tocu curr rren enci cies es are are beginning to emerge as the most secure and therefore the best method of payment.
Could goods be valued in cryptocurrencies? cryptocurrencies?
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Possibly, but then for this to happen, more people in the world needs to understand and use cryptocurrencies for it to be just as common as paper bills, coins and gold.
Do cryptocurrencies weaken governments? Seei Seeing ng as cryp cryptoc tocur urre renc ncie iess are are slow slowly ly repl replac acin ing g actu actual al gove govern rnme ment nt mone money, y, there there is a chan chance ce that that gove overnme rnment ntss who who do not not embr embrac ace e or nati nation onal aliz ize e cryp crypto tocu currrenc rencie iess mig might see see the their coun countr try y’s econ econom omy y be weak weake ened ned great reatly ly.. Furth urther ermo more re,, bec because ause the the nee need for for a midd middle lema man n is remo remov ved, ed, gove overnments can no longer keep a hold of cryptocurrency transactions and as such may lose auth author orit ity y in the these area areas. s. Yet Yet gov governm ernme ents nts may may turn turn to the these elect lectro roni nicc cac caches hes in the the futu futurre for for thei theirr powe power. r. Imag Imagin ine e a futur future e wher where e ever everyo yone ne pays pays for ever everyt ythi hing ng in cryp crypto tocu curr rren enci cies es,, with with each each gove govern rnme ment nt bein being g able able to deco decode de only only thei theirr cryp crypto tocu curr rren ency cy,, then then that that futu future re may may not not be tota totall lly y crazy.
Key Terms to Explore A medium of exchange is an intermediary instrument used to facilitate the sale, purchase or trade of goods between parties. For an instrument to function as a medium of exchange, it must represent a standard of value accepted by all parties. Store of value is the function of an asset than can be saved, retrieved or exchanged at a later time.
A unit of account is the nominal monetary unit of measure or currency used to represent the real value of any economic item. A blockchain ledger is a growing of records linked and secured using cryptography. It is inherently resistant to modification and cannot be tampered with. A decentralized currency is not controlled by the government or any one person. Anyone can mine Bitcoin, so it is a decentralized currency. The value of a currency comes from the people using it. Decentralized currencies take away the power of big institutions and distributing the power to everyone else. Cryptocurrency mining is the act of monitoring and validating transactions in the blockchains. In return, the miners gain cryptocurrency as a reward. A hard fork is radical change to the protocol of a cryptocurrency. A blockchain splits into two incompatible separate chains.
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Learn more about hard forks: https://youtu.be/XCo6yyutYAM
A soft fork is a change to the software protocol of a cryptocurrency where only previously valid blocks and transactions are made invalid, making it backwards compatible. Wallets are software programs that store private and public keys and interact with various blockchain to enable users to send and receive digital currency and monitor their balance.
A private key is a form of cryptography that allows a use to access their cryptocurrency. The volatility of a cryptocurrency is a measure of the dispersion of returns. Higher volatility means riskier security.
Example Cryptocurrencies to Research Bitcoin ●
The first and arguably most famous cryptocurrency
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Invented by Satoshi Nakamoto, creating the first blockchain database in 2009 ○
Note that the name Satoshi Nakamoto is used by an anonymous person or a group of people but may not necessarily be a real name
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Accepted as a worldwide payment system s ystem
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Transactions take place between users directly
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Created as a reward for mining
Bitcoin Cash ●
Hard Fork of Bitcoin (Spin-off company) due to Bitcoin scalability debate
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Group of developers were unhappy with Bitcoin’s new n ew changes therefore decided to create this new cryptocurrency in 2017
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By splitting the blockchain, users can have more transactions due to its increased block size limit
Ethereum ●
Proposed by Vitalik Buterin in 2013
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Features “smart contract” (scripting) ○
Credit transactions with no third parties (like in blockchains)
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Able to process not only transactions but also programs and complicated contracts, making it flexible
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Ethereum Classic is a hard fork created after DAO (under Ethereum) has been hacked
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Ethereum is more like a family of currencies ○
Including DigixDAO, Augur, Ether
Ripple ●
XRP (name of currency) released in 2012
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Does not use Blockchain to record transactions
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Uses an iterative consensus process, which makes it faster than Bitcoin
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But at the same time more vulnerable to hacker attacks
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Works with big firms like: Bank of America, RBC, Standard Chartered, and UBS
Stellar ●
Founded in 2014 by Jed McCaleb (Co-founder of Ripple) and Joyce Kim
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Non-profit open-source technology for financial access and inclusion
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Originally a fork of Ripple but has almost no share codes now
Dogecoin ●
At first implemented as a joke in 2013
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The cryptocurrency features a Shiba Inu Dog
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Uses similar blockchain algorithms like Litecoin ○
Litecoin is considered to be the t he “digital silver” against Bitcoin, which is the “digital gold” in cryptocurrency.
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Questions for Further Exploration ●
Is it too easy to create a cryptocurrency? Consider the case of doge, a cryptocurrency originally intended as a joke. Does its success point at any problems with the market for cryptocurrencies more broadly?
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Consider the recent emergence of a widespread black market in Venezuela. Discuss with your team: should consumers be punished for participating in such markets? What drives their popularity?
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Learn about the effort in Cuba to normalize elements of its widespread black markets—including granting self-employed individuals official licenses to sell pirated movies. What is motivating the government to try to regulate its black market rather than to outlaw it?
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In cities and countries where Uber operates (or has operated) without official permission, can it be seen as a black market service?
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Consider the emergence of cryptocurrency mining as an entrepreneurial opportunity in the developing world, including for this individual in Nairobi. Discuss with your team: could cryptocurrency help level the global playing field? Or is it wishful thinking to imagine it could provide sufficient opportunities to help lift people out of poverty around the world?
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In what ways is the “grey market” like and unlike a traditional black market? Do different factors motivate their creation? Discuss with your team: would you be willing to buy something on the gray market that you would not be willing to buy on the black market?
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Move over, Bitcoin: more and more nations are announcing their own cryptocurrencies, including Kazakhstan (the CryptoTenge) and Venezuela (the Petro). Discuss with your team: can so many cryptocurrencies successfully coexist, and why might nations want to have their own?
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Discuss with your team: is a contract the best way to form a binding agreement between two parties? If you were to sign a contract with your parents, what would it look like? How about with your teammates?
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Read Chapter 2 of this book on deal-making by a well-known American political celebrity, then discuss with your team: does this chapter contain good advice? With what aspects of it, if any, do you disagree? Be sure to share with your teammates the last time you were involved in making a deal of your own, even on a very small scale; would you have approached it any differently after reading this t his chapter?
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As of 2016, pangolins were the most illegally trafficked animal in the world. Learn about the pangolin’s situation, then research other illegally trafficked animals. What do they have in common, and who, if anyone, should be responsible for protecting them?
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Read about the kidnapping of Bitcoin exchange manager Pavel Lerner. What motivated his kidnapping, and how was he freed? Are cryptocurrencies and criminal behavior too closely linked for cryptocurrencies ever to become a safe medium of exchange?
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Look into the emergence of Bitcoin ATMs around the world—do they make sense for an online currency? Why might stores and restaurants be motivated to install Bitcoin ATMs, and do these reasons make sense—or are they just part of a passing craze?
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Satoshi Nakamoto wrote the original “white paper” that helped launch Bitcoin and the entire cryptocurrency movement—but no one knows who Satoshi Nakamoto really was. Discuss with your team: why might this individual want to remain unknown, and how important is it that we determine who he was?
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Some products on the black market might surprise you—for instance, the underground trade in manuka honey. What drives its presence in the black market, and what other unusual goods can you think of that might be similarly valued or illegally exchanged?
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Investigate the impact of cryptocurrencies on Japan’s GDP. Should other countries learn something from the example of Japan? Is national revenue generated through cryptocurrencies as legitimate as that generated through more traditional means of exchange?
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Would “Torrenting” copyrighted movies or television shows be considered a black market activity, or does money need to be exchanged in a transaction for it to be counted as such?
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Does the creation of special economic zones—most famously, cities such as Shenzhen in China, though the practice is now common around the world—facilitate black market activity? Or do they diminish it?
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Interwoven black markets are markets for counterfeit goods—whether Rolex wat ches or, in Kiev, Big Macs. Discuss with your team: would you be willing to buy counterfeit goods that are as good as the original? What if they are not as good, but much cheaper? Be sure to research what goods are most commonly counterfeited in the global marketplace.
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Consider the Silk Road—not the trade route which once linked Europe and Asia, but an online marketplace for black market transactions that went through several incarnations and spawned multiple imitators and descendants. Discuss with your team: are such marketplaces inevitable? Do they pose a lasting challenge to government control of
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economic transactions? If you had to design your own online black market, what it would look like?
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