A brief history of virtual currency and value

A Brief History of Virtual Currency and Value

by John Bandler

Humans have exchanged and stored value for a long time. Virtual currency (including cryptocurrency) is newer, but some older principles remain.

In this article we outline some major steps.

My experience with virtual currency

I was a relatively junior prosecutor who stumbled into a global cybercrime case that involved trafficking of stolen credit card data (and other stolen data), and payments and laundering of virtual currency and other payment mechanisms. These cybercriminals, identity thieves, and money launderers seemed to use almost every method of value transfer possible (but didn't, more exist).

That investigation became known as the Western Express Case. Of course, virtual currency preceded cryptocurrency, and cryptocurrency is a type of virtual currency, as I discuss in another article.

New or Old?

As with all things in technology and cybercrime, we look to what is the same and what is different. I explore that in my book on cyberlaw.

The chronology

This history of humans and value goes back a long time. When I cover this topic, I like to start at the beginning, and I cover these topics.

8 billion years BC/BCE: Big Bang?
2 million years BC/BCE: First humans?
____ BC: Humans learn to hunt and, gather, then farm, and trade and exchange value
____ BC: Humans learn to trade and exchange value
____ BC: Humans learn to steal and commit crimes
3000 BC: Government starts taxing people
3000 BC: People hide their money from the government
800 AD/CE: Hawala to transfer value (original Silk Road)
1792-1861: First U.S. coin and paper money (U.S. currency)
1931: Al Capone convicted of tax evasion
1970: U.S. Bank Secrecy Act (BSA)
1986: First U.S. criminal money laundering statute (state criminal statutes follow, and also money transmitting laws)
1996: Egold created
1998: Webmoney created
199? People start using virtual currency to hide payments
199? Cybercrime starts being profitable and global
2001 Western Express related cybercrimes commence
Feb 2006: Western Express I indictment by DANY (money transmitting, check cashing)
2006: Gold-Age Brooklyn exchanger prosecution by DANY
April 2007: Egold prosecution by U.S. DOJ (effectively shuts them down)
August 2007: Western Express II indictment by DANY (cybercrime, virtual currency money laundering, though it remains sealed and then partially sealed for some time)
October 2007: Arrest and search warrants re: US defendants
May 2008: Arrest of defendant in Europe
July 2008: Arrest of two defendants in Europe
2008: Bitcoin invented (goes live in 2009)
2009: Liberty Reserve created
September 2009: Extradition of two defendants from Europe
July 2010 extradition to US of one defendant from Europe
2011: Silk Road Marketplace created (with the use of Bitcoin and Tor internet anonymity tool)
2013: Liberty Reserve and owners indicted by U.S. DOJ
2013: Silk Road takedown by U.S. DOJ (Ross Ulbricht)
2013: FinCEN Virtual Currency Guidance
2015: New York regulation on virtual currencies (from NYS Department of Financial Services, 23 NYCRR 200 “Rule 200”)
Growing use of virtual currencies and cryptocurrencies as an investment
Growing guidance from regulators about how existing laws anre regulations apply
- Internal Revenue Service (IRS) guidance
- Securities and Exchange Commission (SEC) guidance
- Commodities and Futures Trading Commission (CFTC) guidance
- 2018 NYS Attorney General report
- May 2019 FinCEN advisory
2021: Rising use of non-fungible tokens (NFTs)
2022-3-9: Presidential Executive Order on Ensuring Responsible Development of Digital Assets.

Wait, that's it? Just a list?

I am working to get my new book on cyberlaw done.

I may build this page out in the future, or create a video lecture on it.

If not, the chronology steps are here for you.