WSC 2018: Social Studies – Black Market

Introducing Markets

ESSENT IAL QUEST IONS

DO ALL MARKETS FUNCT ION THE SAME WAY AROUND THE WORLD?
A market is one of the many varieties of systems, institutions, procedures, social
relations and infrastructures whereby parties engage in exchange. While parties may exchange goods and
services by barter, most markets rely on sellers offering their goods or services (including labor) in
exchange for money from buyers. It can be said that a market is the process by which the prices of goods
and services are established. Markets facilitate trade and enables the distribution and allocation of
resources in a society. Markets allow any trade-able item to be evaluated and priced. A market
sometimes emerges more or less spontaneously but is often constructed deliberately by human interaction
in order to enable the exploitative exchange of rights (cf. ownership) of services and goods.

In economics, a market that runs under laissez-faire policies is called a free market, it is “free” from the
government, in the sense that the government makes no attempt to intervene
through taxes, subsidies, minimum wages, price ceilings, etc. This is not always the case, as
Governments may interfere in countries where they wish to dictate matters in the country. Also in the
case of an oligopoly or monopoly imperfect competition may result.

What (or who) determines the prices of goods and services?

In economics, a free market is an idealized system in which the prices for goods and services are
determined by the open market and consumers, in which the laws and forces of supply and demand are
free from any intervention by a government, price-setting monopoly, or other authority. Proponents of the
concept of free market contrast it with a regulated market, in which a government intervenes in supply
and demand through various methods such as tariffs used to restrict trade and protect the economy. In an
idealized free market economy, prices for goods and services are set freely by the forces of supply and
demand and are allowed to reach their point of equilibrium without intervention by government policy.

What is money – and where do the different types of money derive their value?

Money is any item or verifiable record that is generally accepted as payment for goods and services and
repayment of debts in a particular country or socio-economic context.[1][2][3] The main functions of
money are distinguished as: a medium of exchange; a unit of account; a store of value; and, sometimes,
a standard of deferred payment.[4][5] Any item or verifiable record that fulfills these functions can be
considered as money.

Money is historically an emergent market phenomenon establishing a commodity money, but nearly all
contemporary money systems are based on fiat money.[4] Fiat money, like any check or note of debt, is
without use value as a physical commodity. It derives its value by being declared by a government to
be legal tender; that is, it must be accepted as a form of payment within the boundaries of the country, for
“all debts, public and private”.[6]
The money supply of a country consists of currency (banknotes and coins) and, depending on the
particular definition used, one or more types of bank money (the balances held in checking
accounts, savings accounts, and other types of bank accounts). Bank money, which consists only of
records (mostly computerized in modern banking), forms by far the largest part of broad money in
developed countries

To what degree can governments control prices or quantities of goods and services exchanged?

Governments intervene in markets to address inefficiency. In an optimally efficient market, resources are
perfectly allocated to those that need them in the amounts they need. In inefficient markets that is not the
case; some may have too much of a resource while others do not have enough. Inefficiency can take many
different forms. The government tries to combat these inequities through regulation, taxation, and
subsidies. Most governments have any combination of four different objectives when they intervene in
the market.

MAX IMIZING SOCIA L WELFARE

In an unregulated inefficient market, cartels and other types of organizations can wield monopolistic
power, raising entry costs and limiting the development of infrastructure. Without regulation, businesses
can produce negative externalities without consequence. This all leads to diminished resources, stifled
innovation, and minimized trade and its corresponding benefits. Government intervention through
regulation can directly address these issues.

Another example of intervention to promote social welfare involves public goods. Certain depletable
goods, like public parks, aren’t owned by an individual. This means that no price is assigned to the use of
that good and everyone can use it. As a result, it is very easy for these assets to be depleted. Governments
intervene to ensure those resources are not depleted.

MACRO-ECONOMIC FACTORS
Governments also intervene to minimize the damage caused by naturally occurring economic events.
Recessions and inflation are part of the natural business cycle but can have a devastating effect on
citizens. In these cases, governments intervene through subsidies and manipulation of the money supply
to minimize the harsh impact of economic forces o

OTHER OBJECT IVES

Governments can sometimes intervene in markets to promote other goals, such as national unity and
advancement. Most people agree that governments should provide a military for the protection of its
citizens, and this can be seen as a type of intervention. Growing a large and impressive military not only
increases a country’s security, but may also be a source of pride. Intervening in a way that promotes
national unity and pride can be an extremely valuable goal for government officials.

SOCIO -ECONOMIC FACTORS

Governments may also intervene in markets to promote general economic fairness. Government often try,
through taxation and welfare programs, to reallocate financial resources from the wealthy to those that are
most in need. Other examples of market intervention for socio-economic reasons include employment
laws to protect certain segments of the population and the regulation of the manufacture of certain
products to ensure the health and well-being of consumers.

KEY TERMS TO LEARN

Supply – In economics, supply is the amount of something that firms, consumers, labourers, providers
of financial assets, or other economic agents are willing to provide to the marketplace. In the goods
market, supply is the amount of a product per unit of time that producers are willing to sell at various
given prices when all other factors are held constant. In the labor market, the supply of labor is the
amount of time per week, month, or year that individuals are willing to spend working, as a function of
the wage rate. In the financial markets, the money supply is the amount of highly liquid assets available in
the money market, which is either determined or influenced by a country’s monetary authority.

Demand – In economics, demand is the quantity of a commodity or a service that people are willing or
able to buy at a certain price, per unit of time.

Deadweight loss – is a loss of economic efficiency that can occur when equilibrium for a good or a
service is not achieved. That can be caused by monopoly pricing in the case of artificial scarcity,
an externality, a tax or subsidy, or a binding price ceiling or price floor such as a minimum wage. For
example, if the price of a glass of wine is $3.00 and the price of a glass of beer is $3.00, a consumer might
prefer to drink wine. If the government decides to levy a wine tax of $3.00 per glass, the consumer might
prefer to drink beer. The excess burden of taxation is the loss of utility to the consumer for drinking beer
instead of wine since everything else remains unchanged.

Regulation – Means putting rules in place and can take many forms: legal restrictions promulgated by
a government authority, contractual obligations (for example, contracts between insurers and their
insureds[1]), social regulation (e.g. norms), co-regulation, third-party regulation, certification,
accreditation or market regulation.[2] . State-mandated regulation is government intervention in the
private market in an attempt to implement policy and produce outcomes which might not otherwise
occur,[3] ranging from consumer protection to faster growth or technological advancement.

Perfect competition – In theoretical models where conditions of perfect competition hold, it has been
theoretically demonstrated that a market will reach an equilibrium in which the quantity supplied for
every product or service, including labor, equals the quantity demanded at the current price. This
equilibrium will be a Pareto optimum, meaning that nobody can be made better off by exchange without
making someone else worse off.

Imperfect competition – is a type of market structure showing some but not all features of competitive
markets.[1] . Forms of imperfect competition include:

▪ Oligopoly, competition among 10

▪ Monopolistic competition, in which there are many sellers producing highly differentiated products.
▪ Monopoly, where there are many buyers but only one seller.
▪ Monopsony, where there are many sellers but one buyer.
▪ Oligopsony, where there are many sellers but few buyers.
▪ Duopoly, competition among 2
Monopoly – exists when a specific person or enterprise is the only supplier of a particular
commodity. Monopolies are thus characterized by a lack of economic competition to produce
the good or service, a lack of viable substitute goods, and the possibility of a high monopoly price well
above the seller’s marginal cost that leads to a high monopoly profit.

Taxes – is a mandatory financial charge or some other type of levy imposed upon a taxpayer (an
individual or other legal entity) by a governmental organization in order to fund various public
expenditures.[1] A failure to pay, or evasion of or resistance to taxation, is punishable by law. Taxes
consist of direct or indirect taxes and may be paid in money or as its labour equivalent. Most countries
have a tax system in place to pay for public/common/agreed national needs and government functions:
some levy a flat percentage rate of taxation on personal annual income, some on a scale based on annual
income amounts, and some countries impose almost no taxation at all, or a very low tax rate for a certain
area of taxation.

Tariffs – A tariff is a tax imposed on imported goods and services. ariffs are used to restrict imports
by increasing the price of goods and services purchased from overseas and making them less attractive to
consumers. A specific tariff is levied as a fixed fee based on the type of item, for example, $1,000 on any
car. An ad-valorem tariff is levied based on the item’s value, for example, 10% of the car’s value.

Read more: Tariff https://www.investopedia.com/terms/t/tariff.asp#ixzz54igAgcDR
 Embargoes – is the

partial or complete prohibition of commerce and trade with a particular country or a group of
countries.[6] Embargoes are considered strong diplomatic measures imposed in an effort, by the imposing
country, to elicit a given national-interest result from the country on which it is imposed. Embargoes are
generally considered legal barriers to trade, not to be confused with blockades, which are often considered
to be acts of war

Sanctions – are commercial and financial penalties applied by one or more countries against a targeted
country, group, or individual.[1] Economic sanctions may include various forms of trade barriers, tariffs,
and restrictions on financial transactions.

Arbitrage – is the practice of taking advantage of a price difference between two or more markets:
striking a combination of matching deals that capitalize upon the imbalance, the profit being the
difference between the market prices. When used by academics, an arbitrage is a (imagined, hypothetical,
thought experiment) transaction that involves no negative cash flow at any probabilistic or temporal state
and a positive cash flow in at least one state; in simple terms, it is the possibility of a risk-free profit after
transaction costs. For instance, an arbitrage is present when there is the opportunity to instantaneously
buy low and sell high.

Bazaar – is a permanently enclosed marketplace or street where goods and services are exchanged or
sold.

Souk – is a marketplace or commercial quarter in Western Asian and North African cities.[1][2] The
term souq goes by many alternative in different parts of the world; in Malta; in the Balkans, the
term bedesten is used; the terms suq and sometimes monti are used for a marketplace; and in northern
Morocco, the Spanish corruption socco is often used. The equivalent Persian term is “bazaar“. In general
a souq is synonymous with a bazaar or marketplace, and the term souq is used in Arabic speaking
countries.

Exchange – or bourse /bʊərs/ also known as a trading exchange or trading venue, is an

organized market where (especially) tradable securities, commodities, foreign exchange, futures,
and options contracts are sold and bought.

Swap meets – A flea market (or swap meet) is a type of bazaar that rents or provides space to people
who want to sell or barter merchandise. Used goods, cheap items, collectibles, and antiques are
commonly sold. Many markets offer fresh produce or baked goods, plants from local farms and vintage
clothes. Renters of the flea market tables are called vendors. It may be indoors, as in a warehouse or
school gymnasium; or outdoors, as in a field or parking lot or under a tent.

Boot sales – are a form of market in which private individuals come together to sell household and
garden goods. They are popular in the United Kingdom, where they are often referred to simply as ‘car
boots’. Car boot sales are becoming prevalent across many cities and towns and have evolved from shady
operations selling mass produced products to anyone and everyone attempting to sell any surplus
household items.

The term refers to the selling of items from a car’s boot. Although a small proportion of sellers are
professional traders selling goods, or indeed browsing for items to buy, most of the goods on sale are used
personal possessions. Car boot sales are a way of attracting a large group of people in one place to recycle
useful but unwanted domestic items that otherwise might have been thrown away.

Stock market – is the aggregation of buyers and sellers (a loose network of economic transactions, not a
physical facility or discrete entity) of stocks (also called shares), which represent ownership claims on
businesses; these may include securities listed on a public stock exchange as well as those only traded
privately. Examples of the latter include shares of private companies which are sold
to investors through equity crowdfunding platforms. Stock exchanges list shares of common equity as
well as other security types, e.g. corporate bonds and convertible bonds.

Futures market – is a central financial exchange where people can trade standardized futures contracts;
that is, a contract to buy specific quantities of a commodity or financial instrument at a specified price
with delivery set at a specified time in the future. These types of contracts fall into the category
of derivatives.

Trade agreement – is a wide ranging tax, tariff and trade treaty that often
includes investment guarantees. The most common trade agreements are of the preferential and free
trade types are concluded in order to reduce (or eliminate) tariffs, quotas and other trade restrictions on
items traded between the signatories.
Laissez-faire – s an economic system in which transactions between private parties are free
from government intervention such as regulation, privileges, tariffs, and subsidies.

Optimal functionality – Who knows? Please tell me in the comments section!

Contracts: Formalizing Exchanges

Essential Questions
Where do contracts derive their authority?

A contract is a voluntary arrangement between two or more parties that is enforceable by law as a
binding legal agreement. Contract is a branch of the law of obligations in jurisdictions of the civil
law tradition. Contract law concerns the rights and duties that arise from agreements.[1]

A contract arises when the parties agree that there is an agreement. Formation of a contract generally
requires an offer, acceptance, consideration, and a mutual intent to be bound. Each party to a contract
must have capacity to enter the agreement. Minors, intoxicated persons, and those under a mental
affliction may have insufficient capacity to enter a contract. Some types of contracts may require
formalities, such as a memorialization in writing.

How do contracts vary between countries?

Global business is happening everywhere as we speak. A complex global network of goods and services
are spread all around the world. Global trade becomes important for any business or entrepreneur to
understand. What also becomes important are global contracts.

Global contracts vary across the world depending on the culture and country you are conducting business
with. It becomes extremely important for an international manager or expats to understand not only how
contracts vary across the global but also what the term “contract” means to each country or culture.

Do your homework before entering a new market or setting up for an international assignment. Below are
a few examples of some countries and how they perceive business contracts.

▪ Swiss, Scandinavian countries, Britain and American – Contracts tend to me formal, sacred and
once signed, the rules must be adhered to.
▪ Japanese – For the Japanese, a contract does not mean the deal is settled at all. It is just the starting
point to the business relationship and can be modified at will according to the circumstances.
▪ South American countries – “Contract is an ideal.” It unlikely that a contract will ever be achieved.
Most latin American countries will sign the contract just to avoid argument, which is reflective of
their flexible business culture.
▪ America – Americans see contracts as a cultural norm.
▪ Chinese – Chinese practices are similar to the Japenese. Contracts serve for clarification purposes.
They do not exist to enforce the underlying agreements. While all relevant information should be
included, Chinese contracts are usually not as detailed as those in Japan or in the U.S.
▪ Italy – A signed contract in Italy is negotiable. Italians can bend the rules which are set around some
laws and regulations. Court supplies “arrangements to made” for those who have the means. Ha,
interesting!

Are offers on the market contractual obligations?

??? I think this was answered above. Yes is the answer?

KEY TERMS TO RESEARCH (EXAMPLES)

Formation – Offer and acceptance analysis is a traditional approach in contract law. The offer and
acceptance formula, developed in the 19th century, identifies a moment of formation when the parties
are of one mind. This classical approach to contract formation has been weakened by developments in the
law of estoppel, misleading conduct, misrepresentation and unjust enrichment.

Offer – Treitel defines an offer as “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”,
the “offeree”.[1] An offer is a statement of the terms on which the offeror is willing to be bound. It is the
present contractual intent to be bound by a contract with definite and certain terms communicated to the
offeree.

Acceptance – A promise or act on the part of an offeree indicating a willingness to be bound by the terms
and conditions contained in an offer. Also, the acknowledgment of the drawee that binds the drawee to the
terms of a draft.

Agreement – an contract enforceable by law: Meeting of the minds (a.k.a. mutual agreement) a common
understanding in the formation of a contract. A pact, convention, or treaty between nations, sub-national
entities, organizations, corporations

Rights – are legal, social, or ethical principles of freedom or entitlement; that is, rights are the
fundamental normative rules about what is allowed of people or owed to people, according to some legal
system, social convention, or ethical theory.[1] Rights are of essential importance in such disciplines
as law and ethics, especially theories of justice and deontology.

Liabilities –

▪ Public liability, part of the law of tort which focuses on civil wrongs
▪ Product liability is the area of law in which manufacturers, distributors, suppliers, retailers, and others
who make products available to the public are held responsible for the injuries those products
cause.
Breach – . Breach of contract, a situation in which a binding agreement is not honored by one or more of
the parties to the contract, or communicates an intent to fail the obligation or otherwise appears not to be
able to perform his or her obligation under the contract.[1]

Estoppel – is a collective name given to a group of legal doctrines in common law legal systems whereby
a person is prevented from making assertions that are contradictory to his or her prior position on certain
matters before the court—the person is said to be “estopped”.

Duty of care – is a legal obligation which is imposed on an individual requiring adherence to

a standard of reasonable care while performing any acts that could foreseeably harm others. It is the first
element that must be established to proceed with an action in negligence. The claimant must be able to
show a duty of care imposed by law which the defendant has breached. In turn, breaching a duty may
subject an individual to liability.

Condition – In its most extended meaning, a condition is a clause in a contract or agreement which has
for its object to suspend, rescind or modify the principal obligation; or in case of a will, to suspend,
revoke, or modify the devise or bequest. In many cases it is by itself an agreement.

Consideration – is one of the four main building blocks of a contract. Consideration can be anything of
value (such as an item or service), which each party to a legally binding contract must agree to exchange
if the contract is to be valid. If only one party offers consideration, the agreement is not legally a binding
contract. In its traditional form, expressed as the requirement that in order for parties to be able to enforce
a promise, they must have given something for it (quid pro quo): something must be given or promised in
exchange or return for the promise.

Capacity – of natural and juridical persons (legal persons) in general, determines whether they may make
binding amendments to their rights, duties and obligations, such as getting married or merging, entering
into contracts, making gifts, or writing a valid will.

Terms (implied vs. express) – An express term is stated by the parties during negotiation or written in a
contractual document. Implied terms are not stated but nevertheless form a provision of the contract.

Misrepresentation – a false or misleading statement of fact made by one party to another, which then
induces that other party into the contract.

Duress – refers to a situation whereby a person performs an act as a result of violence, threat, or other
pressure against the person
Collateral – is usually a single term contract, made in consideration of the party for whose benefit the
contract operates agreeing to enter into the principal or main contract, which sets out additional terms
relating to the same subject matter as the main contract.[1] The collateral contract co-exists side by side
with the main contract. For example, a collateral contract is formed when one party pays the other party a
certain sum for entry into another contract. A collateral contract may be between one of the parties and a
third party.

Quid pro quo – is a phrase used in English to mean an exchange of goods or services, in which one
transfer is contingent upon the other; “a favour for a favour”. Phrases with similar meanings include:
“give and take”, “tit for tat“, and “you scratch my back, and I’ll scratch yours”. It indicates that an item
or a service has been traded in return for something of value, usually when the propriety or equity of the
transaction is in question.

Caveat emptor – “Let the buyer beware” is the contract law principle that controls the sale of real
property after the date of closing, but may also apply to sales of other goods. The phrase caveat
emptor and its use as a disclaimer of warranties arise from the fact that buyers typically have less
information about the good or service they are purchasing, while the seller has more information.

Force majeure – is a common clause in contracts that essentially frees both parties from liability or
obligation when an extraordinary event or circumstance beyond the control of the parties, such as
a war, strike, riot, crime, or an event described by the legal term act of
God (hurricane, flood, earthquake, volcanic eruption, etc.), prevents one or both parties from fulfilling
their obligations under the contract. In practice, most force majeure clauses do not excuse a party’s non-
performance entirely, but only suspend it for the duration of the force majeure.

Smart contracts – is a computer protocol intended to digitally facilitate, verify, or enforce the negotiation
or performance of a contract. Smart contracts allow the performance of credible transactions without third
parties. These transactions are trackable and irreversible.[1] Smart contracts were first proposed by Nick
Szabo in 1994. Proponents of smart contracts claim that many kinds of contractual clauses may be made
partially or fully self-executing, self-enforcing, or both. The aim of smart contracts is to provide security
that is superior to traditional contract law and to reduce other transaction costs associated with
contracting. Various cryptocurrencies have implemented types of smart contracts.

Oral contract – a contract, the terms of which have been agreed by spoken communication. This is in
contrast to a written contract, where the contract is a written document. There may be written, or other
physical evidence, of an oral contract – for example where the parties write down what they have agreed
– but the contract itself is not a written one.

Written contract – Some types of contracts may require formalities, such as a memorialization in
writing.

Adhesion – is a contract between two parties, where the terms and conditions of the contract are set by
one of the parties, and the other party has little or no ability to negotiate more favorable terms and is thus
placed in a “take it or leave it” position. While these types of contracts are not illegal per se, there exists
a very real possibility for unconscionability.

Legal regulation – Responsible governments already legally regulate many risky activities and other
drugs effectively, including alcohol, tobacco and pharmaceuticals. So, far from being ‘radical’, legal
regulation is in fact the norm. In reality, it is prohibition that is the radical policy.

Statutory regulation – When a financial market or industry is controlled by a government organization,

such as the Securities and Exchange Commission in the US, rather than being allowed to control itself.

Formalities – are required in some kinds of transaction by English contract law and trusts law. In a
limited number of cases, agreements and trusts will be unenforceable unless they meet a certain form
prescribed by statute. The main kinds of formality that a statute can require are to put the transaction in
writing, to make a deed, or to register it at a government registrar (such as HM Land
Registry or Companies House).

Remedies – is the means with which a court of law, usually in the exercise of civil law jurisdiction,
enforces a right, imposes a penalty, or makes another court order to impose its will.

Freedom of contract – is the freedom of private or public individuals and groups (of any legal entity) to
form contracts without government restrictions. This is opposed to government restrictions such
as minimum wage, competition law, or price fixing. The freedom to contract is the underpinning
of laissez-faire economics and is a cornerstone of free-market libertarianism. Through freedom of
contract, individuals possess a general freedom to choose with whom to contract, whether to contract or
not, and on which terms to contract.

Sanctity of contract – is the concept that U.S. agricultural products already contracted to be exported
should not be subject to government cancellation because of short supply, national security, or foreign
policy reasons. The 1990 farm bill (P.L. 101-624) provides for contract sanctity by prohibiting the
President from restricting the export of any agricultural commodity already under contract to be delivered
within 270 days from the date an embargo is imposed, except during national emergency or war.

Reasonableness – is a hypothetical person of legal fiction who is ultimately

an anthropomorphic representation of the body care standards crafted by the courts and communicated
through case law and jury instructions.

Negligence – is a failure to exercise the appropriate and or ethical ruled care expected to be exercised
amongst specified circumstances.[2] The area of tort law known as negligence involves harm caused by
failing to act as a form of carelessness possibly with extenuating circumstances. The core concept of
negligence is that people should exercise reasonable care in their actions, by taking account of the
potential harm that they might foreseeably cause to other people or property.
 Black Markets

A great article on the mechanics of the black market from investopedia.n your browser.</div></div>

ESSENT IAL QUEST IONS

What makes black markets necessary? underground economy, or shadow economy is
a clandestine market or transaction that has some aspect of illegality or is characterized by some form of
noncompliant behaviour with an institutional set of rules. If the rule defines the set of goods and services
whose production and distribution is prohibited by law, non-compliance with the rule constitutes a black
market trade since the transaction itself is illegal.

What distinguishes a black market from other kinds of markets—do they function
differently? Parties engaging in the production or distribution of prohibited goods and services are
members of the illegal economy.

Are black markets better suited for the offline or online worlds?

A great online video explains Black markets

For me there is an obvious advantage to it being suited to the online (dark web) world, simply because the
goods are generally illegal and so the less easy the goods are to trace, the better it is for the buyer and
seller. If illegal goods are traded in the offline (real) world, as in a grey market, the chance of being
caught by the authorities is higher.

What kinds of goods and services are traded on black markets? Examples include the drug trade,
prostitution (where prohibited), illegal currency transactions and human trafficking. Violations of the tax
code involving income tax evasion constitutes membership in the unreported economy

Is there a difference between a black market and an informal market? An informal market is the
part of an economy that is neither taxed, nor monitored by any form of government. Unlike the formal
economy, activities of the informal economy are not included in the gross national product (GNP)
and gross domestic product (GDP) of a country.[3] The informal sector can be described as a grey
market in labour. The difference is that the black market is illegal: the grey is unofficial or unauthorised.

Do governments benefit more from eliminating black markets or from regulating them? Hojoon
Kim believes there are ways of getting rid of the black market

“I believe that the most effective methods would be a prohibition of using paper money so the
governments can trace the outflow and inflow of exact amount of money. In addition, the government also
should relax regulations on illegal activities so black markets can disappear without using money or other
enforcements including military power.
When we consider a key distinction between paper money and electronic money or credit cards, it is easy
to understand why most crime organizations or crime syndicates use paper money for their transactions.
This is because they heavily rely on untraceability and anonymity of money. If the world only uses
electronic money, it would be so much easier to track illegal transactions. Of course, it is nearly
impossible to prohibit the use of paper money since negative side effects will come along but it worth a
try considering the volume of illegal drug market, which is approximately $360 billion.

Another method would be alleviating regulation on illegal markets. It is undeniable fact that black
markets will not disappear as long as what people want to buy or sell are prohibited by governments. If
the U.S. government cannot prohibit freedom of action in respect one’s own body, I would recommend
the government to legalize the use of drugs so they can get tax from it. It is evident that we can collect a
huge amount of tax when we consider the amount of marihuana or other illegal drugs that are being traded
everyday.”

Is the new popularity of cryptocurrencies in part of a function of their usefulness on the black
market? Conor Patterson writes about the origins of Britcoin linking it to the black market:

“This created two distinct demographics of people who were originally interested in the
cryptocurrency. Anyone who grasped onto Bitcoin in its early years were either crypto enthusiasts
interested in the technical aspect of Bitcoin, or privacy advocates, crypto anarchists and libertarians who
saw potential opportunities emerge with the new cryptocurrency. The liberating aspect of Bitcoin
necessitated the latter to put their trust in Bitcoin as a possible currency, as there was no alternative that
could provide fractions of the privacy and pseudonymity offered by Bitcoin. With this freedom, an entire
sub culture sought to free themselves from government regulations and control. Its use in crime was
therefore inevitable.”

Does the term ‘black market’ refer to a specific marketplace in any given country, or can there be
many black markets even in the same place? – There are black markets in a wide range of goods &
services both within a country, and between countries. See Wikipedia – Black market for a wide range of
examples.

Are there contracts in the black market? If so, are they legally enforceable, and who should be
responsible for enforcing them? All trades are illegal and so there is no recourse to the law. In some
jurisdictions (such as England and Wales), consumers in possession of stolen goods will have them taken
away if they are traced, even if they did not know they were stolen. Though they themselves commit no
offense, they are still left with no goods and no money back. This risk may make some averse to buying
goods that they think may be from the underground market, even if in fact they are legitimate (for
example, items sold at a car boot sale).

A classic example of new regulation creating a black market is the Prohibition of alcohol. Similarly when
the law disappears, so does the black market, which is why of the arguments for marijuana legalization is
the elimination of the black market, and thus taxes from that economy being used by the government.
Does anyone regulate black markets? – The market itself, so it is self regulating! The classic supply
and demand but with no consumer rights.

Are there any countries in which black markets are formally endorsed by the authorities? In some
goods and services – yes. Prostitution is illegal or highly regulated in many countries across the world.

KEY TERMS TO LEARN (EX AMPLES)

Underground economy – is a clandestine market or transaction that has some aspect of illegality or is
characterized by some form of noncompliant behavior with an institutional set of rules. If the rule defines
the set of goods and services whose production and distribution is prohibited by law, non-compliance with
the rule constitutes a black market trade since the transaction itself is illegal. Parties engaging in the
production or distribution of prohibited goods and services are members of the illegal economy.

Shadow economy – A short explanation

Dangers Of Shadow Economy - Crash Course

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Informal economy – Ten minute, easy to follow clip

Lessons from the informal economy | Diana Enriquez | TEDxMünchen

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Unreported economy – Unreported employment; working under the table, off the books, or cash-in-
hand; or (in UK English) moonlighting,[1] is employment that is not reported to the government. The
employer or the employee often does so for tax evasion or to avoid or violate other laws.[2] It is a part of
what has been called the underground economy, or the non-observed economy.

Payments are generally in cash, and the employer often does not check the employee’s background
or credentials, as is sometimes required by law or otherwise expected by the industry’s client base, such
as a license or professional certification. While the hiring of the employee may or may not be legal in
itself, it is often done when the employer or the employee intentionally fails to obey one or more laws.

In developed nations, unreported employment evades withholding tax and is part of the informal sector. It
is hidden from the state for tax, social security, or labor law purposes but is legal in all other aspects.

Black market – see Underground economy (above)

Grey market – is the trade of a commodity through distribution channels that are legal but unintended by
the original manufacturer. Grey market products are products sold by a manufacturer or their authorized
agent outside the terms of the agreement between the reseller and the manufacturer.

Manufacturers that produce products including computer, telecom, and technology equipment very often
sell those products through distributors. Most distribution agreements require the distributor to resell the
products strictly to end users. However, some distributors choose to resell those products to other
resellers. In the late 1980s manufacturers labeled the resold products as “grey market”.

There is nothing illegal about buying “grey market” products. In fact, the US Supreme Court has upheld
the idea that grey market products are legal for resale in the United States regardless of where they were
produced or originally sold. The EU Supreme Court has similarly ruled that grey market products are
legal for resale in the EU, provided that the equipment was originally sold by the manufacturer inside the
EU.

White market – is the legal, official, authorized, or intended market for goods and services. It is distinct
from the black market of illegally trafficked goods and the grey market, in which commodities are
distributed through channels which, while legal, are unofficial, unauthorized, or unintended by the
original manufacturer. It is also sometimes distinguished from the pink market of state-sanctioned, but
immoral activities, such as wars of aggression, and the red market of immoral activities banned by the
state. The white market in some goods, such as adoption of children, has been criticized as being
inefficient due to government regulation.[1]

Import cycle – a cycle is “a completed series of events that follows or is followed by another series of
similar events occurring in the same sequence.” An import cycle refers to the events that lead up to the
completion of goods and products being moved from one country to another. It can be very complex as
the the linked Global Trade Import Cycle shows.

Fluid supply – Supply is “the willingness and ability to offer goods and services for sale” or “the amount
of a commodity that producers are willing and able to offer for sale at a specified price.” The fluidity
indicates how quickly goods or services can be supplied, high fluidity indicating very quickly.

Compounding crime – Compounding a felony was an offence under the common law of England and
was classified as a misdemeanour. It consisted of a prosecutor or victim of an offence accepting anything
of value under an agreement not to prosecute, or to hamper the prosecution of, a felony.[1] To
“compound”, in this context, means to come to a settlement or agreement.[2] It is not compounding for
the victim to accept an offer to return stolen property, or to make restitution, as long as there is no
agreement not to prosecute.

Commission-free – are motif or single stock trades that carry no commission fees when executed.

Counterfeiting – To counterfeit means to imitate something. Counterfeit products are fakes or

unauthorized replicas of the real product. Counterfeit products are often produced with the intent to take
advantage of the superior value of the imitated product. The word counterfeit frequently describes both
the forgeries of currency and documents, as well as the imitations of items such
as clothing, handbags, shoes, pharmaceuticals, aviation and automobile parts, watches, electronics (both
parts and finished products), software, works of art, toys, and movies.[1]

Smuggling – is the illegal transportation of objects, substances, information or people, such as out of a
house or buildings, into a prison, or across an international border, in violation of applicable laws or other
regulations.

There are various motivations to smuggle. These include the participation in illegal trade, such as in
the drug trade, illegal weapons trade, exotic wildlife trade, illegal immigration or illegal emigration, tax
evasion, providing contraband to a prison inmate, or the theft of the items being smuggled. Examples of
non-financial motivations include bringing banned items past a security checkpoint (such as airline
security) or the removal of classified documents from a government or corporate office.

Black money – is income earned surreptitiously or illegally, usually in cash, and not reported to the
government so as to avoid paying taxes on it.

Money laundering – is the process of transforming the profits of crime and corruption into ostensibly
“legitimate” assets.[1][2] The dilemma of illicit activities is that it is often a problem spending the
proceeds of such activities without raising the suspicion of law enforcement agencies. Accordingly,
considerable time and effort is put into devising strategies which enable the safe use of those proceeds
without raising unwanted suspicion. Such strategies are generally called money laundering. After money
has been suitably laundered or “cleaned”, it can be used in the mainstream economy for accumulation of
wealth, such as acquisitions of properties, or otherwise spent. Law enforcement agencies of many
jurisdictions have set up sophisticated systems in an effort to detect suspicious transactions or activities,
and many have set up international cooperative arrangements to assist each other in these endeavours.

See Methods for a complete list of how money laundering is carried out.

Price ceilings – is a government-imposed price control, or limit, on how high a price is charged for a
product. Governments use price ceilings to protect consumers from conditions that could make
commodities prohibitively expensive. Such conditions can occur during periods of high inflation, in the
event of an investment bubble, or in the event of monopoly ownership of a product, all of which can
cause problems if imposed for a long period without controlled rationing, leading to shortages.[1] Further
problems can occur if a government sets unrealistic price ceilings, causing business failures, stock
crashes, or even economic crises. In unregulated market economies, price ceilings do not exist.

Real World examples – Rent control in New York, apartment pice control in Finland.

Market failure – is a situation in which the allocation of goods and services is not efficient, often
leading to a net social welfare loss. Market failures can be viewed as scenarios where individuals’ pursuit
of pure self-interest leads to results that are not efficient – that can be improved upon from the societal
point of view

Underground – see Black market above

Contraband – denotes any item that, relating to its nature, is illegal to be possessed or sold. It is used for
goods that by their nature are considered too dangerous or offensive in the eyes of the legislator
(termed contraband in se) and forbidden. So-called derivative contraband refers to goods that may
normally be owned, but are liable to be seized because they were used in committing an unlawful act and
hence begot illegally:

BLACK MARKETS TO EXPLORE (EXAMPLES)

Organs – is the trade of human organs, tissues or other body parts for the purpose of transplantation.
There is a global need or demand for healthy body parts for transplantation, far exceeding the numbers
available. Trade in human organs is illegal in many jurisdictions in a number of ways and for various
reasons, though organ trafficking is widespread, as is transplant tourism. The data on the extent of
the black market is difficult to obtain. The question of whether to legalize and regulate the organ trade to
combat illegal trafficking and organ shortage is hotly debated.

An article from the Independent in 2011 sums up the debate as such:

Should we be allowed to sell our organs?

Yes
* It would boost the supply of organs helping to solve the national shortage

* It would end the existing black market in organs, making it safer for people to donate

* It would mean donors were paid like everyone else – doctors, nurses, transplant co-ordinators –
involved in transplantation.

No

* Encouraging people to sell parts of their bodies is morally wrong and would almost certainly lead to
exploitation of the poor.

* Potential donors would be more likely to conceal conditions or illnesses that might rule them out.

* It would undermine the existing altruistic donor programme.

Prezi on organ donation legalisation

Gold – The United States Gold Reserve Act of January 30, 1934 required that all gold and gold
certificates held by the Federal Reserve be surrendered and vested in the sole title of the United States
Department of the Treasury.[1][2]

The Gold Reserve Act outlawed most private possession of gold, forcing individuals to sell it to the
Treasury, after which it was stored in United States Bullion Depository at Fort Knox and other locations.
The act also changed the nominal price of gold from $20.67 per troy ounce to $35. This price change
incentivized foreign investors to export their gold to the United States, while simultaneously devaluing
the U.S. dollar in an attempt to spark inflation. The increase in gold reserves due to the price change as
well as the confiscation clause resulted in a large accumulation of gold in the Federal Reserve and U.S.
Treasury. The increase in the money supply lowered real interest rates which increased investment in
durable goods.

Illegal gold trade shows the situation in Congo

ART
Endangered Animals – An endangered species is a species which has been categorized as very likely to
become extinct. Endangered (EN), as categorized by the International Union for Conservation of
Nature (IUCN) Red List, is the second most severe conservation status for wild populations in the
IUCN’s schema after Critically Endangered (CR). In 2012, the IUCN Red List featured 3079 animals as
endangered (EN) worldwide.[1] The figures for 1998 were, respectively, 1102 and 1197.
Many nations have laws that protect conservation-reliant species: for example, forbidding hunting,
restricting land development or creating preserves. Population numbers, trends and species’ conservation
status can be found in the lists of organisms by population.

Find an WWF Endangered species list to find out more.

Oil – There are lots of stories about the illegal trade in oil at Sputnik news.

As a fantastic infographic at Visual Capitalist describes “The value of the crude oil production alone is
worth a staggering $1.7 trillion each year. Add downstream fuels and other services to that, and oil is a
money-making machine. Both companies and governments take advantage of this resource wealth. More
of the world’s largest companies work in the oil patch than any other industry. At the same, entire
government regimes are kept intact thanks to oil revenues.

The only problem when an industry becomes this lucrative? Eventually, everybody wants a piece of the
pie – and they’ll do anything to get their share.

Billions of dollars per year of government and corporate revenues are lost due to the following activities:

Tapping Pipelines: By installing illicit taps, thieves can divert oil or other refined products from
pipelines. Mexican drug gangs, for example, can earn $90,000 in just seven minutes from illegal pipeline
tapping.

Illegal Bunkering: Oil acquired by thieves is pumped to small barges, which are then sent to sea to
deliver the product to tankers. In Nigeria, for example, the Niger Delta’s infamous labyrinth of creeks is
the perfect place for bunkering to go undetected.

Ship-to-Ship Transfers:
 This involves the transfer of illegal fuel to a more reputable ship, which can be
passed off as legitimate imports. For example, refined crude from Libya gets transferred from ship-to-ship
in the middle of the Mediterranean, to be illegally imported into the EU.

Armed Theft (Piracy):
 This involves using the threat of violence to command a truck or ship and steal
its cargo. Even though Hollywood has made Somalia famous for its pirates, it is the Gulf of Guinea near
Nigeria that ships need to be worried about. In the last few years, there have been hundreds of attacks.
Bribing Corrupt Officials:
 In some countries – as long as the right person gets a cut of profits,
authorities will turn a blind eye to hydrocarbon theft. In fact, E&Y says an astonishing 57.1% of all fraud
in the oil an gas sector relates to corruption schemes.

Smuggling and Laundering:
 Smuggling oil products into another jurisdiction can help to enable a
profitable and less traceable sale. ISIS is famous for this – they can’t sell oil to international markets
directly, so they smuggle oil to Turkey, where it sells it at a discount.

Adulteration:
 Adulteration is a sneaky process in which unwanted additives are put in oil or refined
products, but sold at full price. In Tanzania, for example, adding cheap kerosene and lubricants to
gasoline or diesel is an easy way to increase profit margins, while remaining undetected.

Cigarettes – A great article from the Washington Post 2014 outlines the issues:

“The global black market in tobacco is estimated to supply 11.6% of the world’s consumption, a startling
650 billion cigarettes a year. And there are two components to this market that have drawn the particular
scrutiny of law enforcement: fake cigarettes and tax avoidance……..Some of the tax avoidance is
conducted via off-shore suppliers who take orders over the Internet. …….However, there is a simpler way
for criminals to evade cigarette taxes which requires neither a shipper nor an Internet connection: Buy
them in bulk in a low tax jurisdiction and physically transport them to a high tax jurisdiction. For
example, the tax difference between Virginia and New York State cigarettes is just over $4 a pack, and
even more in New York City where further taxes are applied. An individual who throws two cases of
legally-purchased cigarettes in his car trunk and drives from Richmond to Brooklyn can make a thousand
dollars re-selling them illegally; someone driving a loaded tractor trailer truck can make over a million.”

Slave Trade – slavery is no longer legal anywhere in the world (with the exception of penal
labour),[7] human trafficking remains an international problem and an estimated 25-40 million people are
enslaved today, the majority in Asia.[8]

The history of slavery spans many cultures, nationalities, and religions from ancient times to the present
day. However the social, economic, and legal positions of slaves were vastly different in different systems
of slavery in different times and places.[1]

See Wikipedia Slavery History for a wider picture of this sad and tragic condition.

In modern times slavery has been replaced by Human trafficking, the trade of humans for the purpose
of forced labour, sexual slavery, or commercial sexual exploitation for the trafficker or others.[1][2] This
may encompass providing a spouse in the context of forced marriage,[3][4][5] or the extraction of organs
or tissues,[6][7] including for surrogacy and ova removal.[8] Human trafficking can occur within a
country or trans-nationally. Human trafficking is a crime against the person because of the violation of the
victim’s rights of movement through coercion and because of their commercial exploitation. Human
trafficking is the trade in people, especially women and children, and does not necessarily involve the
movement of the person from one place to another.

According to the International Labour Organization (ILO), forced labor alone (one component of human
trafficking) generates an estimated $150 billion in profits per annum as of 2014.[9] In 2012, the ILO
estimated that 21 million victims are trapped in modern-day slavery. Of these, 14.2 million (68%) were
exploited for labor, 4.5 million (22%) were sexually exploited, and 2.2 million (10%) were exploited in
state-imposed forced labor.[10] Human trafficking is thought to be one of the fastest-growing activities of
trans-national criminal organizations.[11] . Human trafficking is condemned as a violation of human
rights by international conventions. In addition, human trafficking is subject to a directive in the European
Union.[12]

Housing – In places where there is rent control there may be a black market for housing. For instance, in
the UK there is illegal subletting of social housing homes where the tenant illegally rents out the home at
a higher rent.[33] In Sweden, rental contracts with regulated rent can be bought on the black
market,[34] either from the current tenant or sometimes directly from the property owner. Specialised
black-market dealers assist the property owners with such transactions.[35] In India, places like Chennai,
Bangalore, Hyderabad, Mumbai, Kolkotta, and New Delhi where students are coming from all over India,
getting high rented PG (paying guests) or other forms of rented apartments without any taxation or
regulations.

Currency – See the following simple example from youtube

This one is a bit longer, and gives some great common sense explanations:your browser.</div></div>

Money itself is traded on the black market. This may happen for one or more of several reasons:

▪ The government sets (“pegs”) the local currency at some arbitrary level to another currency that does
not reflect its true market value.
▪ A government makes it difficult or illegal for its citizens to own much or any foreign currency.
▪ The government taxes exchanging the local currency with other currencies, either in one direction or
both (e.g. foreigners are taxed to buy local currency, or residents are taxed to buy foreign
currency).
▪ The currency is counterfeit.
▪ The currency has been acquired illegally and needs to be laundered before the money can be used.[40]
A government may officially set the rate of exchange of its currency with that of other currencies,
typically the US dollar. When it does, the peg often overvalues the local currency relative to what its
market value would be if it were a floating currency. Those in possession of the “harder” currency, for
example expatriate workers, may be able to use the black market to buy the local currency at better
exchange rates than they can get officially.
In situations of financial instability and inflation, citizens may substitute a foreign currency for the local
currency. The U.S. dollar is viewed as a relatively stable and safe currency and is often used abroad as a
second currency. In 2012, $340 billion, roughly 37 percent[41] of all U.S. currency, was believed to be
circulating abroad.[42] The most recent study of the amount of currency held overseas suggests that only
25 percent of U.S. currency is presently held abroad.[43] The widespread substitution of U.S. currency for
local currency is known as de facto dollarisation, and has been observed in transition countries such as
Cambodia[44] and in some Latin American countries.[45] Some countries, such as Ecuador, abandoned
their local currency and now use US dollars, essentially for this reason, a process known as de jure
dollarization. See also the example of the Ghanaian cedi from the 1970s and 1980s.

If foreign currency is difficult or illegal for local citizens to acquire, they will pay a premium to acquire it.
U.S. currency is viewed as a relatively stable store of value and since it does not leave a paper
trail,[dubious – discuss] it is also a convenient medium of exchange for both illegal transactions and
for unreported income both in the U.S and abroad.[46]

More recently cryptocurrencies such as bitcoin have been used as medium of exchange in black market
transactions. Cryptocurrencies are sometimes favored over centralized currency due to their anonymous
nature and their ability to be traded over the internet.[47]

Weapons – The legislatures of many countries forbid or restrict the personal ownership of weapons.
These restrictions can range from small knives to firearms, either altogether or by classification
(e.g. caliber, handguns, automatic weapons, etc.), and explosives. The black market supplies the demands
for weaponry that can not be obtained legally, or may only be obtained legally after obtaining permits and
paying fees. This may be by smuggling the arms from countries where they were bought legally or stolen,
or by stealing from arms manufacturers within the country itself, using insiders. In cases where the
underground economy is unable to smuggle firearms, they can also satisfy requests by gunsmithing their
own firearms. Those who may buy this way include criminals to use for illegal activities, gun collectors,
and otherwise law-abiding citizens interested in protecting their dwellings, families or businesses.

In England and Wales, certain categories of weapons used for hunting may be owned by qualified
residents but must be registered with the local police force and kept within a locked cabinet. Another
segment of the population who may purchase weapons on the black market are individuals who are
unable to pass the legal requirements for registration—convicted felons or those suffering from mental
illness for example. In some jurisdictions, collectors may legally keep antique weapons made incapable of
being readily restored to a firing condition. Also see Wikipedia arms traffiking

Medicine – A few youtube videos from different areas of the world. First a report from 10 years ago on
how the internet has fuelled a problem with prescription medicines:

Silk Road 1.0 – 3.1 – was an online black market and the first modern darknet market, best known as a
platform for selling illegal drugs. As part of the dark web,[7] it was operated as a Tor hidden service, such
that online users were able to browse it anonymously and securely without potential traffic monitoring.
The website was launched in February 2011; development had begun six months prior.[8][9] Initially
there were a limited number of new seller accounts available; new sellers had to purchase an account in
an auction. Later, a fixed fee was charged for each new seller account.[10][11]
In October 2013, the Federal Bureau of Investigation (FBI) shut down the website[12] and arrested Ross
William Ulbricht under charges of being the site’s pseudonymous founder “Dread Pirate Roberts”.[3] On
6 November 2013, Silk Road 2.0 came online, run by former administrators of Silk Road.[13] It too was
shut down, and the alleged operator was arrested on 6 November 2014 as part of the so-called “Operation
Onymous“. Ulbricht was convicted of eight charges related to Silk Road in the U.S. Federal Court in
Manhattan and was sentenced to life in prison without possibility of parole.[1][14][15]

On 6 November 2013, administrators from the closed Silk Road relaunched the site, led by a new
pseudonymous Dread Pirate Roberts, and dubbed it “Silk Road 2.0”. It recreated the original site’s setup
and promised improved security.[13] The new DPR took the precaution of distributing encrypted copies
of the site’s source code to allow the site to be quickly recreated in the event of another shutdown.[91]

On 20 December 2013, it was announced that three alleged Silk Road 2.0 administrators had been
arrested;[92] two of these suspects, Andrew Michael Jones and Gary Davis, were named as the
administrators “Inigo” and “Libertas” who had continued their work on Silk Road 2.0.[93] Around this
time, the new Dread Pirate Roberts abruptly surrendered control of the site and froze its activity, including
its escrow system. A new temporary administrator under the screenname “Defcon” took over and
promised to bring the site back to working order.[94]

d inyour browser.</div></div>
Darknet – is any overlay network that can be accessed only with specific software, configurations, or
authorization, often using non-standard communication protocols and ports. Two typical darknet types
are friend-to-friend[1] networks (usually used for file sharing with a peer-to-
peer connection)[2] and privacy networks such as Tor.The reciprocal term for an encrypted darknet
is clearnet[3][4][5] or surface web when referring to search engine indexable content.[6]

Darknets in general may be used for various reasons, such as:

▪ Computer crime (cracking, file corruption etc.)

▪ Protecting dissidents from political reprisal
▪ File sharing (warez, personal files, pornography, confidential files, illegal or counterfeit software etc.)
▪ To better protect the privacy rights of citizens from targeted and mass surveillance
▪ Sale of restricted goods on darknet markets
▪ Whistleblowing and news leaks
▪ Purchase or sale of illicit or illegal goods or services[14]
▪ Circumvent network censorship and content-filtering systems, or to bypass restrictive firewall-
policies.[15]
▪ Exercising human rights such as the right to speak or contract free from commercial or state
interference.
▪ Avoiding emotional battery (crime) such as that may be inflicted as a result of neuromarketing.
▪ Refusing to consent to surveillance on communications networks where no right to consent is formally
recognized or honored between the Internet Service Provider and the end user.
Acropolis is a multisig darknet market that allows the sale of recreational drugs, e-books, bitcoin security
solutions, and services. It is not as big as other major dark web markets but it offers a well-designed and
fast site. It also has a referral program. It is being referred to as a referral only market but we were
actually able to sign up for an account without having to use a referral link.

Its main products are books and digital services, unlike other markets where drugs are the target items.
The books listed for sale are mainly related to fraud, security, and hacking; although there are those
instructing readers on how to earn easy money – How to make $1000 per day for example and similar
titles.

Cryptocurrency

What is a cryptocurrency, and can a cryptocurrency be considered a form of money?

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What does it mean for a currency to be decentralized and unregulated?

Virtual currency, also known as virtual money, is a type of unregulated, digital money, which is issued
and usually controlled by its developers (Bitcoin is an exception), and used and accepted among the
members of a specific virtual community. The Financial Crimes Enforcement Network (FinCEN), a
bureau of the US Treasury, defined virtual currency in its guidance published in 2013. In 2014,
the European Banking Authority defined virtual currency as “a digital representation of value that is
neither issued by a central bank or a public authority, nor necessarily attached to a fiat currency, but is
accepted by natural or legal persons as a means of payment and can be transferred, stored or traded
electronically”. By contrast, a digital currency that is issued by a central bank is defined as “central bank
digital currency“.

Who controls cryptocurrencies?

The centralized network on the left has a clear central point (you could think of the central point as a
central bank). The central point is the dominant player. All control flows from a central point (for better or
worse).

The decentralized network in the middle has many different points of control, but you could think of these
as banks all operating on the same closed network. You can clearly see 7 different control points. Also,
this network has a hierarchal control mechanism. This just means that rules from a dominant system flow
down to subordinate systems (think central banks cascading rules down to retail and commercial banks).

The key to understanding control of a crypto currency (via consensus and contribution) vs control of a fiat
currency (via central banking) is simple. A central bank has the ability to extract value from the people
who use their fiat currency. They have a government with guns to enforce the use of the currency.
All the participants of a crypto currency can only create value for each other or the entire thing falls apart
because there is no incentive to support the currency.

A failure to perpetuate the core ideas that make a crypto coin possible makes everyone involved poorer so
there are many positive incentives intentionally built into crypto currencies that prevent everyone from
becoming poorer.

Why are people skeptical of cryptocurrencies?

Not stable, and can be prone to bubbles (prices can go up and then crash – as recently with bitcoin).

With Bitcoin, a list of transactions is sent out to the network in the form of a “block”. Miners, who are
slowly paid in more bitcoin up to a maximum of 21,000,000 validate a transaction. If a transaction
doesn’t make it into a block (on Bitcoin) it waits a certain period of time to get into the next block. This
means it might take more time (a problem).

Another problem is that everyone can “see” the transaction on what is called the blockchain. They can’t
see who it was but they can see the size and other details. (a problem).

Sometimes software can provide a solution (a coffee shop can say, I’ll verify the transaction anyway and
trust that in ten minutes I’ll know for sure and there’s not a lot of risk in this).

But a software layer involves humans and human error and human “evil”. Hence there are scammers and
Ponzi scheme and theft (just like with paper currencies).

What makes one cryptocurrency different to another?

There are many reasons: Here is a discussion of Etherum vs Bitcoin –

Part of the reason there are so many crpytocoins today is that many of them are built on Ethereum’s
underlying technology, even relying on it entirely in some cases. While the specifics of thatare beyond the
scope of this guide, it’s all possible because of one key feature that Ethereum has that bitcoin doesn’t:
Smart contracts.

Where bitcoin supports quite simple scripting (comparatively), Ethereum can handle much more
complexity thanks to its smart contract system. It makes it possible to set simple rules which have to be
followed, effectively forcing contractual compliance in a manner that would never be possible with a real-
world contract, without some sort of middleman.
An example of how that would work, is that it could be used to effectively emulate a crowd-funding
website, only releasing a collection of Ether when a threshold has been reached. No Kickstarter company
required. Ethereum operates in a manner that is far more decentralizing than bitcoin, even if its monetary
impact on the world has yet to reach the heady heights of its bigger and older crypto-brother.

There are lots of new emerging cryptology

Why is Bitcoin so volatile? What determines its value?

With no ties to a national economy and lofty goals, Bitcoin’s price is famously volatile. Prices have
soared and plummeted in the wake of various national policies, financial deals, competing
cryptocurrencies, and fluctuating public opinion. On the other hand, as many sovereign nations find
themselves with currencies that are also vulnerable, the citizens of countries such as China and Venezuela
are turning increasingly to virtual currencies.

What kinds of transactions would a cryptocurrency make possible (or easier) that a normal
currency might not?

Fraud: Individuals cryptocurrencies are digital and cannot be counterfeited or reversed arbitrarily by the
sender, as with credit card charge-backs.

Immediate Settlement:Purchasing real property typically involves some third parties (Lawyers, Notary),
delays, and payment of fees. In many ways, the bitcoin/cryptocurrency blockchain is like a “large
property rights database,” says Gallippi. Bitcoin contracts can be designed and enforced to eliminate or
add third party approvals, reference external facts, or be completed at a future date or time for a fraction
of the expense and time required to complete traditional asset transfers.

Lower Fees: There aren’t usually transaction fees for cryptocurrency exchanges because the miners are
compensated by the network (Side note: This is the case for now). Even though there’s no
bitcoin/cryptocurrency transaction fee, many expect that most users will engage a third-party service,
such as Coinbase, creating and maintaining their bitcoin wallets. These services act like Paypal does for
cash or credit card users, providing the online exchange system for bitcoin, and as such, they’re likely to
charge fees. It’s interesting to note that Paypal does not accept or transfer bitcoins.

Identity Theft: When you give your credit card to a merchant, you give him or her access to your full
credit line, even if the transaction is for a small amount. Credit cards operate on a “pull” basis, where the
store initiates the payment and pulls the designated amount from your account. Cryptocurrency uses a
“push” mechanism that allows the cryptocurrency holder to send exactly what he or she wants to the
merchant or recipient with no further information.

Access to Everyone: There are approximately 2.2 billion individuals with access to the Internet or mobile
phones who don’t currently have access to traditional exchange, these people are primed for the
Cryptocurrency market. Kenya’s M-PESA system, a mobile phone-based money transfer, and
microfinancing service recently announced a bitcoin device, with one in three Kenyans now owning a
bitcoin wallet.

Decentralization: A global network of computers use blockchain technology to jointly manage the
database that records Bitcoin transactions. That is, Bitcoin is managed by its network, and not any one
central authority. Decentralization means the network operates on a user-to-user (or peer-to-peer) basis.
The forms of mass collaboration this makes possible are just beginning to be investigated.

Recognition at universal level: Since cryptocurrency is not bound by the exchange rates, interest rates,
transactions charges or other charges of any country; therefore it can be used at an international level
without experiencing any problems. This, in turn, saves lots of time as well as money on the part of any
business which is otherwise spent in transferring money from one country to the other. Cryptocurrency
operates at the universal level and hence makes transactions quite easy.

Could goods be valued in cryptocurrencies?

The only reasons to own Bitcoins are not to use them as a currency, but to either speculate on their asset
value or use them to shield transactions from others. Without a stable value Bitcoin cannot truly be a
currency. Rather it is a commodity asset that one trades, like gold or silver, in hopes that its value will rise
and yield a trading profit. There is nothing wrong with speculation; the actions of speculators help to add
market liquidity and to determine the market value of assets. However, usually the asset being valued also
has an actual underlying use: you can invest in gold or use it to make jewelry or electronic components.
Bitcoins have no uses other than allowing people to hide wealth, conceal (often illegal) transactions, and
make and lose money by trading them.

Do cryptocurrencies weaken governments?

One viewpoint from Quora: “Yes it weakens the current financial system. Since half of the Bitcoins are
currently held up by few 1000s guys. So Government don’t want the value of crypto to be ruled by
them. Regulations and crackdowns are seen.”

Among early adopters and traders, the big appeal of cryptocurrencies is their relative lack of
regulations. But as more and more countries begin to place restrictions on cryptocurrencies, trading
volumes are likely to slow, which could deflate the price of these investments. China isn’t alone in this
trend of cracking down on these much-hyped tokens. Countries all over the world have instituted or
discussed increasing oversight of the currencies.
So far, several countries have outright banned the trading of Bitcoin and other cryptocurrencies, including
Bangladesh, Bolivia, Ecuador, Kyrgyzstan, Morocco, and Nepal. But it’s the regulators in large
cryptocurrency markets that really matter.

What will Russia do?

Thus far, Russia has had a rather seesaw relationship with cryptos. In October, the Kremlin began
blocking access to currency exchanges in the country, which came only a month after a promise to
legalise the market. Eleven days after the announced block, President Vladimir Putin issued five orders
that needed to be satisfied in order to allow for crypto use. This included forming strategies to tax miners
that dig for new cryptocurrencies, regulating ICOs, and producing a plan to create a “single payment
space,” likely as a way to digitise the Russian ruble. The Kremlin has provided few specifics on how
these measures will look, but it’s clear the free crypto market won’t be a free-for-all in Russia.

Current articles concerning cryptocurrencies

How does the new GDPR data regulation impact cryptocurrencies?

GDPR effects on cryptocurrencies

Key Terms to Explore (Examples)

Medium of exchange – is an intermediary used in trade to avoid the inconveniences of a

pure barter system. Fiat currencies are the generally accepted mediums of exchange. Their most
important and essential function is to provide a ‘measure of value’.

Store of value – is the function of an asset that can be saved, retrieved and exchanged at a later time, and
be predictably useful when retrieved. More generally, a store of value is anything that retains purchasing
power into the future.

The most common store of value in modern times has been money, currency, or a commodity like
a precious metal or financial capital. The point of any store of value is risk management due to a stable
demand for the underlying asset. Money is one of the best stores of value because of its liquidity, that is, it
can easily be exchanged for other goods and services.

Unit of account – is a nominal monetary unit of measure or currency used to represent the real value (or
cost) of any economic item; i.e. goods, services, assets, liabilities, income, expenses.
Blockchain ledger – is a continuously growing list of records, called blocks, which are linked and
secured using cryptography.[1][6] Each block typically contains a cryptographic hash of the previous
block,[6] a timestamp and transaction data.[7] By design, a blockchain is inherently resistant to
modification of the data. It is “an open, distributed ledger that can record transactions between two parties
efficiently and in a verifiable and permanent way”

Decentralised – is the process of distributing or dispersing functions, powers, people or things away from
a central location or authority.[1][2] While centralisation, especially in the governmental sphere, is widely
studied and practiced, there is no common definition or understanding of decentralisation.

Economic decentralisation can be done through privatisation of public owned functions and businesses, as
described briefly above. But it also is done through deregulation, the abolition of restrictions on
businesses competing with government services, for example, postal services, schools, garbage collection.

Mining – In cryptocurrency networks, mining is a validation of transactions. For this effort, successful
miners obtain new cryptocurrency as a reward. The reward decreases transaction fees by creating a
complementary incentive to contribute to the processing power of the network.

Hard forks – occurs when a blockchain splits into two incompatible separate chains. This is a
consequence of the use of two incompatible sets of rules trying to govern the system.[1] For
example, Ethereum has hard-forked to “make whole” the investors in The DAO, which had been hacked
by exploiting a vulnerability in its code

Soft forks – is a change of rules that creates blocks recognised as valid by the old software, i.e. it
is backwards-compatible.[4] A soft fork can also split the network when non-upgraded software creates
blocks not considered valid by the new rules

Wallets & private keys – stores the public and private “keys” or “addresses” which can be used to
receive or spend the cryptocurrency. With the private key, it is possible to write in the public ledger,
effectively spending the associated cryptocurrency.[31] With the public key, it is possible for others to
send currency to the wallet.

Volatility – (symbol σ) is the degree of variation of a trading price series over time as measured by
the standard deviation of logarithmic returns. Historic volatility is derived from time series of past market
prices. An implied volatility is derived from the market price of a market traded derivative (in particular
an option)

Example Cryptocurrencies to Research

Bitcoin – is a cryptocurrency and worldwide payment system.[9]:3 It is the first decentralized[a] digital
currency.[9]:1[10] Its conception is peer-to-peer and transactions take place between users directly,
without an intermediary.[9]:4 These transactions are verified by network nodesthrough the use
of cryptography and recorded in a public distributed ledger called a blockchain. Bitcoin was invented by
an unknown person or group of people under the name Satoshi Nakamoto[11] and released as open-
source software in 2009

Bitcoin Cash – On 1 August 2017, a hard fork of bitcoin was created, known as Bitcoin Cash. Bitcoin
Cash has a larger block size limit and had an identical blockchain at the time of fork.[43][44] On 12
November another hard fork, Bitcoin Gold, was created. Bitcoin Gold changes the proof-of-work
algorithm used in mining.[45][46]

Ethereum – is an open-source, public, blockchain-based distributed computing platform and operating

system featuring smart contract (scripting) functionality

Ripple – is a real-time gross settlement system (RTGS), currency exchange and remittance network
created by the Ripple company. Also called the Ripple Transaction Protocol (RTXP) or Ripple
protocol,[3] it is built upon a distributed open source Internet protocol, consensus ledger and
native cryptocurrency called XRP (ripples). Released in 2012, Ripple purports to enable “secure, instantly
and nearly free global financial transactions of any size with no chargebacks.” It supports tokens
representing fiat currency, cryptocurrency, commodity or any other unit of value such as frequent flier
miles or mobile minutes.[4][5] At its core, Ripple is based around a shared, public database or
ledger,[6] which uses a consensus process that allows for payments, exchanges and remittance in a
distributed process.

Stellar – is an open-source protocol for exchanging money.[13] Servers run a software implementation of
the protocol, and use the Internet to connect to and communicate with other Stellar servers, forming a
global value exchange network. Each server stores a record of all “accounts” on the network. These
records are stored in a database called the “ledger”. Servers propose changes to the ledger by proposing
“transactions”, which move accounts from one state to another by spending the account’s balance or
changing a property of the account.

Dogecoin – is a cryptocurrency featuring a likeness of the Shiba Inu dog from the “Doge” Internet
meme as its logo.[4][5] Introduced as a “joke currency” on 6 December 2013, Dogecoin quickly
developed its own online community and reached a capitalization of US$60 million in January 2014.[6]

Compared with other cryptocurrencies, Dogecoin had a fast initial coin production schedule: 100 billion
coins were in circulation by mid-2015, with an additional 5.256 billion coins every year thereafter. As of
30 June 2015, the 100 billionth Dogecoin had been mined.[7] While there are few mainstream
commercial applications, the currency has gained traction as an Internet tipping system, in which social
mediausers grant Dogecoin tips to other users for providing interesting or noteworthy content.

A BBC article from 8 January 2018 charts the rise of Dogecoin

 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 cyptocurrencies more
broadly?

Yes – the article points to a bubble, and that a long overdue fall in the cryptocurrency market is due (it
was written on 7 January 2018). Lo and behold there was a correction with the BBC reporting the Worse
week for cryptocurrencies since April 2013 . There is huge volatility in these decentralised markets.

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?

Scarcity of basic needs products drives the popularity of the bachaqueros. This is caused by government
controls of these goods, as they try to control market prices. People are resourceful though, using all sorts
of tricks to get round the newly introduced regulations and in turn making money as the poor suffer. In
theory, yes they should be punished under a country’s laws. The Government is put in place to run the
economy, and law abiding citizens should follow these rules. However, morally, it may be a different
case when the Government themselves are the cause of the problems due to their own regulations.

Learn about the effort in Cuba to normalise 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?

In the hope that it will be able to raise taxes, for one. This brings in more government money. It may also
slow down the theft of goods from Government controlled shops/factories, etc.

In cities and countries where Uber operates (or has operated) without official permission, can it be
seen as a black market service?

Yes – if not legal or regulated by the authorities. For example (Wikipedia) – In some markets where
leasing arrangements for vehicles are available, the only requirement for driving for Uber, other than
appropriate age, health, car age and type, and ability to drive, is passing a background check.[38] Both a
smartphone or tablet, and a vehicle may be leased.[39] In many cities, vehicles used by Uber drivers must
pass annual safety inspections and must have an Uber emblem posted in the passenger window.

Legislation in some cities, such as San Francisco, requires individuals who drive for Uber to also have
a business license in the city in which they drive.

In Hong Kong SCMP reported on 23 May 2017 that “Twenty-two Uber drivers were arrested on suspicion
of driving without a hire car permit and third-party insurance in a three-week undercover police operation
that ended with a series of raids across Hong Kong on Tuesday.”
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?

A great article, and the optimist in all of us sees a glimmer of hope for those people in third world
countries being able to make a success of themselves (in money terms) through their own skill/ingenuity,
instead of only people from the developed world who are lucky enough to receive a privileged upbringing
and education (most of us, right?). The trick is then to get these new successful engineers to pass that
success on to people in their own communities/countries, and not fall into the oft-seen corrupt practices
that we see in the underdeveloped nations.

In reality this social change can only happened with the rise of decentralisation/deregulation, as the
authorities try to wrestle back power. The cryptocurrencies are also a massive gamble too, and for many
stories such as these there will be others that do not succeed.

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 grey
market that you would not be willing to buy on the black market?

Goods known as “grey” products or parallel imports are, according to the International Trademark
Association (INTA), ones that are genuine in that they have been manufactured by, or for or under licence
from, the brand owner. The discount comes because they are not being sold through official channels, and
are usually brought in from another country. As a result they are cheaper. So what do they not have that
warranted goods have? The full back up if something goes wrong, and so repairs will be more
costly. You may have to pay extra costs (duties) in some cases! It is not illegal, unlike the black market
where you may be liable to arrest. So for me – yes.

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?

A great article from Wolverine crypto currency by Andy Walner has some ideas here:

” These are by far the most widespread cryptocurrencies, but what many people miss is the fact there are
actually over 1300 on the market today according to CoinMarketCap. Now, consider the fact that there
are only 180 fiat currencies (government currencies) in the entire world. The crypto universe suddenly
starts to become way more intriguing… and confusing………While we may very well need all of these
cryptocurrencies in the future, it’s not really reasonable to expect people to own, or even keep track of,
more than one or two different cryptos at a time………in a future world where we use Dash (instant,
cheap transactions) to pay for our food, FunFair(online casino) to legally indulge our gambling needs, and
Bitcoin to pay tuition for our childrens’ education, we will need a new solution for storing and keeping
track of our various cryptocurrencies.” So he argues that it is fine! He goes on to propose atomic swaps
as a solution to make it easier:
“Atomic swaps work by allowing swaps between two different blockchains, enabling you to instantly
exchange one crypto for another (eg. swap Bitcoin for Ethereum) with just one blockchain transaction.
This works by using hash time-locked contracts (HTLCs), which means that when two people make a
transaction both parties must be able to prove they have paid their promised amount by a certain deadline,
or any transferred currency will be returned to the original owner……….In an ideal future, a person
would hold only one crypto, such as Bitcoin, and would then be able to seamlessly transfer that coin to
another such as PowerLedger at the specific time they wanted to buy some energy to power their home.
From the outside, it would appear that this transaction took place using only Bitcoin. But technically the
user actually transferred their Bitcoin for a precise amount of PowerLedger, and then immediately traded
all of that PowerLedger in return for electricity.”

Why do nations want their own crypto currencies? Check out this article from medium.com by Jeffrey
Elliot:

To cryptocurrency enthusiasts one of the most attractive traits of cryptos is that they are decentralized.
Cryptos are traditionally fully decentralized, with no government body or bank controlling them, so why
would a government made digital currency be attractive to investors and users? Why would a government
decide to create its own cryptocurrency?

Benefits to a Government
▪ Impossible to counterfeit – Cryptocurrencies are cryptographically secured and cannot be copied.
▪ In-built tax code – They could be made with an in-built taxing algorithm which would be convenient
for both government bodies and citizens.
▪ Developing countries would be able to trade more easily that with conventional fiat currency
Venezuela for example are planning on creating their own cryptocurrency to get around the trade
sanctions placed on them by the US, many banks refuse to do business with Venezuela. With their own
digital currency they’d be able to bypass the banks and trade overseas. President Nicolas Maduro of
Venezuela has stated that the Venezuelan cryptocurrency will be backed by reserves of gold, oil, gas, and
diamonds solidifying its legitimacy as a currency.

I’m sure the motives are different for each of the nations who want to get involved in cryptocurrencies,
but all of this further reinforces the crypto world and is a key indicator that cryptocurrencies are here to
stay.

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?

Answer to first part – yes as it makes it legal and their is recourse if a problem in future. Remember how
this is done? How to make a binding contract? Generally, to be legally valid, most contracts must
contain two elements:

1. All parties must agree about an offer made by one party and accepted by the other.
2. Something of value must be exchanged for something else of value. This can include goods, cash,
services, or a pledge to exchange these items.
I do not like the thought that children should need a contract with their parents! Good parenting is built
on trust that builds up during childhood, born on fair treatment that respects each side as human
beings. If it were necessary I would turn to the UN convention on the rights of the child for inspiration.

In many ways it is the same with team mates, and it is the trust and experience from the past that keeps
them together. They can step away, unlike with the parents where they have a right in law to have their
child at home with them (unless clear abuse can be proven).

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 chapter?

This insight into Trump’s mindset with business explains some of the rhetoric and decision-making that
he uses as the President of The USA. There is not a single ounce of humility. There is very little talk of
compromise, both sides being winners in a deal. It is all about him – “I love to go up against these guys,
and beat them” (p.48) when talking about his competitors. Think of Putin and North Korea. See what I
mean? Personally I cannot stand this mindset, although I see how it allows individuals to be the best (in
financial terms) at what they do. So no, as in the words (amended slightly) of another egotistical leader ”
This man’s not for turning!”.

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?

The main problem? “You can pour as much money as you want into enforcement, but so long as the
demand is still there and the consumer market is there and the price is so high, the criminal networks will
always find a way to poach animals and get these stolen gems of nature to the black market.” This should
come down to agreements across countries, to stop the hunting/selling in those where animals are native:
and educate consumers on the black market in countries where the parts are traded. Changing culture is
hard though, as superstition and cult practices have a hold on people for generations.

Read about the kidnapping of Bitcoin exchange manager Pavel Lerner. What motivated his
kidnapping, and how was he freed? Are cryptocurrencies and criminal behaviour too closely linked
for cryptocurrencies ever to become a safe medium of exchange?

The Ukrainian National Police formally opened a criminal investigation into the abduction of Lerner and
the disclosure of the personalities behind the attack……Despite the fact that Exmo is a small Bitcoin
exchange involving only 94 000 active investors and a daily trading volume of 125 million dollars, which
is less than 1% of the leading exchanges such as Bithumb, GDAX Coinbase and Bitfinex, as a company,
and the Ukrainian authorities believe that Lerner became an object of the armed because of his
participation in Bitcoin trade.

The authors of a report in theconversation.com argue that cryptocurrencies fuel crime by concealing
identities. They say “Anonymity in cryptocurrencies is fueling crime by enabling criminals to evade
identification by law enforcement. We believe that this problem will get worse as cryptocurrencies evolve
stronger privacy protections and become more flexibly programmable.” They go on to explain
that cryptocurrency “offers more privacy than credit cards and bank accounts, even against powerful
entities like governments who might try to trace money obtained by criminals. Bitcoin’s privacy both
attracts users – law-abiding and otherwise – and raises law enforcement agencies’ suspicions.” They do
not see any quick solutions to the issue either “Crime-fighting tools require empowerment of authorities.
Cryptocurrencies are innately anti-authority technologies. How this tension is resolved will determine the
future of the world’s monetary systems. There is no simple answer.”

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?

They will only make money in the medium/long term if they are placed in areas where there are likely to
be people who deal in these currencies, so mostly urban areas. At the present time even regular users of
cryptocurrencies do not use them solely, and will have most of their money available already in
centralised forms. Not a passing craze…..but unlikely to be widespread.

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?

Why remain unknown? A myriad of reasons:

1. Keep the bitcoin name in the public eye – the secrecy promotes constant headlines in the press and thus
bitcoin is constantly publicised.
2. The person may be kidnaped, given their wealth and knowledge.
3. It may be a team of people and not just an individual.
4. The person (s) may not like publicity
Is it important to know who it is? Not really. The system is understood, has been copied and adapted
subsequently so there is no need to have them explain the technology. The mystique surrounding it is
intriguing to most. Only if anything illegal is done by the inventor (s) would it be necessary.

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?
These are high price items, with a ready made demand mainly in overseas markets. Here are some other
unusual ones:

Sea cucumbers: These creatures are illegally sold in black markets, especially in China. The sea
cucumber is considered illegal to purchase and the fishing for these creatures has been banned in the
country as well, due to over-fishing issues. Unfortunately, because of the major restrictions, this only
empowered the black market as well as the demand for these ocean floor creatures. And plenty of
individuals in many Asian countries are always willing to pay a great price for these sea cucumbers.

Sugar: In Malaysia, a particularly interesting country, actually has a black market set up for sugar, simply
because it’s an item that is hard to come by. For anyone not wanting to pay large fines for sugar, this is a
considerable option for many. Turbinado, which is the type of sugar that’s usually sold at the markets, is
much healthier than white sugar and consider much higher in standards.

Baby milk formula: It’s widely known that a mother will do just about anything to make sure her child
doesn’t starve, but just in the past few years, a very strange happening has occurred. Many people have
been caught stealing baby formula. It’s theorised that this is because it can be used to produce a certain
base for drugs such as heroin and methamphetamine. Some stores across the country have even taken
such extreme measures as to keep the formula locked away until the time of purchase.

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?

The last three months of 2017 just might carry the country’s GDP 0.3% higher (GDP is a measure of all
final goods and services produced) into early 2018, according to the Nomura analysts. They’ve pegged a
formula as follows: every jump in asset value wealth of ¥10 billion yields consumption to rise in
proportion by ¥0.2 to ¥0.4 billion. – according to a report in Britcoin.com

It goes on to say: “Spring of 2017 saw the country’s relative embrace of bitcoin, as the Payment Services
Act formally allowed crypto trading. Yen has followed. With the Chinese government making its Yuan
impotent in crypto circles, the land of the rising sun has filled that vacuum. And by the end of last year,
the world’s most popular cryptocurrency reached ¥12 trillion in market cap, well-triggering the bitcoin
effect.”

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?

Comparitech says that “Torrenting itself isn’t illegal, but downloading unsanctioned copyrighted material
is. It’s not always immediately apparent which content is legal to torrent and which isn’t. Some fall in a
grey area, so you may find yourself unwittingly on the wrong side of the law. Your internet service
provider (ISP) and copyright trolls monitoring the BitTorrent network can take action if they catch you
illegally torrenting.”
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?

A special economic zone (SEZ) is an area in a country that is subject to unique economic regulations that
differ from other areas in the same country. The SEZ regulations tend to be conducive to foreign direct
investment. Conducting business in an SEZ typically implies that the company will receive tax incentives
and the opportunity to pay lower tariffs.

According to the HK based SCMP it has led to : “Cross-border licence plates go for a million yuan on
black market” – a report in 2012. “the black market price for plates issued by Huang Gang ranges from 1
million yuan to 1.1 million yuan. The plates issued by Shenzhen Bay checkpoints go for 700,000 yuan to
800,000 yuan.”

Interwoven black markets are markets for counterfeit goods—whether Rolex watches 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" target="_blank">Try watching this video on
www.youtube.com</a>, or enable JavaScript if it is disabled in your browser.</div></div

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 economic transactions? If you had to design
your own online black market, what it would look like?

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