Virtual currencies are not a new concept, with multiple virtual currencies have come and gone over the past decade. This section provides a summary of some of the most famous virtual currencies and currency exchanges.
One of the first popular virtual currencies was E-Gold. First established in 1996, E-Gold allowed users to open an account with a value denominated in grams of gold (or other precious metals) and the ability to make instant transfers of value to other E-Gold accounts. It was reported that in 2005 E-Gold had 2.5 million account holders performing daily transactions with a typical value of US$6.3 million. In 2007, E-Gold was indicted by a grand jury in the U.S., accusing the company of money-laundering, conspiracy, and operating an unlicensed money transmitting business, ultimately leading to the shut down of E-Gold by the U.S. courts. E-Gold spawned a range of imitators such as e-Bullion.com, Pecunix.com, and others.
In 1998, WebMoney was established and continued to experience significant growth, with almost 25 million users at the time of writing. The WebMoney system is based on providing its users with the ability to control individual property rights for valuables (assets) stored by other system participants (known as Guarantors).
Liberty Reserve, established in 2006, and operating until 2013, allowed users to register and transfer money to other users with only a name, email address, and date of birth. No efforts were made to verify the identities of its users. In 2013 the US Department of Justice charged Liberty Reserve with operating an unregistered money transmitter business and money laundering for facilitating the movement of more than $6 billion in illicit proceeds.
The first cryptocurrency was Bitcoin. Bitcoin is a decentralized, peer-to-peer payment network powered by its users with no central authority or intermediaries. Satoshi Nakamoto published the first Bitcoin specification and proof of concept to a cryptography mailing list in 2009. Since that time, the value of bitcoins has fluctuated wildly, ranging from approximately US$0.30 in 2011 to US$1135 in 2013.
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