Lecture 2 - Money Systems Flashcards
What is the King’s Peace?
The value of precious metals was agreed between states, allowing the government/monarchy to enforce currency
What are FIAT currencies?
Controlled by central banks, not asset backed, but note availability is controlled by governments
Detail some features on Euro banknotes
12 digit serial number (2 letters, 10 numbers). The first letter is the bank country of origin.
Sequential notes are 9 digits apart, and the signature changes with ECB president
What limits/requirements are in place for stored value cards?
Minimal ID for basic card
Initial limit of 2,500 Euro
Pre-paid debit card on Visa or Mastercard
Widely useable
Upgradable to 50k Euro with full ID documents
How would a criminal use a stored value card?
They would acquire a drop address, such as a mailbox service.
They would use false names/photo ID/utility bills.
Smurfing (small transactions), topping up in supermarkets/post office.
Cards can then be sent to a drug supplier to pay debts.
What is Cryptocurrency?
Digital asset that represents value
Can be transferred in cyberspace over blockchain
Bypasses traditional financial institutions, Decentralised Finance
Bitcoin most valued cryptocurrency and most well known
What is blockchain?
it is the technology behind cryptocurrency
It is a database that can store electronic information in a distributed ledger
The ledger is shared across the network and is immutable in which each iteration/block must contain the previous information to enhance security and verifiability of the info
All transactions have timestamps, and must be unanimous (all parties agree)
What can blockchain be used for?
Supply chains, such as temperature control checks during transport or tracing source of ingredients
Smart contacts - flight delay insurance, real estate decentralised property ledger
NFTs
What are validators and miners?
Validators process blockhain transactions submitted to the network
Miners collect the transactions into a bundle, then solve a computational puzzle before adding it to the blockchain. Miners receive cryptocoin when they add a block
What is proof of work for blockchain?
A random number (called a nonce) is added to a bundle of transactions (circa 2700), then SHA256 is applied.
This is then run through the miner to calculate the nonce. Once calculated, the bundle is submitted to the blockchain. Once agreed by the network, the bundle is added.
