Investigating Cryptocurrencies

CHAPTER 1What Is a Cryptocurrency?

Over the past few years, the term cryptocurrency has become a well-used term in financial circles, new business plans, and news headlines. Often the term is associated with criminal activity on the so-called “dark web,” but more recently with the increasing value of currencies like Bitcoin, the word, concept, and products are entering mainstream consciousness.

But what really is a cryptocurrency and how does it work? In this chapter, we will examine the concept, the history, and the uses for cryptocurrencies and look at how to set up a Bitcoin trading node.

Why does an investigator need to know this? Understanding the concept of these online currencies can help you form a good foundation to build a more comprehensive technical understanding. It can also help you to see the criminal uses of these currencies.

A New Concept?

In the far western Pacific region of Micronesia is a tiny cluster of islands named Yap. Conspicuous against the deep blue of the ocean, this tiny group of “high islands” comprises rolling hills covered with dense, lush forest. The islands share a coral reef that provides sustenance for the islanders from the fish that seek protection from ocean predators.

As far back as the thirteenth century, the sultan of Egypt referenced islands at the far east of the Persian Empire, where the only currency was millstones. This was later confirmed by the Spanish when they “discovered” the island group in 1528. If you visit today, you can ...