Old age Digital Transactions – e-gold
One of the foremost Old age Digital Transactions system was e-gold, a website opened in 1996 and operated by Gold & Silver Reserve Inc. (G&SR) under the name ‘e-gold Ltd’ that allowed customers to open accounts and trade units of gold between each other. The digital units were backed by gold stored in a bank safe deposit box in Florida, USA. E-gold didn’t ask users to prove their identity, and this made it attractive for the underworld.
The Old age Digital Transactions became very successful. It was reported to have up to 3.5 million accounts in 165 countries in 2005 with 1,000 new accounts opening every day 115, but the website was eventually shut down due to fraud and allegations of facilitation of crime 116. Unlike Bitcoin, it had a centralised ledger.
Old age Digital Transactions – Liberty Reserve
Like e-gold, Liberty Reserve, based in Costa Rica was also an Old age Digital Transactions that allowed customers to open accounts with few personal details, nothing more than a name, email address, and birth date. Liberty Reserve made no attempts to verify these, even for obviously false accounts named ‘Mickey Mouse’ and so on. During an investigation, a US agent opened a functional account with the username ‘ToStealEverything’ in the name of ‘Joe Bogus’ who lived at ‘123 Fake Main Street’ in ‘Completely Made Up City, New York’ and wrote that it would be used for ‘shady things’.
As a result of its relaxed controls, Liberty Reserve was used extensively for money laundering and other criminal proceeds, more than $6 billion according to ABC News. It served over 1 million customers before it was shut down in 2013 by the US Government under the Patriot Act.
Old age Digital Transactions- Napster
Another Old age Digital Transactions was Napster was a peer-to-peer filesharing system that was live between 1999 and 2001. It was created by Shawn Fanning and Sean Parker, and was popular with people who liked to share music, particularly in mp3 format, and who didn’t like to pay for it. The idea was to allow anyone to copy and share content saved on users’ hard drives. At its peak the service had about 80 million registered users.
It was eventually shut down because its relaxed approach to the sharing of copyright material wasn’t appreciated by those with interests vested in that material. Napster’s technical weakness was that it had central servers.
When a user searched for a song, their machine would send the search request to Napster’s central servers, which would return a list of computers storing that song and would allow the user to connect to one of them (this is the peer-to-peer bit) to download the song. Although Napster itself didn’t host the material, it made it easy for users to discover others who did. Centralised services and entities running those services are easy to shut down.
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