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This paper examines cyberterrorism and its potential to create a postmodern state of chaos. In general, chaos refers to a state of extreme confusion and disorder. This analysis breaks new ground in that it describes chaos theory as a foundation for better understanding cyberterrorism and explains how chaos theory and game theory are tightly coupled. The author also contrasts modern, conventional terrorism with postmodern, innovative cyberterrorism. The main idea is that the postmodern state of chaos caused by cyberterrorist attacks differs dramatically from the destruction caused by conventional terrorist acts. This comparison serves as the basis for making the point that cyberterrorism is not three-dimensional, it is not analog (but it is digital), and it exposes actors of cyberspace to new concepts of time and space. Another important argument is that the postmodern state of chaos implies the danger of cascading failures brought forth by cyberterrorists. A cascading failure is a succession of failures (i.e., cascade) caused by the elimination of a crucial node (i.e., a point or location in an infrastructural system) from a network. This paper is groundbreaking in that it adds fresh, new insights on scholarly perceptions of cyberterrorism. While most of the literature on the subject is technical and political, this paper brings a philosophical outlook to the association between postmodernism and the evolving face of terrorism. This paper begins with a thorough description of cyberterrorism, which refers to attacks conducted against computers, networks, and systems. Of equal relevance is the distinction between cyberterrorism and simple hacking. This paper then proceeds to explain postmodernism, asserting that cyberspace needs to be framed in the context of hyperreal (the blurring of distinctions between the real in the unreal). What comes next is the heart of the paper: the postmodern state of chaos. This paper ends with a discussion that also includes suggestions for future research.