Definition Centralized Exchanges (CEX) are platforms designed for trading a variety of cryptocurrencies, governed by a centralized authority that facilitates the execution of trades. Unlike decentralized exchanges (DEX), CEXs maintain a single point of control, which allows them to offer substantial liquidity and diverse trading pairs.
Components of CEX User Accounts: Users create accounts that are linked to their personal information, allowing the exchange to adhere to Know Your Customer (KYC) regulations.
Definition Cryptocurrency wallets are digital applications or devices that store private and public keys, allowing users to interact with various blockchain networks. They are essential for managing, sending and receiving cryptocurrencies, providing a crucial interface between users and their digital assets.
Components of Cryptocurrency Wallets Public Key: This is like an email address. It’s a long string of characters that you can share with others to receive cryptocurrency.
Private Key: This is like a password.
Definition Decentralized Exchanges (DEXs) are trading platforms that operate without the need for a central authority or intermediaries. They facilitate peer-to-peer trading of cryptocurrencies, allowing users to retain control over their private keys and funds during the transaction. This aligns with the broader ethos of blockchain technology, promoting transparency, security and user autonomy.
Components of DEX Smart Contracts: These self-executing contracts ensure that transactions occur only when predefined conditions are met, providing security and automation.
Definition Mobile payments refer to the process of making financial transactions using a mobile device, such as a smartphone or tablet. This modern payment method allows consumers and businesses to conduct transactions without the need for physical cash or credit cards. The convenience, speed and improved security features of mobile payments have led to their increasing adoption in various sectors.
Components of Mobile Payments Mobile Wallets: Digital wallets store credit/debit card information and allow users to make transactions through their mobile devices.
Definition Smart Contracts are self-executing contracts where the terms of the agreement or conditions are directly written into lines of code. They reside on a blockchain network and automatically execute or enforce the agreement once predetermined conditions are met. This can include transferring assets, issuing payments or updating records—all without the need for an intermediary, resulting in increased efficiency and reduced fraud risk.
Components of Smart Contracts Code Base: Smart contracts are constructed using specific programming languages suited for blockchain technologies, such as Solidity for Ethereum.
Definition Stablecoins are a type of cryptocurrency designed to minimize price volatility by being pegged to a stable asset, such as a fiat currency (e.g., USD) or a commodity (e.g., gold). Unlike traditional cryptocurrencies like Bitcoin or Ethereum, which can experience significant price swings, stablecoins aim to provide the benefits of digital assets—such as fast transactions and low fees—without the extreme fluctuations in value.
Importance of Stablecoins Stablecoins play a crucial role in the cryptocurrency ecosystem by providing a reliable medium of exchange, store of value, and unit of account.
Definition Decentralized Finance (DeFi) is a rapidly growing sector within the financial industry that leverages blockchain technology to eliminate intermediaries such as banks and financial institutions. By using smart contracts on decentralized networks like Ethereum, DeFi enables peer-to-peer financial transactions, including lending, borrowing, trading and earning interest, all without traditional intermediaries.
Importance of DeFi DeFi is transforming the traditional financial system by offering more inclusive, transparent and efficient financial services.