Definition Blockchain is a technology that enables the storage and management of data across a network of computers (also known as nodes) in a way that is secure, transparent and tamper-proof. It operates as a decentralized digital ledger that records transactions in blocks, which are then linked together in a chronological order to form a chain. This technology can be utilized across various industries, ensuring authenticity and accountability.
Components of Blockchain Blocks: Each block contains a list of transactions, a timestamp and a cryptographic hash of the previous block, which links them together securely.
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 A digital wallet, also known as an e-wallet, is a software application that allows users to securely store and manage their payment information, including credit and debit card details and make electronic transactions using their smartphones or computers. With the rise of electronic commerce, digital wallets have become an integral tool for consumers and businesses alike.
Components of Digital Wallets Digital wallets consist of several key components:
Payment Information Storage: Users can store multiple payment methods, including bank account details, debit/credit card numbers and even cryptocurrency wallet addresses.
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 Open Banking refers to a financial services model that allows banks and other financial institutions to share customer data with third-party providers through secure Application Programming Interfaces (APIs). This collaboration fosters innovation and enables consumers to access a wider range of financial products and services tailored to their needs.
Components of Open Banking APIs (Application Programming Interfaces): These are essential for enabling secure data sharing between financial institutions and third-party providers.
Definition P2P (Peer-to-Peer) Lending is a method of borrowing and lending money directly between individuals, facilitated by online platforms, without the need for traditional banking intermediaries. This innovative form of financing provides a marketplace where borrowers can request loans from multiple lenders, who can choose to fund all or part of those loans.
Components of P2P Lending The P2P lending landscape includes several critical components:
Borrowers: Individuals seeking funds for personal or business use.
Definition Regulatory Technology (RegTech) refers to the innovative use of technology to improve and streamline compliance processes in the financial sector. It incorporates tools designed to monitor, report and ensure adherence to rules and regulations while minimizing operational costs and complexity associated with compliance tasks. RegTech represents an intersection of finance, technology and regulatory affairs, addressing the growing demand for regulatory compliance, especially with evolving regulations and market complexities.
Definition Robo Advisors are automated investment platforms that provide portfolio management and financial planning services using algorithms and artificial intelligence, with limited human interaction. The primary function of Robo Advisors is to create and manage diversified investment portfolios based on the investor’s goals, risk tolerance and time horizon.
Components of Robo Advisors Algorithmic Portfolio Management: Robo Advisors employ algorithms to automatically manage, rebalance and optimize investment portfolios based on market conditions.
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.