Know your bitcoins from your blockchains to understand the next revolution in financial systems.
- May 01, 2016
Blockchain — A constantly updated electronic public ledger of every transaction executed within a network formed by the blockchain’s creator. Each computer connected to the network copies the blockchain and validates transactions. All connected computers reconcile accounts together, keeping the public ledger updated.
Cryptocurrency — A digital or virtual currency that uses cryptography for security and counterfeit deterrence. Unlike physical legal tender, a cryptocurrency is not issued by a central authority, so theoretically it is outside government interference or manipulation. The first cryptocurrency to capture the public imagination was Bitcoin, which was launched in 2009 and had a blockchain as its underpinning.
Fintech — Short for “financial technology,” refers to technological innovation in the financial sector, especially advancements related to computer software. The term originally applied to back-end technology systems at financial institutions.
Microfinance — A type of banking service that is provided to unemployed or low-income individuals or groups who would otherwise have no other means of gaining financial services. Ultimately, the goal of microfinance is to give low-income people an opportunity to become more self-sufficient by providing a means of saving or borrowing money and getting insurance.
Robo-adviser — An online wealth management service that provides automated, algorithm-based portfolio management advice without the use of human financial planners. Robo-advisers use the same software as traditional advisers, but usually offer only portfolio management and do not get involved in more personal aspects of wealth management, such as taxes and retirement or estate planning.