An arrangement with a bank or financial institution that holds securely your money or assets.1
Account State Notarized:
A notary is a public official commissioned by the state government. A notarized statement is the said statement when a notary attests the same by affixing his official seal and signatures on the said document after it has been signed by the deponent.2
An address is a “payment instruction” for a digital asset. When receiving payment, a payee communicates an address to the payor, and the payor sends funds to that address. A set of addresses used together comprises a wallet.3
Acquirers provide legal entities with the means to accept card payments. These legal entities are called Merchants and they can use Acquirers virtual or physical POS terminals to accept payments.4
Acquiring processors are the set of system that provide the connectivity to the networks or payment gateways to process transactions.5
Adverse media is a type of screening performed on individuals or businesses. To goal is to check for conviction or link to any criminal activity relating to financial crime (fraud, money-laundering, terrorism funding, etc.)6
Also known as ‘blind trust’. In a blind trust, the trustees have full discretion over the assets, and the trust beneficiaries theoretically have no knowledge of the holdings of the trust. The trustor initiates the trust and maintains the ability to terminate the trust, but otherwise exercises no control over the actions taken within the trust and receives no reports from the trustees while the blind trust is in force.7
Alternative Trading System:
An alternative trading system (ATS) is one that is not regulated as an exchange but is a venue to match the buy and sell orders of its subscribers. ATS account for much of the liquidity found in publicly traded issues worldwide. They are known as multilateral trading facilities in Europe, electronic communication networks (ECNs), cross networks, and call networks. Most ATS are registered as broker-dealers rather than exchanges and focus on finding counterparties for transactions.8
Anti-money Laundering is a set of policies and procedures enforced by European directives and local regulations to prevent the use of financial systems for the purpose of money laundering.
Apple Pay is a mobile payments service that utilizes Near Field Communication (NFC) to initiate secure payments between Apple devices and contactless POS terminals.
Fees that are charged by networks on both acquirer and issuers for the usage of the network. This is how networks make money.
Audit can be done internally by employees or heads of a particular department and externally by an outside firm or an independent auditor. The idea is to check and verify the accounts by an independent authority to ensure that all books of accounts are done in a fair manner and there is no misrepresentation or fraud that is being conducted.
BIN Sponsors are institutions members of schemes (Visa, Mastercard etc.) and are authorized to issue cards. The BIN Sponsors are often used by Fintech companies to avoid becoming members of the schemes which might be a lengthy and costly process.
Bitcoin is a digital currency created in January 2009. It follows the ideas set out in a whitepaper by the mysterious and pseudonymous developer Satoshi Nakamoto, whose true identity has yet to be verified. Bitcoin offers the promise of lower transaction fees than traditional online payment mechanisms.
A block is a set of updates to the blockchain ledger. Using Bitcoin as an example, a block is basically a virtual container of bitcoin transactions. A block can hold a limited amount of data, allowing for a certain number of transactions and the corresponding data to be stored in each block. A bitcoin node receives these blocks, validates all transactions in them, and then applies the updates to the global ledger. A bitcoin miner is tasked to validate all transactions in the block and then solve a complicated mathematical equation that cryptographically ties this block to previous blocks. Once broadcast to other nodes and miners, this block is added to the string of blocks that make up the chain. The whole blockchain is a publicly viewable record that keeps track of every transaction that has ever occurred within that digital asset.
The amount that miners may claim as a reward for creating a block. Equal to the sum of the block subsidy (newly available satoshis) plus the transactions fees paid by transactions included in the block10. With bitcoin, the reward given is cut in half every four years in order to control the distribution of coins released.
Blockchain is the underlying technology that Bitcoin and most other digital assets use to record and validate transactions. It is a linked list of transaction updates to a virtual digital public ledger. A blockchain consists of a group of transactions in blocks. These blocks are cryptographically connected to one another as they are mined, creating a long chain. The nature of the cryptographic tie from one block to previous blocks means that previous blocks cannot be altered by anyone.
Are certificates that promise to pay a fixed rate of interest. A person who buys a bond is not buying ownership in a company but is lending the company money. The bond is the company’s promise to repay that money with interest at regular intervals. If a company goes bankrupt, bondholders are paid before stockholders, thus it is considered as a safe investment.
BTC is the original shorthand for bitcoin. This designation is often used on digital asset exchanges to denominate a bitcoin’s current value. However, there has been an increase in the use of XBT as an alternate designation. The reason for this is that the International Organization for Standardization (ISO), which keeps a listing of all currencies, uses X to symbolize a currency that is not attached to a specific country (which is the case for all digital assets, because they are decentralized).
The process used by card manufacturers to encode cardholder data on the chip and magnetic stripe, and also imprint on the physical card body⁴.
Cold storage in the context of Bitcoin refers to storing Bitcoins offline and spending without the private keys controlling them ever being online. This resists theft by hackers and malware, and is often a necessary security precaution especially dealing with large amounts of Bitcoin.
Collateral is an asset that a lender accepts as security for extending a loan. If the borrower defaults on her loan payments, the lender may seize the collateral and sell it to recoup some or all of his losses. Collateral can take the form of real estate or other kinds of assets, depending on what the loan is used for.
A commodity is a basic good used in commerce that is interchangeable with other goods of the same type. Commodities are most often used as inputs in the production of other goods or services. The quality of a given commodity may differ slightly, but it is essentially uniform across producers. When they are traded on an exchange, commodities must also meet specified minimum standards, also known as a basis grade. They tend to change rapidly from year to year.
Cloud-based is a term that refers to applications, services or resources made available to users on demand via the Internet from a cloud computing provider’s servers. Companies typically utilize cloud-based computing as a way to increase capacity, enhance functionality or add additional services on demand without having to commit to potentially expensive infrastructure costs or increase / train existing in-house support staff.
A corporation is a legal entity that is separate and distinct from its owners. Corporations enjoy most of the rights and responsibilities that individuals possess: they can enter contracts, loan and borrow money, sue and be sued, hire employees, own assets, and pay taxes. Some refer to it as a “legal person.”
A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double- spend. Many cryptocurrencies are decentralized networks based on blockchain technology—a distributed ledger enforced by a disparate network of computers. A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation.
Cryptography provides for secure communication in the presence of malicious third-parties—known as adversaries. Encryption uses an algorithm and a key to transform an input (i.e., plaintext) into an encrypted output (i.e., ciphertext). A given algorithm will always transform the same plaintext into the same ciphertext if the same key is used. Algorithms are considered secure if an attacker cannot determine any properties of the plaintext or key, given the ciphertext. An attacker should not be able to determine anything about a key given a large number of plaintext/ciphertext combinations which used the key.
A custodian is a financial institution that holds customers’ securities for safekeeping in order to minimize the risk of their theft or loss. A custodian holds securities and other assets in electronic or physical form. Since they are responsible for the safety of assets and securities that may be worth hundreds of millions or even billions of dollars, custodians generally tend to be large and reputable firms. A custodian is sometimes referred to as a “custodian bank.”
information, especially facts or numbers, collected to be examined and considered and used to help decision-making, or information in an electronic form that can be stored and used by a computer.
A debt instrument is a tool an entity can utilize to raise capital. It is a documented, binding obligation that provides funds to an entity in return for a promise from the entity to repay a lender or investor in accordance with terms of a contract. Debt instrument contracts include detailed provisions on the deal such as collateral involved, the rate of interest, the schedule for interest payments, and the timeframe to maturity if applicable.
A derivative is a financial security with a value that is reliant upon or derived from, an underlying asset or group of assets—a benchmark. The derivative itself is a contract between two or more parties, and the derivative derives its price from fluctuations in the underlying asset. The most common underlying assets for derivatives are stocks, bonds, commodities, currencies, interest rates, and market indexes. These assets are commonly purchased through brokerages.
A digital asset is a digital entity owned by an individual or company. Examples include digital photos, videos, and songs. These assets are not tangible, meaning they have no physical presence. Instead, they are files that reside on storage device, such as a local computer or a cloud-based storage network. On our context digital assets are also classified as as cryptocurrencies, crypto assets, virtual currencies, and crypto tokens.
A digital signature is a mathematical technique used to validate the authenticity and integrity of a message, software or digital document. As the digital equivalent of a handwritten signature or stamped seal, a digital signature offers far more inherent security, and it is intended to solve the problem of tampering and impersonation in digital communications.
A dividend is the distribution of a portion of the company’s earnings, decided and managed by the company’s board of directors, and paid to a class of its shareholders.
A double spend is creating two conflicting transactions, one which sends funds to a counterparty, and the other sending those same funds back to yourself. This is prevented by the Bitcoin network and double-spends are not allowed. This is arguably the primary innovation of the Bitcoin blockchain— an algorithm for preventing double-spends. However, in combination with a 51% Attack, an attacker can cause one conflicting transaction to be replaced with another if he or she controls 51% or more of the hashrate.
Electronic money (e-money) is a digitally stored record of monetary value held by an issuer for the purpose of making payment transactions. These are issued by EMI authorized to hold funds and issue e-money.
Electronic Money Institution:
Electronic Money Institutions (EMI) are financial institutions granted a license to issue e-money by a local financial regulatory body like FCA (UK), BaFIN (Germany), and BNB (Bulgaria).
Elliptic Curve Cryptography (ECC):
The preferred public-key cryptography approach for cryptocurrencies to authorize asset transfer. It is favored over older mechanisms based on prime numbers because of the relatively small size of keys and digital signatures and is based on solving equations using an elliptic curve with values in a finite field. The most common elliptic curves used for digital assets are called secp256k1 (e.g., Bitcoin, Ethereum) and ed25519. They are accompanied by an algorithm to create digital signatures that can be publicly validated.
EMI agents are third-party providers registered with the local regulatory body for the purpose of selling or marketing services of EMIs without the permission to hold customer funds.
Ether tokens are a cryptocurrency created within the Ethereum network and, like bitcoins, are tradeable digital assets. Unlike bitcoins, the focus of ether tokens is not as a store of value or payment system but rather as a system for creating and paying for the execution of smart contract logic.
Launched in 2015, Ethereum is an open-source, blockchain-based, decentralized software platform used for its own cryptocurrency, Ether. It enables SmartContracts and Distributed Applications (ĐApps) to be built and run without any downtime, fraud, control, or interference from a third party.
An exchange is a marketplace where securities, commodities, derivatives, digital assets and other financial instruments are traded. The core function of an exchange is to ensure fair and orderly trading and the efficient dissemination of price information for any securities trading on that exchange. Some exchanges facilitate trading bitcoins for fiat currency, while others enable trading among different digital assets.
An Equity instrument is the stock of the companies who look to raise money from the public by offering them a share in the company. A debt instrument such as bonds or debentures is also a way to raise money from the public. The company needs to pay a certain amount of interest to the debt holders.
Fiat money is government-issued currency that is not backed by a physical commodity, such as gold or silver, but rather by the government that issued it. The value of fiat money is derived from the relationship between supply and demand and the stability of the issuing government, rather than the worth of a commodity backing it as is the case for commodity money.
Financial Regulators are national bodies that regulate and supervise the financial services and payment providers on the market. They are members of the European Banking Authority.
Financial technology (Fintech) is used to describe new tech that seeks to improve and automate the delivery and use of financial services. At its core, fintech is utilized to help companies, business owners and consumers better manage their financial operations, processes, and lives by utilizing specialized software and algorithms that are used on computers and, increasingly, smartphones. Fintech, the word, is a combination of “financial technology”.
A fork occurs when the rules of a blockchain are changed, possibly creating two (or more) distinct digital assets. This may result from an upgrade to the features of the blockchain, a bug in the consensus algorithm, or changes to the node software. The term hard fork refers to a rules change that forces the creation of a new digital asset (if there is contentious disagreement among the network participants, or some nodes don’t upgrade in time). Alternatively, a hard fork may result in a continuation of the network structure if all the participants agree to the changes, install new node software, and update dependent software-like wallets. Soft forks are backward-compatible software updates to a digital asset blockchain. Soft forks do not result in a physical split of the blockchain into two digital assets.
A fund is a pool of money that is allocated for a specific purpose. A fund can be established for any purpose whatsoever, whether it is a city government setting aside money to build a new civic center, a college setting aside money to award a scholarship, or an insurance company setting aside money to pay its customers’ claims.
Genesis Block is the name of the first block of Bitcoin ever mined—thus called “Genesis.” The Genesis Block forms the foundation of the entire Bitcoin trading system and is the prototype of all other blocks in the blockchain. In 2009, Bitcoin’s named developer, Satoshi Nakamoto, created the Genesis Block, which launched the process of Bitcoin trading that’s in place today.
Google Pay is a mobile payments service that utilizes Near Field Communication (NFC) to initiate secure payments between Google devices and contactless POS terminals.
Digital asset miners are compensated, or rewarded, for their work, which aids the process of validating and processing transactions. In Bitcoin, the reward amount for successfully mining a block is cut in half every four years. This is done to control the distribution of new digital assets in circulation. It is the technical mechanism by which the creator implemented the monetary policy of the system.
A hard fork is the splitting of a digital asset’s blockchain in a backward-incompatible way, resulting in two distinct digital assets. The code and data are replicated from the original digital asset to create the new one, adding backward-incompatible changes. Once the hard fork occurs, the two digital assets are non-fungible with each other but share some transaction and ledger history. Hard forks occur for two key reasons: The first is when competing visions of a digital asset’s future development fail to reach agreement. The second is unforeseen bugs or intentional fixes to system-critical issues. When a hard fork occurs, developer and miner support are key components in determining whether the digital assets gain or lose value and relevancy. If poorly implemented, hard forks can also cause instability in the digital asset’s network, because of transactions that may be valid on both networks.
When used as a feature upgrade mechanism, hard forks require everyone using the digital asset to simultaneously upgrade their node software (called a flag day). Coordination of flag days is extremely difficult and, as digital asset networks grow, may become impossible. For this reason, some digital assets such as Bitcoin do not use hard forks as an upgrade mechanism.
A hash is the function of mapping data of variable size to a new set of data at a fixed size in such a way that the reverse computation is effectively impossible. Cryptographic hash functions require specific properties to be considered secure, and different digital assets may use different hash functions. The SHA- 256 hashing algorithm is used in Bitcoin, and SHA-3 with Ethereum, for example.
When miners run software to create blocks, the algorithm they run is called a hash. Miners compute a lot of hashes; the sum of how many hashes they compute in a given unit of time is called their hash rate. Hash rate is directly correlated with miner earnings. Increasing one’s hash rate by installing new mining devices increases the miner’s profits. As of October 2018, all bitcoin miners combined compute 50 EH/s (50,000,000,000,000,000,000 hashes per second), which is more computations than all the world’s other computers combined. These computations are special purpose, useful only for mining bitcoin and cannot be repurposed to solve other problems. Hash functions are commonly used for proof-of-work algorithms and are integral to digital signature algorithms.
International Bank Account Number is a standard numbering system used to facilitate cross-border bank payments.
An institutional investor is a company or organization that invests money on behalf of other people. Mutual funds, pensions, and insurance companies are examples.
Issuers are members of networks (Visa, Mastercard etc.) and are authorized to issue cards by setting up BIN programs. Issuers are either banks, electronic money institutions or payment institutions.
Keys are long numeric codes that are involved in digital asset transactions, often encoded as hex or alphanumeric strings. Asymmetric key cryptography provides a strong security layer in which two different keys are created—a public key that is shared to encrypt a message, and a private key that is confidential to decrypt or sign a message. In Bitcoin these asymmetric keys are used to create digital signatures instead of encryption, which can be validated by everyone. There are two kinds of keys: public and private.
The term key pair describes public and private keys used in public-key (or asymmetric) cryptography, where the key used to encrypt data is different from the key used to perform decryption. In Bitcoin, public keys are used as a transaction output in addresses, functioning similarly to an account number or payment instruction, while the private key is known only to the funds’ owner and can be used to sign transactions moving those funds.
Know Your Business is a process performed by an issuer to comply with anti- money laundering regulations and frauds⁴.
Know your Customer is a process performed by an issuer to verify the identity of individual cardholders.
A ledger is a book containing accounts in which the classified and summarized information from the journals is posted as debits and credits. It is also called the second book of entry. The ledger contains the information that is required to prepare financial statements. It includes accounts for assets, liabilities, owners’ equity, revenues and expenses. This complete list of accounts is known as the chart of accounts. The ledger represents every active account on the list.
A light client is a wallet which does not download and validate the full blockchain (see Node). Generally they are wallets (particularly on mobile devices) and rely on a server to supply them with transactions. In order to have full security for assets, a full node is generally required. A light client mechanism was originally proposed by Satoshi Nakamoto called Simple Payment Verification (SPV). Although it was initially deemed to be unworkable, several improvements have been made since. This is an area of active research and development.
Market capitalization refers to the total dollar market value of a company’s outstanding shares of stock. Commonly referred to as “market cap,” it is calculated by multiplying the total number of a company’s outstanding shares by the current market price of one share. As an example, a company with 10 million shares selling for $100 each would have a market cap of $1 billion. The investment community uses this figure to determine a company’s size, as opposed to using sales or total asset figures. Using market capitalization to show the size of a company is important because company size is a basic determinant of various characteristics in which investors are interested, including risk. It is also easy to calculate. A company with 20 million shares selling at $100 a share would have a market cap of $2 billion.
Maximum Coin Supply:
This is the total number of coins that can be minted for a particular digital asset. Most digital assets have been designed with caps on the total supply that can be created by the network in an attempt to drive value by creating digital scarcity. A digital asseft’s maximum coin supply is a fundamental feature of its design, and some have no fixed maximum supply at all. Bitcoin’s maximum coin supply is set at 21 million.
A bitcoin can be split into very small parts. Each bitcoin is divisible to the eighth decimal place, so each bitcoin can be split into 100,000,000 units (satoshis). An mBTC is one thousandth of a bitcoin, or 0.001 BTC. It is also called a millibitcoin. See also uBTC and Satoshi.
Merchants are legal entities allowed to accept card payments using virtual or physical POS terminals provided by Acquirers.
The bank that manages the account of a merchant where funds from transactions are accumulated.
Merchant Category Code:
Code identifying the type of activity performed by the merchant which is often used to identify the type of transaction being performed.
A Merkle tree is a data structure that is used in computer science applications. In bitcoin and other cryptocurrencies , Merkle trees serve to encode blockchain data more efficiently and securely. Merkle Trees are a fundamental component of blockchains that underpin their functionality.
Mining is the method by which digital assets such as Bitcoin and Ethereum are minted and released into circulation. Mining is also the method by which transactions are incorporated into the blockchain. Finally, mining provides a mechanism to cause the unit of account to acquire a cost of production, which causes the blockchain to become a financial asset and not just a database entry. Miners perform all the same duties as nodes, and additionally attempt to solve a proof-of-work puzzle that, given a successful solution, gives them the right to publish a block of new transactions and allocate new coins to themselves. They do this by computing a hash repeatedly with different inputs, creating a proof-of-work algorithm. Mining is competitive and requires powerful dedicated hardware, energy consumption, and time.
A mining pool is a joint group of cryptocurrency miners who combine their computational resources over a network. Individually, participants in a mining pool contribute their processing power toward the effort of finding a block. If the pool is successful in these efforts and is rewarded with cryptocurrency tokens as a result, the mining pool divides up these rewards to individuals who contributed according to the proportion of each individual’s processing power or work relative to the whole group. In some cases, individual miners must show proof of work in order to receive their rewards.
Multi-signature, or multi-sig, is a feature of bitcoin and other digital assets that requires that multiple private keys be used to sign a transaction and move funds. Practically speaking, multi-sig can be used to add an extra layer of security to digital asset transactions by requiring an additional approval from a third party before a transaction is approved. Digital asset custodians typically use multi-sig wallets and processes to help secure client funds.
A mutual fund is a type of financial vehicle made up of a pool of money collected from many investors to invest in securities like stocks, bonds, money market instruments, and other assets. Mutual funds are operated by professional money managers, who allocate the fund’s assets and attempt to produce capital gains or income for the fund’s investors. A mutual fund’s portfolio is structured and maintained to match the investment objectives stated in its prospectus. Mutual funds give small or individual investors access to professionally managed portfolios of equities, bonds, and other securities. Each shareholder, therefore, participates proportionally in the gains or losses of the fund. Mutual funds invest in a vast number of securities, and performance is usually tracked as the change in the total market cap of the fund—derived by the aggregating performance of the underlying investments.
In countries where the schemes are not processing the market directly, there are local third-party processors that facilitate the connectivity between local banks and Mastercard and Visa. For example, Borica is the national processor for all Bulgarian banks.
Node is a computer that connects to Bitcoin network and uses peer-to-peer protocol that allows nodes communicating with each other within the network as well as spreading information on transactions and blocks. Information is distributed among such nodes and they are what blockchain network consists of.
A nonce is a random number that is used to vary the input to a cryptographic hash function (see Nonce), modifying the output in an unpredictable way. In the context of proof of work, the nonce is what miners repeatedly modify to find an output hash numerically smaller than the target, thereby winning the block.
Off-chain transactions are valid bitcoin transactions that are not sent to the main Bitcoin network. New research using off-chain transactions is under development by several companies and enables a large increase in the effective transaction capacity of the network. They use multiple off-chain transactions to create a payment channel between counterparties. By keeping a valid signed transaction and not sending it to the blockchain, the parties in the payment channel can update their balances in real time, without having to wait for transactions to be mined. In the event of a dispute or one party going offline, the counterparties can send their transactions to the blockchain to settle. This technique is used by payment networks, such as the Lightning Network, and non-custodial trading. It is a major tool that allows blockchains to handle many more transactions than could ever be settled on the blockchain.
An over-the-counter (OTC) market is a decentralized market in which market participants trade stocks, commodities, currencies or other instruments directly between two parties and without a central exchange or broker. Over-the-counter markets do not have physical locations; instead, trading is conducted electronically40.
Payment and electronic money institutions can passportize their rights to perform services outside of their national boundaries by passporting their license across other European Economic Area member states.
Payment is the transfer of one form of goods, services, or financial assets in exchange for another form of goods, services, or financial assets in acceptable proportions that have been previously agreed upon by all parties involved. Payment can be made in the form of funds, assets or services.
Payment gateways usually take care of the connectivity between acquirer and issuers for the purpose of processing payments.
Payment Card Industry requires certain security standards to be implemented by Issuers, Acquirers and Merchant that process credit card information. Obtaining PCI DSS Level 1 is required for any institution that stores and processes sensitive credit card data.
In its simplest form, a peer-to-peer (P2P) network is created when two or more PCs are connected and share resources without going through a separate server computer. A P2P network can be an ad hoc connection—a couple of computers connected via a Universal Serial Bus to transfer files. A P2P network also can be a permanent infrastructure that links a half-dozen computers in a small office over copper wires. Or a P2P network can be a network on a much grander scale in which special protocols and applications set up direct relationships among users over the Internet.
Politically Exposed Person (PEP):
A politically exposed person (PEP) is a person who has a public status and functions. PEPs are usually subject to stricter measures due to a higher risk of potential involvement in corruption, bribery or money-laundering.
A private key is a tiny bit of code that is paired with a public key to set off algorithms for text encryption and decryption. It is created as part of public key cryptography during asymmetric-key encryption and used to decrypt and transform a message to a readable format. Public and private keys are paired for secure communication, such as email. A private key is also known as a secret key.
A processor is a software system connected to the networks that process all transactions for the Issuer. The link between a processor and an issuer is usually a configuration setup rather than an integration effort .
Is the degree to which a business makes money. It represents what percentage of sales has turned into profits. For example if a business achieves 35% profit margin during the last quarter, it means that it had a new income of $0.35 for each dollar of sales generated.
Proof of Work:
Proof of Work (PoW) is the mechanism by which Bitcoin creates a cost of production for the unit of account and ensures immutability of the ledger in a trustless manner. Because each update to the ledger block contains a costly proof of work, this cost makes it expensive to rewrite the ledger.
A public key is created in public key encryption cryptography that uses asymmetric-key encryption algorithms. Public keys are used to convert a message into an unreadable format. Decryption is carried out using a different, but matching, private key. Public and private keys are paired to enable secure communication.
A QR code (short for “quick response” code) is a type of barcode that contains a matrix of dots. It can be scanned using a QR scanner or a smartphone with built-in camera. Once scanned, software on the device converts the dots within the code into numbers or a string of characters. For example, scanning a QR code with your phone might open a URL in your phone’s web browser47.
Real Estate Investment Trust:
A real estate investment trust (REIT) is a company that owns, operates, or finances income-generating real estate. Modeled after mutual funds, REITs pool the capital of numerous investors. This makes it possible for individual investors to earn dividends from real estate investments—without having to buy, manage, or finance any properties themselves.
Ring signature is a type of cryptographic digital signature. In a peer-to-peer transaction, such as that used with cryptocurrencies, a ring signature enables an individual of a group to sign a transaction without revealing the identity of the actual signer.
Safeguarded or pooled accounts are used by electronic money institutions to store customer funds .
Sanction lists are shared between governments and regulators to identify people who have been involved in financial crimes for the purpose of fraud prevention and anti-money laundering control.
The satoshi is the smallest unit of the bitcoin cryptocurrency. It is named after Satoshi Nakamoto, the creator of the protocol used in blockchains and the Satoshi Nakamoto is a pseudonym that was used by the Bitcoin’s creator in email communications, forum posts and publications such as the Bitcoin Whitepaper. For all we know, this could have been a male, a female or a group of persons. The name is clearly of Japanese origin, but since the person was writing in perfect English, many believe that Satoshi comes from an English-speaking country.
All cryptocurrencies contain an algorithmically enforced limit on the number of coins. This is different from traditional commodity and currency assets, in which either more commodities can be created (such as in gold mining) or more currency can be printed (fiat). Thus Bitcoin has a different (and stronger) form of scarcity than traditionally scarce assets.
Scheme or Networks (US term) are Mastercard, Visa, Amex and other networks that facilitate card payments.
The term “security” is a fungible, negotiable financial instrument that holds some type of monetary value. It represents an ownership position in a publicly-traded corporation—via stock—a creditor relationship with a governmental body or a corporation—represented by owning that entity’s bond—or rights to ownership as represented by an option.
SegWit is the process by which the block size limit on a blockchain is increased by removing signature data from Bitcoin transactions. When certain parts of a transaction are removed, this frees up space or capacity to add more transactions to the chain. Segregate means to separate, and Witnesses are the transaction signatures. Hence, Segregated Witness, in short, means to separate transaction signatures.
Shares are units of ownership interest in a corporation or financial asset that provide for an equal distribution in any profits, if any are declared, in the form of dividends. The two main types of shares are common shares and preferred shares. Physical paper stock certificates have been replaced with electronic recording of stock shares, just as mutual fund shares are recorded electronically.
A soft fork can be viewed as a backward-compatible software update for a digital asset blockchain. Soft forks can refine the governance rules and functions of a digital asset blockchain but, unlike hard forks, are compatible with the previous blockchain. This means that a soft fork does not result in a split of the blockchain into two digital assets. For a soft fork to be implemented, a specific level of readiness to enforce the new rules must be signaled by miners. Soft forks are optional for all users in the system, and it is not necessary for users to immediately upgrade, unless they want to use the new features. See also Hard Fork.
Source of Funds:
A smart contract is a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein exist across a distributed, decentralized blockchain network. The code controls the execution, and transactions are trackable and irreversible. Smart contracts permit trusted transactions and agreements to be carried out among disparate, anonymous parties without the need for a central authority, legal system, or external enforcement mechanism.
A smart contract is a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein exist across a distributed, decentralized blockchain network. The code controls the execution, and transactions are trackable and irreversible. Smart contracts permit trusted transactions and agreements to be carried out among disparate, anonymous parties without the need for a central authority, legal system, or external enforcement mechanism 54 .
A stock (also known as “shares” or “equity”) is a type of security that signifies proportionate ownership in the issuing corporation. This entitles the stockholder to that proportion of the corporation’s assets and earnings.
A stock certificate is the physical piece of paper representing ownership in a company. Stock certificates will include information such as the number of shares owned, the date, an identification number, usually a corporate seal and signatures. They are a bit bigger than a normal piece of paper, and most of them have intricate designs to discourage fraudulent replication.
Store of Value:
Store of Value is one of the core functions of money, alongside Medium of Exchange and Unit of Account. An asset is considered to be a good Store of Value if the purchasing power does not degrade over time.
Third-party providers (TPP), service providers or often called Fintech companies that can be licensed under the PSD2 to manage electronic money, payment initiation and account information services.
Total Circulating Coin Supply:
This is the total number of coins that a particular digital asset has in circulation.
Total Coin Supply:
This is the total number of coins that have been minted for a particular digital asset, although not all coins minted may be in circulation. It can also mean the total number of coins that will ever exist, as in 21 million for Bitcoin.
A transaction fee is an amount of cryptocurrency that is attached to a transaction and that incentivizes miners to process the user’s transaction. In Bitcoin, a transaction fee is not mandatory, nor is it prescribed by the code. Users can choose how much to pay for their transactions to be processed. That is why during times of network congestion, the average transaction fee goes up, as users are trying to incentivize miners to process their transactions over other users’ transactions. On the other hand, when network traffic slows down, average transaction fees also decline.
A trust is a fiduciary relationship in which one party, known as a trustor, gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party, the beneficiary. Trusts are established to provide legal protection for the trustor’s assets, to make sure those assets are distributed according to the wishes of the trustor, and to save time, reduce paperwork and, in some cases, avoid or reduce inheritance or estate taxes. In finance, a trust can also be a type of closed-end fund built as a public limited company.
Unspent Transaction Output:
Bitcoin does not operate on the account model (like Ethereum) but on the unspent transaction output (UTXO) model. Every transaction has inputs and outputs. Outputs that have not been spent are the set of bitcoins in circulation (i.e., spendable bitcoins). Unspent outputs are used as inputs in new transactions.
A bitcoin can be split into very small parts. A uBTC is one millionth of a bitcoin, or 0.000001 BTC. It is also called a microbitcoin.
Virtual currency is a type of unregulated digital currency that is only available in electronic form. It is stored and transacted only through designated software, mobile or computer applications, or through dedicated digital wallets, and the transactions occur over the internet through secure, dedicated networks. Virtual currency is considered to be a subset of the digital currency group, which also includes cryptocurrencies, which exist within the blockchain network.
A digital asset wallet is a piece of software that maintains keys and manages addresses. A wallet is comprised of a set of addresses. If the wallet has the private keys for these addresses, it is capable of sending transactions. If it does not have the private keys for these addresses, it is called a watch-only wallet, as might be used by an auditor.
The Bitcoin whitepaper, Bitcoin: A Peer-to-Peer Electronic Cash System, was published in 2008 by Satoshi Nakamoto. Bitcoin is revolutionizing the global payments industry and people around the world are rethinking the meaning of their money. Moreover, the underlying technology and network that process Bitcoin transactions, known as blockchain, is transforming industries as varied as banking, farming, logistics, healthcare, elections and manufacturing, to name a few58.
While BTC was and often still is the original shorthand for bitcoin, there has been an increase in the use of the term XBT. The reason for this is that the International Organization for Standardization (ISO), which keeps a listing of all currencies, uses X to symbolize a currency that is not attached to a specific country (which is the case for all digital assets, because they are decentralized). Fidelity Digital Assets uses the XBT currency code.
Zero Knowledge Proof:
Zero Knowledge Proofs (ZKPs) are an experimental technology that allows one to cryptographically prove a statement, without revealing the input data. For instance, one could prove that a transaction was included in the blockchain without telling you which transaction it is. One could also prove the ability to decrypt encrypted data, or the ability to spend from a certain address, or prove the amount of funds in your wallet without revealing any addresses (for instance, to satisfy an audit). ZKPs are being actively explored by a number of blockchain and cryptocurrency projects and are a fundamental piece of engineering infrastructure in the space. 51% Percent: In the Bitcoin Whitepaper, Satoshi Nakamoto computed the probability that transactions could be reversed. The ability to reverse transactions is only possible probabilistically as long as no entity has more than 51% of the mining hash rate and supports the rule of thumb to wait 6 confirmations before considering a transaction settled, as well as the concept of a 51% attack. If any entity controls 51% or more of the hashrate, they can arbitrarily censor transactions and/or prevent progress, though they cannot directly steal funds. Theft of funds is possible by such an entity only if a counterparty follows the 6 confirmation rule, the attacker has 51% of the hash rate, and the attacker creates a double spend.
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