A glossary of common FinTech terms.
Disclaimer: The glossary of terms provides general information and definitions. It is not legal advice or regulatory guidance.
Bitcoin
The original digital asset that can be sent peer-to-peer without intermediaries.
Blockchain
A type of distributed ledger that requires entries to be confirmed and encrypted via an advanced encryption technique called cryptography, which makes the entries very difficult to change or hack. Blockchain is the technology that underpins Bitcoin, but other digital assets have their own blockchain and distributed ledger systems.
Cryptocurrency
The native asset of a decentralized network that can be traded, utilized as a medium of exchange, and used as a store of value. A cryptocurrency is issued directly by the decentralized protocol on which it runs. Examples include Bitcoin and Ether.
Digital Asset
Non-tangible asset that is created, traded, and stored in a digital format. In the context of blockchain, digital assets include cryptocurrency and tokens.
Distributed Ledger
A database that is consensually shared and synchronized across multiple sites, institutions, or geographies, accessible by multiple people. It allows transactions to have public "witnesses".
DeFi or Decentralized Finance
A form of finance that does not rely on central financial intermediaries such as exchanges, or banks. DeFi platforms are generally built on top of smart contract-enriched blockchains to fulfill specific financial functioned determined by the smart contracts’ underlying code.
Ether
A transactional token that facilitates operations on the Ethereum network. It tracks and facilitates all transactions in the network.
Fiat Currency (or “real money”)
Government-issued currency that is not backed by a commodity, such as gold.
Initial Coin Offerings (ICO)
A process or event in which a company attempts to raise capital by selling a new cryptocurrency or token. Investors purchase the tokens in the hope that the value of the cryptocurrency will increase, or to later exchange for services offered by that company.
Mining
The process by which some digital assets, such as Bitcoin, are entered into circulation. The process validates and adds transactions to the blockchain to bring new Bitcoin or other digital asset into circulation.
Non-Fungible Token (NFT)
A certificate of authenticity for digital artifacts. Each NFT is stored on an open blockchain (often Ethereum’s) and anyone interested can track them as they’re created, sold, and resold.
Peer-to-peer
Decentralized system where two persons interact with each other without a third-party intermediary. Example: I send money directly from my digital wallet to yours.
Public Key
The code for your digital wallet that you share with others so they can send you digital assets.
Private Key
Your personal code that allows you access to your digital wallet, and without which the wallet and the related digital assets cannot be accessed (even by the owner).
Smart contracts
Programs stored on a blockchain that run when predetermined conditions are met. They typically are used to automate the execution of an agreement so that all participants can be immediately certain of the outcome, without any intermediary's involvement or time loss.
Stablecoin
A digital asset whose value is pegged to a fiat currency (e.g., U.S. Dollar) and is collateralized by “cash”, securities or both.
Tokens
Are units of value that blockchain-based organizations or projects develop on top of existing blockchain networks. While they often share deep compatibility with the cryptocurrencies of that network, they are a wholly different digital asset class. Cryptocurrencies are the native asset of a specific blockchain protocol, whereas tokens are created by platforms that build on top of those blockchains. For example, a stablecoin such as Gemini dollar1 is a token on the Ethereum network but Ether is the cryptocurrency on the network.
Virtual currency
A digital representation of value used as a medium of exchange, a unit of account, or a store of value, but does not have legal tender status as recognized by the United States government.
Wallet
the digital home for your digital assets. It is generally an application (app) or web-based way to store cryptocurrencies. Wallets manage and store users’ public and private keys.