Everything Flashcards
(43 cards)
What is FinTech
Fintech, short for financial technology, refers to the integration of technology into offerings by financial services companies to improve their use and delivery to consumers.
Example of fintech
Paypal, Lydia,
Name some fintech sub sectors
Crypto
Insurance
Payments
Wealth Management
Personal Finance
Benefits of fintech
- Enhanced Accessibility
- Lower Costs
- Faster Transactions
- Improved Security
- Personalized Services
- Greater Convenience
- Automated Services
What’s an API
An API (“Application Program Interface”) is an interface by which computers can exchange information and/or instructions with each other, without human intervention. There are many different types of APIs. One of the most common API standard is the REST API, which is use on the world wide web.
Example of an API
When you use a weather app on your phone, the app uses an API to request weather data from a remote server. The server sends back the weather information, which the app then displays to you.
Why do we care about APIs?
They are fuelling the open banking revolution
What’s open banking
Open banking is a system where banks and other financial institutions provide access to their customers’ financial data to third-party service providers, securely and with the customers’ consent. This access is typically achieved through the use of APIs.
What is the GDPR
The General Data Protection Regulation (GDPR) is a comprehensive data privacy law in the European Union that sets guidelines for the collection, processing, and storage of personal information of individuals within the EU. It gives individuals greater control over their personal data and requires organizations to protect the privacy and security of this data. GDPR came into effect on May 25, 2018.
Due to regulations, what do you need to run a financial company?
A license
Loss aversion
It means that for most people, the pain of losing something is stronger than the pleasure of gaining something of the same value.
Human decision biases
- Confirmation Bias: Preferring information that matches beliefs.
- Availability Heuristic: Valuing easily recalled information.
- Self-Serving Bias: Attributing success to self, failure to external factors.
- Anchoring Bias: Over-relying on initial information.
Algorithmic trading PROS
Instantaneous decision
Best price trades
Objective criteria, no emotions
No human mistakes
Ability to back test
Algorithmic trading CONS
No contextual information taken into account
Back testing (historical data) can be irrelevant
Algorithms can go “mad” (glitches)
Main algo trading strategies
Trend following
Arbitrage
Indexfund rebalancing
(and more)
What you need for algo trading strategies
Algorithm (duh)
Computing power
Data access (remember APIs?)
What is a blockchain
A block chain is a growing list of records, called blocks, that are linked together using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data (generally represented as a merkletree).
What is a hash
A hash is a function that converts an input (or ‘message’) into a fixed-size string of characters, which typically appears random. It serves as a digital fingerprint of the data, ensuring data integrity.
What does the “timestamp” do in a block
The timestamp proves that the transaction data existed when the block was published in order to get into its hash
Why is it called a block chain
As blocks each contain information about the block previous to it, they form a chain, with each additional block reinforcing the ones before it.
What’s special about the data in the blockchain
Blockchains are resistant to modification of their data because once recorded, the data in any given block cannot be altered retroactively without altering all subsequent blocks.
What’re the main concepts of blockchain
Ledger
Coin
Mining
Transaction
Smart contracts
Explain “Ledger”
LIST OF TRANSACTION RECORDS
Explain “Coin”
UNIT OF CRYPTO CURRENCY. PARTIAL AMOUNTS CAN BE OWNED
