Financial Technologies (Week 7) Flashcards
What is Financial Technology (FinTech)?
FinTech combines finance and technology. It uses AI, blockchain, etc., to create new financial products and improve services efficiently
Advantages of FinTech
–> Easy to set up
–> More attractive fees/ rates
–> Better quality of service
–> Available 24/7
–> Access to different products/ services
–> Better online experiences and functionality
Why is FinTech in demand?
–> Financial crises
–> Banks, fees and obsolete processes
–> Growth of mobile devices and the internet
–> Technological advancement
What is Blockchain?
A system that is compromised of:
–> Transactions
–> Encryption processes
–> Immutable Ledgers
–> Decentralised peers
–> Consensus Mechanisms
–> Optional Smart Contracts
What is Decentralised peers?
Where every node has a ledger and is decentralised
What is a ledger?
A distributed ledger is a record of transactions shared across a network. It works by storing identical copies on multiple computers
What is Transactions in a Blockchain?
A historical archive of decisions and actions taken
Why do we need Blockchain?
–> Resilience: Blockchain’s replicated architecture ensures continued operation even during attacks
–> Time reduction: Enables quick settlement of trades with agreed-upon shared ledger data
–> Reliability: Certifies identities, reduces errors, and accelerates transactions
–> Security: Distributed ledger technology prevents system failure even if some nodes are compromised
–> Transparency: Public blockchains allow transparent, immutable transactions
–> Collaboration: Direct transactions without intermediaries foster collaboration
–> Decentralization: Standard rules ensure validation and orderly addition of transactions by all nodes
