Join NexChange - the professional
network for the financial services
industry - and receive a free one-
year subscription to Forbes
The geek's glossary: A guide to fintech jargon for 2016
For the uninitiated, getting to grasps with the terminology surrounding the financial services and technology sectors can be challenging at the best of times. It’s no wonder then that the combination of the two has given rise to a whole new lexicon for us to get our heads around.
Here is a guide to some of the fintech buzzwords that will likely be in use this year:
API stands for application programming interface. It is a set of requirements that dictate how two pieces of software talk to each other. It is basically what allows you to move data between applications.
A relatively new term for 2016, coined by William Mougayar of Virtual Capital Ventures in early 2015. It means Blockchain-as-a-Service. Equivalent terms include Ethereum Blockchain-as-a-Service (EthBaaS), or “Blockchain-as-a-Platform” (BaaP). It refers to the growing landscape of services based around blockchain technology. The best example of this we have so far is Microsoft launching its own EthBaaS on the Microsoft Azure cloud platform this year. This platform will allow companies to begin working with blockchain technology without having to first make significant investments in hardware.
Bitcoin is a decentralised digital cryptocurrency that was invented by the pseudonymous Satoshi Nakamoto in 2008. In the past few years, Bitcoin has evolved from being a murky money of the digital underworld to an increasingly mainstream digital currency.
Blockchain is the technology that underpins Bitcoin transactions. The most simple explanation is a decentralized digital ledger which records all digital transactions as a string of data stored on a global network of computers. Every time a new batch of transactions is encrypted by the network, it is added to the string (or chain) as a “block.”
There are two types of crowdfunding: rewards-based crowdfunding and equity-based crowdfunding. The first relates to platforms like Kickstarter or Indiegogo, where startups raise pledges and in return offer buy-in incentives for anything they produce. Equity crowdfunding is a more recent phenomenon where pledgers are actually investors that receive a small share in the business in return for their contributions.
A cryptocurrency is a digital currency in which uses encryption to secure transactions and control the creation of new units. Cryptocurrencies typically operate independently of any central bank. Bitcoin and Ether are the most notable examples of this.
A digital native refers to a person who has grown up with the availability, and use of, digital technology. This group includes millennials, or post-millennials AKA Generation Z.
This refers to any electronic device or application that allows an individual to make electronic transactions. This can be either using cryptocurrency or real money which is often pre-loaded onto a digital account.
This is a term that has emerged in the area of cyber security and means Disaster Recovery-as-a-Service. It refers to the hosting of physical or virtual servers by a third party as a security measure to protect a business’ infrastructure in case of a cyber attack, natural disaster, or man-made catastrophe.
Ethereum is a blockchain-based cryptocurrency platform that runs Smart contracts. Its was originally authored by Vitalik Buterin and Gavin Wood.
The currency unit of Ethereum. It is used to pay for computational services on the Ethereum network.
Internet of Things
Internet of Things (IoT) refers to the development of everyday internet-connected objects that have the ability to record, receive, and send data. This covers internet-connected cars, light bulbs, fridges, clothes, pedometers, and everything in between.
P2P means peer-to-peer, or person-to-person, and refers to anything that is decentralized and direct. P2P lending is loaning money to individuals without the systems and processes typically put in place by traditional financial institutions. Instead, the transactions are often handled by digital platforms that use an algorithm to manage transactions between parties.
Smart contracts are computer protocols that facilitate, verify, or enforce a digital contract. The idea is that these programs will eventually be used to replace lawyers and banks when handling common legal and financial transactions.
The means Software-as-a-Service. It is a software distribution model used my many fintech software startups. It basically means applications that are hosted by the vendor on the cloud and can be accessed by the users online for a subscription fee, as opposed to users buying the software outright in a hard format like a CD.
Can you think of anything that we have missed out?
Photo: Caleb Roenigk