Encyclopedia

4 A B C D E F G H I J K L M N O P R S T U W

Blockchain

Blockchain is a public ledger that records transactions that are performed. This is achieved without any trusted central authority as the maintenance of the blockchain is performed by a network of communicating nodes running the software. Network nodes validate transactions, add them to their copy of the ledger, and then broadcast these ledger additions to

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Blockchain Address

A blockchain address is like a bank account for crypto assets. Bitcoin addresses for example start with either a ‘1’ or a ‘3’ or a ‘bc1’ and is 26-35 alphanumeric characters in length. The address is generated from the private key, which is required to send or receive assets assigned to this address to another

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Central Bank Digital Currency (CBDC)

A Central Bank Digital Currency is a blockchain-based fiat currency issued by a central bank. CBDCs seek to leverage blockchain’s immutability, transaction speeds and costs with a country’s fiat currency for a more accountable and efficient system.

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Clustering Algorithms

Clustering algorithms are used to identify blockchain addresses belonging to the same owner by analytical means. Good clustering algorithms can identify hundreds of thousands of suspect’s blockchain addresses just based on one address confirmed as belonging to the suspect. This includes the determination of suspects’ addresses on different blockchain networks. In most cases clustering analysis gives the level

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Combatting the Financing of Terrorism (CFT)

Combatting the Financing of Terrorism or ‘CFT’ are a set of procedures deployed by obliged entities to ensure that the financial system and intermediaries are not used to facilitate the funding of terrorist acts and groups. Terrorist groups need funding to recruit and support members, plan operations and have a logistics hub. By having proper

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Counterparty Risk

Counterparty risk is the risk that an entity that is a party to a financial transaction is associated with illicit activity. Bitcoin and cryptocurrency money launderers for example would be benefactors or intermediaries with a high Counterparty Risk Score or ‘C-score’. The criteria that counterparty risk is measured against with proper due diligence is comprehensive.

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Crypto Asset Tracking

What is crypto asset tracking Crypto asset tracking means the identification and evidencing the destination or source of crypto assets through the application of forensic accounting methods. Defrauded cryptocurrency funds are typically passed through complex layering/mixing schemes to conceal the trail of funds. Each asset tracking exercise starts with the provision of transfers to be

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Cryptocurrency Exchange

Is a website service, or an entity, engaged as a business in the exchange of virtual currency for real currency, funds, or other forms of virtual currency and also precious metals, and vice versa, for a fee (commission). Exchangers generally accept a wide range of payments, including cash, wire payments, credit cards, and other virtual

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Cryptocurrency Forks

What is a fork in cryptocurrency? In digital currencies, a “fork” signifies an alteration to the software underpinning a cryptocurrency, leading to two separate versions of the blockchain. Despite this schism, the two versions share a common historical foundation. The consequential outcome is the birth of a new digital currency, the forked version. This phenomenon

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Custodians

Understanding custodians in traditional finance Wondering what are custodians? A custodian, within the domain of traditional finance, is a financial services provider, often a large bank or financial institution, tasked with holding and safeguarding assets on behalf of clients. This role extends to keeping customers’ securities, cash, bonds, stock and other financial instruments, in electronic

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