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FinTech WOTD: Tokenization

Tuesday, 19 July, 2016

FinTech? It’s a portmanteau word created from “Financial Technology.” It’s hot because it threatens to grab some power from the bloated banks and give the the entire byzantine money business a much-needed shakeup. Heard of Bitcoin? It’s the most popular FinTech cryptocurrency. Cryptocurrency? It’s a form of digital currency that uses cryptography for regulation and security. No one is really sure who “mined” it, but the open-source software underpinning it has a shady history. Heard about the Blockchain? It’s where cryptocurrency transactions get recorded. It operates like a public ledger and once data has been entered, it cannot be altered.

All this brings us to our FinTech WOTD (Word of the Day): Tokenization.

Tokenization replaces sensitive data with unique symbols. These “tokens” enable users to retain essential information about their credit cards and transactions without compromising security. Tokenization also turns complex information into short, useful codes.

If you’re still not convinced about the power of FinTech to do good, don’t forget that its advocates say it may help the underbanked to become, well, more banked. Win win.

Language note: There’s tokenization and then there’s tokenism. The latter is the policy and practice of making a superficial gesture towards members of minority groups. Adding a token employee to a workforce usually is intended to create the appearance of diversity — racial, religious, sexual — and so avert accusations of discrimination. Following the Bastille Day terror attack in Nice, Channel 4 was accused of tokenism by putting the hijab-wearing Muslim Fatima Manji in the anchor’s chair.


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