Asset-Backed Securities (ABS): What They Are and How They Work
Warren Team
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Key terms
- AssetAnything of value that an individual or company owns, such as cash, investments, real estate, or personal property. Assets are the foundation of building wealth.
- SecuritiesTradable financial assets including stocks, bonds, options, and mutual funds. Regulated by the SEC (Securities and Exchange Commission) to protect investors.
- Asset AllocationAn investment strategy that balances risk and reward by dividing investments among different asset categories, such as stocks, bonds, and cash, based on goals and risk tolerance.
- Proof of WorkA consensus mechanism that requires miners to solve computationally intensive mathematical puzzles to validate transactions and add new blocks to the blockchain. It was the first consensus method used in blockchain technology and remains the mechanism behind Bitcoin. While highly secure, Proof of Work is criticized for its significant energy consumption and environmental impact.
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