Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Web Trader MT5
D
Distributed Consensus
Distributed consensus is the process by which a network of independent people, without a central authority, agrees on a single version of the truth. This is the system that determines which transactions are valid and which ledger version is correct in blockchain networks. There is no central server holding the official record; the network has to agree.
This is achieved using consensus techniques such as proof of work or proof of stake.
Everybody follows the same rules, validates transactions, and confirms them by consensus. The beauty of distributed consensus is that it makes the system tamper resilient. It becomes too expensive at scale to get the majority of the network to switch a historical record simultaneously.
Example: When a bitcoin transaction is sent to the network, thousands of nodes independently validate it against the same criteria. When enough of them agree that it is valid and it is included in a confirmed block, that transaction is essentially settled. Not because some authority said it is, but because the network reached consensus.
Distributed Ledger
A distributed ledger is a record of transactions or data that is shared, synced, and maintained simultaneously across multiple locations, institutions, or people, rather than in a single central database managed by a single entity. Each person in the network has a copy, and when something is updated, it’s updated on everyone’s copy at the same time.
Distributed ledgers are a popular technology, with blockchain being the most widely known type; however, not all distributed ledgers are blockchains. Unlike a regular database, the key difference is the lack of a central administrator. No single party can change the record on its own, making the system more transparent and harder to tamper with. Financial institutions have been experimenting with distributed ledger technology for applications ranging from cross-border payments to securities settlement, attracted by the promise of lower reconciliation costs and settlement times.
Example: Currently, if two banks settle a cross-border transaction, they reconcile the records independently. This takes time and leaves the possibility for discrepancy. A shared distributed ledger would give both banks the same real-time record of the transaction, removing the reconciliation phase and reducing settlement time from days to minutes.
Diversification
A golden rule in trading practice: to spread your capital across different asset classes, industries, or geographic regions to minimise the impact of one asset’s performance on your overall portfolio.
Dividend
A payment made by a company to its shareholders, typically from the company’s profits.
Dividend aristocrats
Companies that have consistently increased their dividend payments for at least 25 consecutive years.
Dividend yield
A financial ratio that measures the dividend payments made by a company relative to its share price.
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