In the simplest way possible, it is a ledger (a book containing all transactional data) available to every individual who is a part of a particular network. Let’s check how it seems virtually, shall we?
Technically speaking, A distributed ledger is a digital collection of records, or database (to be precise), which is consensually distributed among and synchronized across all the nodes of a particular Peer-To-Peer (P2P) network. It makes transactional data available in the public domain, thereby leaving no room for cyberattacks to happen. The member at each node of this particular network owns a duplicate copy of all the data which is circulating in the corresponding Blockchain. Moreover, any alterations or additions made to the ledger are duplicated and sent instantly to all members in the network within a few minutes perhaps. After all, the distributed ledger technology supports the foundation of blockchain technology, which in turn supports the prevalence of Bitcoin.
Elaborating a bit more…
A distributed ledger stores and maintains information pertaining to transactions or contracts in a decentralized format. This means, such a technology eliminates the necessity to rely on a central authoritative entity for the sake of conducting transactions and being informed about the whereabouts of their own monetary investments.
It is the inability of banks and financial institutions today for not answering people’s queries regarding the need to charge high transaction fees, or even where these money are stored or invested in. This is exactly where Blockchain technology champions this cause. Such a ledger avoids the possibility of manipulating information. Also, the data on this Blockchain is safely stored with the help of cryptography. Moreover, this ledger can be viewed via designated keys and cryptographic signatures as well!
The storage of information further makes this ledger “an immutable database”, governed by the network regulations. Centralized ledgers are always vulnerable to cyberattack, whereas distributed ledgers totally decimate such a scenario because they need to be attacked all at once. Further, these records are resistant to any changes made by any unscrupulous party.
Why do we need them?
Ledgers have been at the centre of all kinds of transactions, such as recording contracts, conducting money transfer, purchasing and selling assets, and even property. With the evolution of the paper, the evolution of transaction records occurred, and man embraced it fully. Over the last twenty years, computers have provided the methodology of record keeping along with great convenience and fast pace!
With the passage of time, more and more innovative minds have brought forth ways to secure financial information securely. And, this is how we netizens are moving from a world order based on backdated banking systems to a world of higher forms; forms which view Cryptocurrency as the new player in the banking industry.
Distributed Ledgers in the Contemporary World
Most scholar opine that the distributed ledger technology is capable of transforming governance, various institutions, as well as corporate work. As Investopedia stated, many have proposed to adopt this technology in the field of —
- Collecting taxes
- Issuing passports
- Recording land registries
- Licenses and outlay of social security
- Election procedures
The distributed ledger tech is has been making enough changes in the industries of —
C. Precious assets
E. Supply chains of various commodities
A technology yet to bloom at its fullest, the distributed ledger technology is yet to be born. Even now, the same has been exploring the virtual world to pick up the best alternatives to provide one this today’s banking systems cannot promise you — a stress-free good night sleep. What else do you expect?