DEFINITION of 'Distributed Ledgers'

A distributed ledger is a database that is consensually shared and synchronized across network spread across multiple sites, institutions or geographies. It allows transactions to have public "witnesses," thereby making a cyberattack more difficult. The participant at each node of the network can access the recordings shared across that network and can own an identical copy of it. Further, any changes or additions made to the ledger are reflected and copied to all participants in a matter of seconds or minutes. Underlying the distributed ledger technology is the blockchain, which is the technology that underlies bitcoin.

BREAKING DOWN 'Distributed Ledgers'

A distributed ledger can be described as a ledger of any transactions or contracts maintained in decentralized form across different locations and people, eliminating the need of a central authority to keep a check against manipulation. All the information on it is securely and accurately stored using cryptography and can be accessed using keys and cryptographic signatures. Once the information is stored, it becomes an immutable database and is governed by the rules of the network. While centralized ledgers are prone to cyber-attack, distributed ledgers are inherently harder to attack because all the distributed copies need to be attacked simultaneously for an attack to be successful. Further, these records are resistant to malicious changes by a single party.

Since ancient times, ledgers have been at the heart of economic transactions – to record contracts, payments, buy-sell deals or movement of assets or property. The journey which began with recording on clay tablets or papyrus, made a big leap with the invention of paper. Over the last couple of decades, computers provided the process of record keeping and ledger maintenance great convenience and speed. Today, with innovation, the information stored on computers is moving towards much higher forms – which is cryptographically secured, fast and decentralized.

Distributed ledger technology has great potential to revolutionize the way governments, institutions, and corporate work. It can help governments in tax collection, issuance of passports, record land registries, licenses and outlay of social security benefits as well as voting procedures. The technology is making waves in industries such as finance; music and entertainment; diamond and precious assets; artwork; supply chains of various commodities; and more. While the distributed ledger technology has multiple advantages, it’s in a nascent stage and is still being explored to adopt in the best possible ways. The future of centuries old ledgers is decentralized.

 

 

RELATED TERMS
  1. Accounts Receivable Subsidiary ...

    An accounts receivable subsidiary ledger shows the transaction ...
  2. Asset Ledger

    The asset ledger is the part of a company's accounting records ...
  3. Accounts Payable Subsidiary Ledger

    An accounts payable subsidiary ledger shows the transaction history ...
  4. Digital Copy

    A digital copy is a duplicate record of every Bitcoin transaction ...
  5. Cash Book

    A financial journal that contains all cash receipts and payments, ...
  6. Credit Ticket

    In accounting and bookkeeping, a credit ticket is a transaction ...
Related Articles
  1. Investing

    What's a General Ledger?

    As the heart of the double-entry accounting system, the general ledger is the record of a company's entire financial transaction history. The left side of the general ledger is for debits: assets, ...
  2. Tech

    Microsoft, Bank of America Team Up on Blockchain Technology

    The technology company and finance institution intend to introduce the digital ledger to trade finance transactions.
  3. Tech

    Bitcoin vs. Big Finance (opinion)

    Bitcoin and big finance occupy parallel universes of value, cooperation, and trust. Understanding these differences helps to decipher the meaning behind the blockchain news cycle and how to recognize ...
  4. Tech

    IBM Offers Open Source Blockchain Code (IBM)

    International Business Machines Corp. (IBM) announced Tuesday that it would donate 44,000 lines of blockchain​ code to the Hyperledger Project, providing an open source foundation for building ...
  5. Tech

    Top 3 Books to Learn About Blockchain

    Here are reviews of three of the best available books on blockchain, a relatively new, but rapidly growing and very important technology.
  6. Personal Finance

    UBS to Test Blockchain Settlement System (BK, DB)

    A team of banks led by UBS is developing a digital cash system using the blockchain technology that forms the backbone of bitcoin.
  7. Tech

    Walmart and IBM Will Use Blockchain to Ensure Food Safety

    The major U.S. retailer is experimenting with ways of using the cryptocurrency technology to help ensure that its food products are tracked sufficiently.
  8. Insights

    Chain Launches Blockchain Open Source Developer Platform (MSFT, NDAQ)

    San Francisco-based blockchain technology solutions provider Chain, Inc., has recently released ‘Chain Core Developer Edition,’ a free and open source version of its distributed ledger platform ...
  9. Tech

    How Blockchain is Changing the Mortgage Game

    Blockchain-based solutions could disrupt the mortgage industry by eliminating many of the inefficiencies that plague the mortgage industry.
  10. Tech

    Blockchain Is Helping Change Government Services

    The distributed ledger helps streamline operations and make them more efficient and trackable.
RELATED FAQS
  1. What's the difference between the general ledger and a general journal?

    Keeping records for most organizations require a double-entry bookkeeping system, which revolves around transactions in the ... Read Answer >>
  2. Is Bitcoin legal in the US?

    Learn about the legality of Bitcoin as a form of payment in the United States, as well as how it is produced and concerns ... Read Answer >>
  3. What Does the Bitcoin Blockchain Record?

    Read about the bitcoin blockchain, a public ledger shared among all bitcoin users that records the information of every single ... Read Answer >>
  4. When should a company recognize revenues on its books?

    When a company makes revenues from its operations, it must be recorded in the general ledger and then reported on the income ... Read Answer >>
Hot Definitions
  1. Inflation

    Inflation is the rate at which prices for goods and services is rising and the worth of currency is dropping.
  2. Discount Rate

    Discount rate is the interest rate charged to commercial banks and other depository institutions for loans received from ...
  3. Economies of Scale

    Economies of scale refer to reduced costs per unit that arise from increased total output of a product. For example, a larger ...
  4. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
  5. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
  6. Financial Risk

    Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
Trading Center