DISTRIBUTED LEDGERS:-A distributed ledger is a database that is consensually shared and synchronized across multiple sites, institutions, or geographies, accessible by multiple people. It allows transactions to have public “witnesses.” The participant at each node of the network can access the recordings shared across that network and can own an identical copy of it. Any changes or additions made to the ledger are reflected and copied to all participants in a matter of seconds or minutes.


A distributed ledger is a database that is synchronized and accessible across different sites and geographies by multiple participants. The need for a central authority to keep a check against manipulation is eliminated by the use of a distributed ledger.

A distributed ledger stands in contrast to a centralized ledger, which is the type of ledger that most companies use. A centralized ledger is more prone to cyber-attacks and fraud, as it has a single point of failure.

Underlying distributed ledgers is the same technology that is used by blockchain, which is the technology that is used by bitcoin. Blockchain is a type of distributed ledger used by bitcoin.

Since ancient times, ledgers have been at the heart of economic transactions, with the purpose of recording contracts, payments, buy-sell deals, or moving 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 have provided the process of record-keeping and ledger maintenance with great convenience and speed. Today, with innovation, the information stored on computers is moving towards being cryptographically secured, fast, and decentralized. Companies can take advantage of this technology in many forms, one way being through 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 for a central authority to keep a check against manipulation. In this manner, a central authority is not needed to authorize or validate any transactions.

All the information on the ledger 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, which the rules of the network govern.

Advantages of Distributed Ledgers

While centralized ledgers are prone to cyber-attacks, distributed ledgers are inherently harder to attack because all of the distributed copies need to be attacked simultaneously for an attack to be successful. Furthermore, these records are resistant to malicious changes by a single party. By being difficult to manipulate and attack, distributed ledgers allow for extensive transparency.

Distributed ledgers also reduce operational inefficiencies, speed up the amount of time a transaction takes to complete, and are automated, and therefore function 24/7, all of which reduce overall costs for the entities that use them.

Distributed ledgers also provide for an easy flow of information, which makes an audit trail easy to follow for accountants when they conduct reviews of financial statements. This helps remove the possibility of fraud occurring on the financial books of a company. The reduction in the use of paper is also a benefit to the environment.

Use of Distributed Ledgers

In a distributed ledger, each node processes and verifies every item, thereby generating a record of each item and creating a consensus on its veracity. A distributed ledger can be used to record static data, such as a registry, and dynamic data, such as financial transactions.

Distributed ledger technology has great potential to revolutionize the way governments, institutions, and corporation’s work. It can help governments collect tax, issue passports, and record land registries, licenses, and the outlay of Social Security benefits, as well as voting procedures.

The technology is making waves in several industries, including:

  • Finance
  • Music and entertainment
  • Diamond and precious assets
  • Artwork
  • Supply chains of various commodities

While the distributed ledger technology has multiple advantages, it’s in a budding stage and is still being explored in how to adopt it in the best possible way. One thing is clear, though: The future format of centuries-old ledgers is to be decentralized.

Is blockchain a distributed ledger?

Blockchain is one type of a distributed ledger. Distributed ledgers use independent computers (referred to as nodes) to record, share and synchronize transactions in their respective electronic ledgers (instead of keeping data centralized as in a traditional ledger).

The most important difference to remember is that blockchain is just one type of distributed ledger. Although blockchain is a sequence of blocks, distributed ledgers do not require such a chain. Furthermore, distributed ledgers do not need proof of work and offer – theoretically – better scaling options.

Why is blockchain called distributed ledger technology?

Blockchain is a type of DLT where transactions are recorded with an immutable cryptographic signature called a hash. The transactions are then grouped in blocks and each new block includes a hash of the previous one, chaining them together, hence why distributed ledgers are often called blockchains.

In 2008, the famously anonymous innovator known by pseudonym Satoshi Nakamoto introduced a peer-to-peer version of electronic cash that allows direct online transactions between two parties without a third party.

How are distributed ledgers different than traditional ledgers?

Distributed ledgers operate independently of a central authority. This makes them faster and more flexible than traditional centralized ledgers. The fact that transactions are automatically mirrored across all ledgers means that information is shared with minimum delay