What is a distributed ledger?
A ledger is the bedrock of accounting and is as ancient as writing and money. Overtime, clay, wooden tally stick, papyrus, stone and paper has served as a medium for the ledger. In the advent of computers in the 1980's and ‘90s, entries done on paper were made digital mostly by manual data entry.
The early digital ledgers took the form of the physical paper-based cataloging and accounting and it can be argued that digitization was mostly used for the logistics of paper documents instead of their creation. However, our society still relies deeply on paper-based system: money, written signatures, certificates, bills, seals and double entry bookkeeping.
Making use of computing power with the development of breakthroughs in cryptography together with the discovery and application of new and interesting algorithms, paved the way for the creation of distributed ledgers.
In lay terms, a distributed ledger is a database functioning and updated separately by each participant (nodes) in a large network. The distribution is unique: information is not distributed by a central entity but is instead created and updated independently by each node. I.e. every transaction and event on the blockchain network is processed independently by each node, reach its own conclusion, and vote on these conclusion to ensure majority agree with the conclusions.
Once an agreement is reached, the distributed ledger is updated and every node in the network stores its own copy of the ledger. This architecture provides for a system of record keeping that transcends the conventional simple database.
Distributed ledgers possess properties and capabilities that exceed the static paper-based ledgers and are a more dynamic form of media. In summary, they provide a new environment for formal and secure kinds of relationship in the digital world.
With the distributed ledger, the cost of trust (usually provided by courts, lawyers, regulatory compliance officers, banks, governments, etc…) is not witnessed. The creation of these distributed ledgers stands for a revolution in the collection and dissemination of information. It can be used for both the static data (the case of a registry) and dynamic data (transactions). Distributed ledgers allows for one to move away from the usual control of database to focus majorly on its use, manipulation and utilization of the contents of the database. That is, typically being concerned about managing a system of records than maintaining a database.