The ledger or ledger, is the record of each and every one of the operations and transactions that are carried out within a blockchain. With this, the ledger becomes one of the fundamental pieces of transparency, security and privacy of blockchain technology and cryptocurrencies.
Unot of the concepts that we usually see in the world of cryptocurrencies, is the ledger or ledger. This is a detailed accounting record of each operation of an entity or company. Thanks to this book, a company or entity can have total control of the accounting of its operations.
Well, in the world of cryptocurrencies a ledger allows you to do exactly the same. Thanks to this registry, each transaction or operation of the cryptocurrency is recorded. This allows each one of these operations to be reviewed or audited publicly. The ledger is the result of gathering and organizing the information of each block that is part of the blockchain of said cryptocurrency.
In cryptocurrencies like Bitcoin o Ethereum, in the ledger each operation carried out by its users is recorded. This is so since his genesis block until today and beyond. This allows anyone to publicly review the transactions and operations carried out in each cryptocurrency. Thanks to this, cryptocurrencies offer their high level of transparency and reliability.
Ledger and blockchain. Two different things but they go hand in hand
While the concepts of ledger and blockchain technology bear many similarities, they are both completely different. On the one hand, the ledger bases its operation on a consensus system similar to that of the blockchain, but its case and structure is completely different. The ledger is a database in which all the network information is stored. By being distributed on many computers, it is guaranteed that the information of said ledger is very difficult to modify and hack adding security to the model. This can be considered essential and a first step towards blockchain technology, but it does not mean that it will necessarily build a blockchain.
On the other hand, we have the blockchain. Blockchain in a nutshell is a highly secure form of distributed accounting thanks to the use of crypto. The blockchain works on the basis of creating a linked record with all the previous records forming a chain. In this way, an unalterable record of information is created for the entire network, in which each change is made thanks to the consensus of that network. At this point it is worth noting that A blockchain is just a type of distributed ledger that stores your information in data blocks.
Another stark difference between ledger and blockchain is governance and the ability to act on it. In blockchain, most of its organizations allow community governance, allowing its users to comment on the fate and development of the blockchain. However, in organizations that use centralized or distributed ledgers, this may not be possible in any way.
Characteristics of a cryptocurrency ledger
- It keeps the accounting of each and every one of the operations and transactions of a cryptocurrency.
- It is completely distributed. Every computer that has a complete copy of the cryptocurrency blockchain has a complete ledger.
- They operate based on consent and the trust of all the parts that make up the network.
- Each transaction stored in this record is a transaction verified by all the parties that make up this network.
- They allow a high level of fault tolerance in the network. The failure of a ledger does not mean that the network stops working.
- The distribution of cryptocurrency ledgers allows for easy duplication and growth of the network.
- It is highly secure. Adding a transaction is a task that needs the consensus of the entire network. Once the transaction is added it cannot be withdrawn or altered without altering the state of the entire network.
- Each record in the ledger is cryptographically protected to guarantee its inalterability.
- Avoid negative schemes in which a user can make malicious use of funds or even get hold of funds that are not his or have been used.
Centralized Ledger vs Distributed Ledger
The ledgers can be of two centralized or distributed types. The first of them we can see for example in banks. Banks use a ledger to know each operation they perform inside and outside the bank. However, the control of said ledger is in the hands of the same bank, that is, it is centralized.
However, banks are not the only ones that use this type of ledgers. Another example applicable to cryptocurrencies can be seen in Hyperledger. Hyperledger is a project that allows you to create blockchains for private use. These blockchain have a ledger that is not publicly accessible, nor is it distributed and control is exercised by those who have created the blockchain.
On the other hand, we have the distributed ledgers. These are the ones we usually see in cryptocurrencies and blockchain like Ethereum, Bitcoin, Litecoin, Dash, among other. These ledgers are publicly accessible, can be duplicated, and their security is guaranteed by the consensus of the network that manages them. No one has absolute control of a distributed ledger, as its operation is orchestrated by the entire network to which it belongs.
Thanks to these characteristics, distributed ledgers are perfect for use in cryptocurrencies or, on platforms such as decentralized exchanges such as Uniswap.
Importance of the Ledger in cryptocurrencies
The distributed ledger of cryptocurrencies has a fundamental role in their operation. First, its distributed character guarantees high levels of security. It is highly unlikely that a hacker can modify the ledger of a cryptocurrency, because for this he should have in his control 51% of the entire network. This type of attack is known 51% attack, a known weakness but with a high operating cost.
On the other hand, in the world of cryptocurrencies transparency and privacy are important. The cryptocurrency ledger is built in such a way that everything is immutably engraved on it. And at the same time, it is very difficult to relate that information with the users of these cryptocurrencies. This is thanks to the use of asymmetric cryptography and using fhashes. The use of both cryptographic techniques guarantees many levels of protection of our identity.
Additionally, a distributed ledger allows you to perform tasks that would otherwise be very difficult. For example, a distributed ledger can serve as a highly secure domain name system such as Namecoin. Another example of its functionality may be the establishment of sovereign identity decentralized. Another great functionality possible thanks to the distributed ledgers, is the creation of integrated platforms such as Ethereum, its smart contracts, Tokens y DApps.
In short, the capabilities and benefits of the ledger have demonstrated its important role in blockchain and cryptocurrency technology.
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