Cryptopedia
Distributed Ledger
In traditional finance, traders’ personal information, transaction information or other information is kept and managed by third-party institutes such as banks. Meanwhile, the traders can only have access to their own trading datas, and have no information of other’s trading record. This is called a centralized ledger.
Conversely, a distributed ledger is a point-to-point database that is consensually shared, synchronized and built by the users on the net, which records the data transfer and assets trading of the users. In this way, each user holds a ledger of the entire network, instead of being monopolized by the authorities or a certain person.
The blockchain is a distributed ledger, in which each person enjoys equal rights. The question remains how to guarantee everyone honestly records spending rather than tamper with information and how to ensure the consistency of the information of each ledger requires the consensus algorithm of blockchain technology. It regulates that nodes should bundle unconfirmed transactions in blocks and stimulate them to compete against each other for a block reward. Those who successfully gain the right to record will broadcast the information to the others. Once the transactions are validated. this new block will be added to the chain. Since there is block reward awarding the eligible node for each block they mine successfully, many nodes participate in the competition.
Distributed Ledger VS Traditional Ledger
The traditional ledger is prone to be tampered with by others or have mistakes due to manual labour. Hence, many enterprises have adopted multi-ledgers to guarantee the authenticity of the data. In contrast, blockchain can ensure the immutability of the ledger data through the work of hash function, timestamp and consensus mechanism. In the meantime, the data is highly accurate owing to its automatic calculation.
Management Cost
The traditional ledger requires specialized management and regular vouching of the finance department or the third-party institutes’ auditing, which demands substantial labor and resources. Unlike that of the traditional ledger, the distributed ledgers achieve point-to-point record through consensus mechanism: each node reaches an agreement before commencing to record so that the data of each ledger can stay consistent. Meanwhile, the miners verify the transactions under the consensus mechanism, ensuring that the ledgers conform to the facts.
Storage Security
The paper ledgers can’t survive natural disaster such as fire; the digital ledgers confront the error of the and the attack from the hackers. However, the distributed ledger, managed by each node instead of a central institute, can maintain security even a mistake incurred in a ledger, only if other ledger data remains the same. Based on that, a 51% attack (aggregating 51% computational power of the network can have an effective attack on the blockchain) is barely achievable.
Conclusion
Currently, distributed ledgers have the most successful use of blockchain. Compared to the traditional ledgers, there is evident merit of maintaining the security and accuracy of data.
Conversely, a distributed ledger is a point-to-point database that is consensually shared, synchronized and built by the users on the net, which records the data transfer and assets trading of the users. In this way, each user holds a ledger of the entire network, instead of being monopolized by the authorities or a certain person.
The blockchain is a distributed ledger, in which each person enjoys equal rights. The question remains how to guarantee everyone honestly records spending rather than tamper with information and how to ensure the consistency of the information of each ledger requires the consensus algorithm of blockchain technology. It regulates that nodes should bundle unconfirmed transactions in blocks and stimulate them to compete against each other for a block reward. Those who successfully gain the right to record will broadcast the information to the others. Once the transactions are validated. this new block will be added to the chain. Since there is block reward awarding the eligible node for each block they mine successfully, many nodes participate in the competition.
Distributed Ledger VS Traditional Ledger
The traditional ledger is prone to be tampered with by others or have mistakes due to manual labour. Hence, many enterprises have adopted multi-ledgers to guarantee the authenticity of the data. In contrast, blockchain can ensure the immutability of the ledger data through the work of hash function, timestamp and consensus mechanism. In the meantime, the data is highly accurate owing to its automatic calculation.
Management Cost
The traditional ledger requires specialized management and regular vouching of the finance department or the third-party institutes’ auditing, which demands substantial labor and resources. Unlike that of the traditional ledger, the distributed ledgers achieve point-to-point record through consensus mechanism: each node reaches an agreement before commencing to record so that the data of each ledger can stay consistent. Meanwhile, the miners verify the transactions under the consensus mechanism, ensuring that the ledgers conform to the facts.
Storage Security
The paper ledgers can’t survive natural disaster such as fire; the digital ledgers confront the error of the and the attack from the hackers. However, the distributed ledger, managed by each node instead of a central institute, can maintain security even a mistake incurred in a ledger, only if other ledger data remains the same. Based on that, a 51% attack (aggregating 51% computational power of the network can have an effective attack on the blockchain) is barely achievable.
Conclusion
Currently, distributed ledgers have the most successful use of blockchain. Compared to the traditional ledgers, there is evident merit of maintaining the security and accuracy of data.
