Block Chain - Distributed Ledger

1. Definition

A Distributed Ledger is a database that is shared, replicated, and synchronized across multiple computers (nodes) in a network.

• Unlike a centralized ledger (kept by one entity like a bank), everyone in the network has the same copy of the ledger.

• Updates (new transactions) are agreed upon through a consensus mechanism, ensuring all copies remain consistent.

2. How It Works

• Each transaction is broadcast to all nodes.

• Nodes verify the transaction using rules (e.g., digital signatures, consensus protocols).

• Once validated, the transaction is added to the ledger, and every node updates its copy.

• This creates a single version of truth across the network.

3. Key Features

• Decentralized – No central authority controls the ledger.

• Transparent – Everyone in the network can access the transaction history.

• Immutable – Once a transaction is recorded, it cannot be altered or deleted.

• Secure – Uses cryptography to protect data from tampering.

4. Benefits

• Removes the need for intermediaries (like banks).

• Reduces fraud since records can’t be secretly changed.

• Provides faster and more reliable settlement of transactions.

• Enhances trust through transparency.

5. Example

• In Bitcoin, the distributed ledger is the blockchain itself, storing every Bitcoin transaction since 2009.

• In supply chain management, companies use distributed ledgers to track goods across manufacturers, shippers, and retailers with a shared source of truth.

6. Types of Distributed Ledgers

• Blockchain – Transactions grouped in blocks and chained together (Bitcoin, Ethereum).

• Directed Acyclic Graph (DAG) – Transactions linked in a graph structure (IOTA, Hedera).

 In short:
A Distributed Ledger is the backbone of blockchain—it’s a tamper-proof, shared database across multiple computers that ensures transparency, trust, and security without a central authority.