Blockchain Simplified
Blockchain Series: What are distributed ledgers?
A not-so-deep dive into what is a ledger and how it is distributed in a blockchain
Welcome to everyone who was waiting with their bated breaths for my next article (I’m aware there aren’t many). As promised, I will be discussing the functions of a distributed ledger on a decentralized network such as a Blockchain.
If you have no idea what I’m talking about and wondering why did you even click this article, then I advise you to read my earlier article which was a kind of pre-pre-introduction of Blockchain and Cryptography. However, you do you!
First of all, what is a ledger?
Imagine the letter ‘T’. Now increase its size so that you can write some letters and numbers on either side of ‘T’. That’s it. You have your ledger, now you just have to fill it. Fatefully, it’s also called a T-account!
Organizations fill it by recording transactions such as sales, purchases, debtors, creditors, assets etc. The left side of a ledger is Debit and the right side is Credit. I’m gonna spare you by not telling you which type of account goes where because that should be a whole another series on its own. But the key takeaway should be that ledgers prove to be a stepping stone in the world of an accountant’s job.
On a basic level, there should be two transactions in your ledger as well as in the ledger of the person (or business) you are dealing with. Let’s say you want to buy new Supreme sneakers and owing to some miraculous intervention, Samantha is willing to sell you hers. Now when the transaction is done, you will record sneakers on the debit side in the sneaker ledger and money on the credit side in the money ledger. Samantha on the other hand would record sneakers on the credit side and money on the debit side.
Okay, so what is a distributed ledger?
A distributed or digital ledger is a widespread network of basic ledgers all around the blockchain network. You as a participant of the network get to edit and pass on the ledger from the comfort of your home in say London to someone in the outskirts of a village in Mexico (if they have the resources to use such network, of course). The extensive access ensures no centralised authority is in control but a set system of protocols and rules that ensure the efficiency and effectiveness of the ledger around Blockchain. Even if any unverified transaction exists on the network, the ledgers can recognize it owing to their set protocols and self-correct.
Another best part? It has triple-entry accounting. So building upon your sneakers’ example, if the transaction was done on the network, apart from the entries recorded in the particular ledgers, another entry would also be recorded on the distributed network so that there is a verified record on the database.
It would be safe to end it here as to not cause an information overload. Would be glad to answer any queries in the comments. You can also connect with me on LinkedIn for a casual chat on the wonder that is Blockchain. I will see you next time when I tell you all about Blockchain in a not-so-interesting metaphor. Can’t wait!
