Questions ยป What is a distributed ledger?

What is a distributed ledger?

In the context of cryptocurrencies, a distributed ledger is a database that records all transactions in a decentralized manner, meaning that there is no single entity controlling the ledger. Instead, it is maintained by a network of computers that validate and confirm each transaction.

The most popular type of distributed ledger used in cryptocurrencies is called a blockchain. In a blockchain, each transaction is grouped together in blocks, which are linked together in chronological order to form a chain. Each block contains a digital signature, called a hash, which is created by solving a complex mathematical problem. This makes it virtually impossible to alter any transaction without being detected, as changing one block would require changing all subsequent blocks in the chain.

The distributed nature of the ledger means that every participant in the network has a copy of the ledger and can verify the validity of each transaction. This eliminates the need for a centralized authority, such as a bank or government, to validate transactions, which is one of the main advantages of cryptocurrencies.