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Last updated: August 19, 2019 2:37 AM


Ledgers, the basis of accounting, are as old as writing and money.

Its medium has been clay, wooden sticks (which were a fire hazard), stone, papyrus and paper. Once computers were standardized in the 1980s and 1990s, paper records were digitized, often through manual data entry.

These first digital ledgers imitated the cataloging and accounting of the paper-based world, and one could say that digitalization has been applied more to the logistics of paper documents than to their creation. Paper institutions remain the backbone of our society: money, stamps, written signatures, invoices, certificates and the use of double-entry accounting.

The computing power and advances in cryptography, together with the discovery and use of some new and interesting algorithms, have allowed the creation of distributed ledgers.

In its simplest form, a distributed ledger is a database maintained and updated independently by each participant (or node) in a large network. The distribution is unique: a central authority does not communicate the records to several nodes, but each node builds and maintains them independently. That is, each node in the network processes each transaction, reaches its own conclusions and then votes on those conclusions to ensure that the majority agrees with the conclusions.

Once this consensus exists, the distributed ledger has been updated and all nodes maintain their own identical copy of the ledger. This architecture allows a new skill as a registration system that goes beyond being a simple database.

Distributed ledgers are a dynamic form of media and have properties and capabilities that go far beyond paper-based static ledgers. For more information on this, read our guide “What can a Blockchain do?“. For now, the short version is that they allow us to formalize and secure new types of relationships in the digital world.

The essence of this new type of relationship is that the architecture and qualities of distributed ledgers avoid the cost of trust (so far provided by notaries, lawyers, banks, regulatory compliance officials, governments, etc.).

Our analogy Wikipedia in our guide “What is Blockchain technology?” It hints at the power of these new types of relationships.

The invention of distributed ledgers represents a revolution in the way information is collected and communicated. It applies to both static data (a record) and dynamic data (transactions). Distributed ledgers allow users to go beyond the simple custody of a database and divert energy to the way we use, manipulate and extract value from databases, less about maintaining a database. data, more about the administration of a registration system.

Images by Maria Kuznetsov

Article Source: http://www.coindesk.com