Ledger

November 21, 2023 - Around 2 mins mins to read

Understanding the Concept of a Ledger

A ledger, in the context of cryptocurrencies, serves as a system for keeping records.

Its primary function is to maintain a comprehensive log of the balances of different participants and all the transactions that take place.

It is worth noting that the identities of the participants are kept anonymous.

While public ledgers have been in use even before the advent of digital assets, they have gained significant prominence with the emergence of the crypto markets.

Both parties involved in a cryptocurrency transaction have the ability to verify the information recorded on the ledger.

One crucial type of distributed ledger technology is blockchain, which records a series of financial transactions or blocks that cannot be modified, ensuring its immutability.

Ledgers are typically decentralized, meaning they are not under the control of a single central authority.

Once a block reaches its maximum capacity, new blocks are added to the ledger, and a select group of network participants known as full nodes also maintain a copy of the ledger.

This grants them the ability to oversee the network, its users, and the authenticity of transactions.

However, there are several challenges associated with using a ledger.

Due to the nature of blockchain, every transaction must be recorded on the network, which can pose security concerns.

These concerns arise from the fear that public records and information about network participants can be tracked by hackers, governments, and security agencies.

Glossary