Perhaps it’s your question as well that what is distributed ledger? Distributed ledgers are the basis of accounting. The history of ledgers is as long as the history of money. In fact, a ledger is a place to store financial data. In early days, people use traditional ways to record the data. They usually write it on a piece of wood or stone. After a while the paper invented, and they started to use paper in order to store financial records. Over the time the technology improved and new methods used to store data. Finally, the ledgers introduced to the world for this purpose and revolutionized finance. With this introduction, Ledgers do not use only in cryptocurrency world and have many usages.
Distributed ledger definition
A distributed ledger is basically a database, which share and synchronize data across multiple people, sites, and institutions. A distributed ledger makes transactions to be publicly transparent. Each node, who participated in the network, can have access to the recordings shared across the network. In addition, a node can have a copy of it. In case, any changes applied to the ledger, it will reflect and copy to all participants just in a few minutes or even seconds.
Ledger is a dynamic state of an existing information system, which is much more efficient in order to record data compare to the traditional methods. Ledger revolutionized the way to store and exchange data. Indeed, it uses statistic as well as dynamic data and helps the users to easily manage their data.
Advantages of Distributed Ledgers
As you know, centralized ledgers are vulnerable to cyber-attacks. On the other hand, distributed ledgers are immune against these kinds of attacks. The reason is that, each node in the network has a copy of the ledger. As a result, it requires to get access to all the copies and change the data in order to attack and hack the network successfully. In addition, the data on a distributed ledger, is immune against manipulation.
Furthermore, distributed ledgers increase the efficiency and make the transactions faster to get completed. They also work 24/7, which will reduce the costs for the entities.
The distributed ledgers provide an easy flow of information. So, they make an audit trail more easily to be followed by accountants when they want to review financial statements. Additionally, it helps to reduce the possibility of fraud occurring on the financial books of a company.