Distributed ledger

Summary

A distributed ledger (also called a shared ledger or distributed ledger technology or DLT) is a consensus of replicated, shared, and synchronized digital data geographically spread across multiple sites, countries, or institutions.[1] Unlike with a centralized database, there is no central administrator.[2]

In some cases an alternative term is used: RJT for Replicated Journal Technology, since the information is replicated in the nodes containing full copy of the information and the information in the blocks is included in timely order, more in the form of an accounting journal than as an accounting ledger.[3]

A peer-to-peer network is required as well as consensus algorithms to ensure replication across nodes is undertaken.[2] One form of distributed ledger design is the blockchain system, which can be either public or private.

CharacteristicsEdit

The distributed ledger database is spread across several nodes (devices) on a peer-to-peer network, where each replicates and saves an identical copy of the ledger and updates itself independently. The primary advantage is the lack of central authority. When a ledger update happens, each node constructs the new transaction, and then the nodes vote by consensus algorithm on which copy is correct. Once a consensus has been determined, all the other nodes update themselves with the new, correct copy of the ledger.[4][5] Security is accomplished through cryptographic keys and signatures.[6][7][8]

ApplicationsEdit

In 2016, some banks tested distributed ledgers for payments[9] to see if investing in distributed ledgers is supported by their usefulness.[2]0x4baf012726cb5ec7dda57bc2770798a38100c44d

TypesEdit

 
Comparison of different Distributed Ledger Technologies [10]

Distributed ledgers may be permissioned or permissionless. This determines if anyone or only approved people can run a node to validate transactions.[11] They also vary between the consensus algorithm – proof of work, proof of stake, voting systems and hashgraph. They may be mineable (one can claim ownership of new coins contributing with a node) or not (the creator of the cryptocurrency owns all at the beginning).[citation needed]

All blockchain is considered to be a form of DLT. There are also non-blockchain distributed ledger tables.[citation needed] Non-blockchain DLTs can be in the form of a distributed cryptocurrency or they may be the architecture on which private or public data is stored or shared.[citation needed]

Blockchain Tangle Hashgraph
Technology Blockchain Directed acyclic graph Directed acyclic graph
Copyright Open source Open source Open source
Consensus Proof of work: SHA256-Hash Proof of work: Check of Tangle tip Virtual voting
Openness Public ledger Public ledger Private ledger
Applications Bitcoin, Ethereum IOTA Hedera Hashgraph, Swirlds
Efficiency 3-4 500-800 > 250,000

One of the first systematic comparisons of DLTs, i.e. Blockchain vs. Tangle vs. Hashgraph was published in 2017.[12]

The main difference is that while blockchain requires global consensus across all nodes a DLT can achieve consensus without having to validate across the entire blockchain.[clarification needed]

See alsoEdit

ReferencesEdit

  1. ^ Distributed Ledger Technology: beyond block chain (PDF) (Report). Government Office for Science (UK). January 2016. Retrieved 29 August 2016.
  2. ^ a b c Scardovi, Claudio (2016). Restructuring and Innovation in Banking. Springer. p. 36. ISBN 978-331940204-8. Retrieved 21 November 2016.
  3. ^ S, Surbhi (26 Jul 2018). "Difference Between Journal and Ledger". Developer works. Retrieved 22 Dec 2020.
  4. ^ Maull, Roger; Godsiff, Phil; Mulligan, Catherine; Brown, Alan; Kewell, Beth (21 Sep 2017). "Distributed ledger technology: Applications and implications". FINRA. 26 (5): 481–89. doi:10.1002/jsc.2148.
  5. ^ Ray, Shaan (2018-02-20). "The Difference Between Blockchains & Distributed Ledger Technology". Towards Data Science. Retrieved 25 September 2018.
  6. ^ "Distributed Ledger Technology: beyond block chain" (Press release). Government Office for Science (UK). 19 January 2016. Retrieved 25 September 2018.
  7. ^ Brakeville, Sloane; Perepa, Bhargav (18 Mar 2018). "Blockchain basics: Introduction to distributed ledgers". Developer works. IBM. Retrieved 25 Sep 2018.
  8. ^ Rutland, Emily. "Blockchain Byte" (PDF). FINRA. R3 Research. p. 2. Retrieved 25 September 2018.
  9. ^ "Central banks look to the future of money with blockchain technology trial". Australian Financial Review. Fairfax Media Publications. 21 November 2016. Retrieved 7 December 2016.
  10. ^ Schueffel, Patrick (2017-12-15). "Alternative Distributed Ledger Technologies Blockchain vs. Tangle vs. Hashgraph - A High-Level Overview and Comparison". Rochester, NY. SSRN 3144241. {{cite journal}}: Cite journal requires |journal= (help)
  11. ^ "Blockchains & Distributed Ledger Technologies", Blockchain Hub
  12. ^ Schueffel, Patrick (2017-12-15). "Alternative Distributed Ledger Technologies Blockchain vs. Tangle vs. Hashgraph - A High-Level Overview and Comparison". Rochester, NY. SSRN 3144241. {{cite journal}}: Cite journal requires |journal= (help)