Distributed Ledger

In cryptocurrency, a distributed ledger is a decentralised system that utilises blockchain technology to record and maintain a secure and transparent record of transactions in a network across multiple participants or nodes. Blockchain is an example of a distributed ledger, which forms the underlying mechanism for many cryptocurrencies like Bitcoin and Ethereum.

Unlike traditional centralised systems, which rely on a single authority (like a bank or government) to maintain and control the ledger, distributed ledgers operate on a decentralised network of computers (nodes), where each node has a copy of the entire ledger, ensuring no single point of failure. Distributed ledgers rely on a consensus mechanism to agree on the state of the ledger, and these mechanisms ensure that all nodes in the network reach a common agreement on the validity of transactions.

Key Takeaway

A distributed ledger in cryptocurrency is a secure, decentralised system for recording and maintaining transactions, providing an immutable history through various consensus mechanisms.

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