Blockchain Anatomy 3: What is Distributed Ledger Technology? Accounting Ledger vs Distributed Ledger

In "Blockchain Anatomy 3: What is Distributed Ledger Technology? Accounting Ledger vs Distributed Ledger", it covers:
The similarities and differences between account ledger and distributed ledger.

0:05 What is distributed ledger technology?
0:56 Similarities between account ledger and distributed ledger.
1:17 Differences between account ledger and distributed ledger.

Blockchain is one of the applications of distributed ledger technology.

Let’s look at Distributed Ledger Technology (or DLT) word by word. First, ledger. A ledger is a record of activities or movement of assets. Each ledger is active in recording the activities only in a given period of time.

Next, distributed. It refers to the peer-to-peer system used, where each computer can share data with another one directly at any given point of time as long as they are connected.

Together with other technologies, like cryptography, consensus protocol, internet, cloud and many more, it gives a holistic operating structure to a DLT.

There are some similarities. They both involve multiple parties, record movement of assets, active in a given period of time, and follow a linear timeline.

There are differences too. First, accounting ledgers are usually controlled by people from the accounting department. They have power in auditing and editing the data. Accounting ledger starts with an opening balance and closes monthly with a closing balance that will be brought forward to the following month’s ledger as the opening balance. Though editing any transactions that happen in the previous month will affect the closing balance of that particular month and affect the opening and closing balances of subsequent months, it is still quite easy to make the changes as there usually only a few copies of accounting ledgers. To edit all the copies, it is quite easy.

On the other hand, distributed ledgers do not fall into the hands of a few as it is distributed over the network. Everyone has the access to audit the data and no one can edit any of the data recorded. Distributed ledgers are linked together with hashes from previous blocks. Changes in data in any block will affect the hashes of the subsequent blocks. It is very difficult to make changes to the majority of the ledgers distributed in a network with hundreds or even thousands of computers. In addition, each distributed ledger usually closes every few minutes or even in seconds, making it even more difficult for any hacker trying to game the system.

In summary, account ledger and distributed ledger bear high similarity in concept yet are very different in execution. The distributed ledger technology makes data more visible, immutable and puts the control back to the users’ hand.