Accounting is built on the basis of ledgers. They were widely used and built on wooden, clay, and stone tablets, but computers were developed in the 1980s and 1990s, and paper records were digitized, often by manually entering data.
What is the purpose of ledgers?
These early digital ledgers imitated cataloguing and accounting from the days when paper was the standard, and it can be said that digitization was more convenient for record organization rather than document production. Our society's foundation remains paper-based institutions: we constantly use bills, seals, signatures, certificates, and the double-entry bookkeeping system. Nonetheless, advances in computing power and cryptography, as well as the development of new algorithms, allowed us to build a distributed ledger system.
Distributed Ledger
In a nutshell, a distributed ledger is a database that each user (or node) in a wide network stores and updates independently. Its distribution is unusual in that records are not distributed from a central authority to various nodes, but are built and stored separately in each node. It means that each node in a network processes each transaction, comes to its own conclusions, and then votes on those conclusions to ensure that the majority agrees with them. The distributed ledger system is modified after the consensus is reached, and each node holds an identical copy of the ledger. A storage framework with this structure can be more versatile and turn into something more than just a database. Distributed ledgers are extremely flexible, with properties and capacities that greatly exceed those of traditional accounting books. They allow us to formalize and secure new types of digital relationships in a nutshell. Because of the assets and layout of distributed ledgers, the cost of confidence, which is usually provided by attorneys, banks, notaries, and other third parties, can be avoided in these partnerships. When it comes to the way knowledge is stored and exchanged, the invention of a distributed ledger system is a revolution. It refers to both static and dynamic data (a registry) (transactions). Users of distributed ledgers can do more than just store databases; they can manage a system of record instead of just running a database.