Table of Contents
The blockchain ledger is an advanced technology that has revolutionized the way we record transactions and data. This digital, decentralized ledger is distributed across multiple computers globally, ensuring transparency and accuracy of information. The ledger is composed of a chain of blocks, each containing a list of transactions. These blocks are replicated across multiple computers in the blockchain network, making it impenetrable for anyone to tamper with or hack the ledger.
When a user makes a purchase using cryptocurrency, a transaction takes place. This transaction must be confirmed by a majority vote of all users or nodes. Once the payment is verified, the transaction and the wallet address used are permanently recorded in the blockchain ledger. This new record is replicated on all nodes in the network, allowing all users running nodes to receive updates to the ledger. This strategy ensures that the blockchain ledger is always up-to-date and transparent.
Because the blockchain ledger is replicated across all nodes worldwide, tampering or hacking the system is difficult, if not impossible. As a result, the blockchain is an example of a distributed ledger that uses cryptography to ensure the integrity and security of transactions and data.
Types of Blockchain Ledgers
This decentralization fosters transparency, security, and immutability of records. Below are the types of Blockchain Ledgers we have:
Public Blockchain Ledgers
Public blockchain ledgers are accessible to all participants without a single entity controlling the network due to their permissionless nature. Anyone can join the blockchain without prior request and has the power to access, read, and write transactions on the ledger. Each transaction must be verified by all nodes, which can be time-consuming and require high processing capacity due to the complete decentralization of the system. However, this decentralized verification process also makes public ledgers highly secure, as once transactions are verified and recorded in the blocks, they cannot be changed or modified. Examples of popular public blockchains include Ethereum and Bitcoin.
Private Blockchain Ledgers
Unlike public blockchains, private blockchains or permissioned ledgers are only accessible by authorized participants. These systems restrict public participation through control systems, meaning that third parties or the general public cannot access transaction records without permission. To become a member or access transaction records, users need to obtain permission, which can be issued through licenses or certifications.Ripple and Hyperledger are popular examples of projects that use private ledgers in some sections of their blockchains.
Benefits of Blockchain Ledger
In contrast to traditional centralized databases that store data in a single location, blockchain ledgers are decentralized, with nodes hosting the blockchain data distributed across multiple locations. This data distribution across many nodes means an attack on one node cannot compromise the entire system. Decentralization is a significant advantage of blockchain over centralized databases, as an attack on a centralized database could result in the loss of all data stored in that single location.
Immutability refers to the quality of being constant and unchanging. In a centralized database, data can be easily modified or changed by the administrator(s). However, with blockchain ledgers, modifying already stored data is nearly impossible, as all copies of the data on all computers (nodes) across the globe must be modified. Whenever data is stored in a blockchain ledger, all nodes are updated in real-time, and these pieces of data are stored in such a way that they cannot be backdated, deleted, or erased. If changes to past transactions or data are required, a new record referencing the previous record must be created, and all nodes must vote on its validity before it can be accepted.
For instance, if the new action or data is to reverse a previous transaction, a new block of data will be created that references the previous record instead of reversing it outright. The new record will initiate a new transaction, and all nodes must vote on its validity before it can be added to the ledger. If other nodes disagree on the transaction’s validity, it will be rejected, and the record will not be added to the ledger.
Data are stored publicly since every node in the network has a copy of the blockchain; hence, transactions are visible to all participants. Blockchain technology makes this possible against traditional ledgers, where a central authority usually processes, approves, and records transactions. Data stored in a central database cannot be accessed by users, making its integrity questionable. While in the case of a blockchain ledger, all nodes must jointly verify a transaction’s authenticity before approving it, then store and replicate it continuously on new nodes that join the network.
Traceability in a blockchain refers to the ability to track the origin of data and verify its movement among nodes. In a blockchain ledger, all data is digitally signed, which identifies the digital identity of the owner or originator of the data. Each piece of data is assigned a unique value known as a hash value, making it possible to identify and differentiate it from other files, regardless of how similar they may be.
Information stored on the blockchain is hard to tamper with, nor can it be reversed. These data sets are secured using cryptography, making data permanent once recorded. Each transaction is stored in blocks, and every new block contains information about the previous blocks creating a chain of blocks. This pattern of storing information makes the system secure and impenetrable by an attacker, and it enhances traceability and transparency.
The best part about blockchain ledgers is that it takes power away from central authorities, making data more trustworthy, and they are highly secure because of their decentralized nature. As a result, many organizations, including governmental agencies, are now embracing blockchain ledger for record keeping.
Blockchain is the future, and it is impressive to see Identity.com contributing to this desired future through the Solana ecosystem and other Web3 projects. Also, as a member of the World Wide Web Consortium (W3C), the standards body for the World Wide Web.
Identity.com, as a future-oriented company, is an open-source ecosystem providing access to on-chain and secure identity verification for businesses, giving their customers a hassle-free experience. Our solutions improve the user experience and reduce onboarding friction through reusable and interoperable Gateway Passes. Please refer to our docs about how to help you with identity verification and general KYC processes.