A distributed ledger is a database that is consensually shared and synchronized across multiple sites, institutions, or geographies. It allows transactions to have public “witnesses,” thereby making cyberattacks more difficult. Unlike traditional databases, distributed ledgers have no central data store or administration functionality.
In a distributed ledger, every participant within the network processes every transaction, coming to a consensus about its validity and then recording it into their own ledgers. This decentralization ensures transparency and security. While blockchain is a type of distributed ledger, not all distributed ledgers necessarily employ a chain of blocks to provide a secure and valid distributed consensus. Distributed ledgers are the backbone of a variety of applications, including cryptocurrencies, supply chain management systems, and identity verification systems.