This is part 3 of a series of short cryptocurrency “explain it like I’m five” posts. If you’re just joining us, start here: Crypto ELI5 Part 1: What is a blockchain?
This series of blog posts is meant for the absolute beginner in cryptocurrency. They are also meant to be concise and easy to understand. If you’re interested in learning about crypto, some of the history of crypto, and how to get started with using crypto, follow along! We’ll be adding a new post daily and each post will build on the one previous to it.
What is a distributed ledger?
A distributed ledger is a database that contains a history of all previous transactions and is shared and synced across many sites and accessible by many people.
The idea is that all transactions have many public “witnesses”. Participants at each node, can access the data on the ledger and can own an identical copy of it. Any changes to the ledger are copied to all participants so a central authority is not needed to authorize or validate transactions. Also, unlike a centralized ledger, a distributed ledger doesn’t have a single point of failure making it more secure and less prone to fraud and cyber attacks.
Check out the next installment in this series: Crypto ELI5 Part 4: What is decentralization?
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