Business Ledgers are used as a record keeping system to keep track of a companys financial information. Every single financial transaction that takes place will find itself into the ledger. The financial information is used to make the companys financial staements.



The Role of Business Ledgers 

There are several serious problems with current business ledgers. The business ledgers used as of now are particularly susceptible to corruption and or tampering. A lack of transparency deepens this issue. Current business ledgers are also inefficient which leads them to be quite costly. 

Problems with current Business Ledgers 

Blocks are files that store data on the blockchain by recording the updated data of transactions and storing that data on a digital ledger. Blocks hold encrypted data, and in order to identity a particular block the information from previous blocks as well as data from transactions are used. 

Blocks

Majaski, C. (2021, October 13). Distributed ledgers. Investopedia. Retrieved October 14, 2021, from https://www.investopedia.com/terms/d/distributed-ledgers.asp#:~:text=A%20distributed%20ledger%20is%20a,geographies%2C%20accessible%20by%20multiple%20people.&amp;text=Underlying%20distributed%20ledgers%20is%20the,that%20is%20used%20by%20bitcoin. 

Distributed Ledgers Reference 

Distributed Ledgers (also known as DLTs) are databases that are shared and collaborated across websites, firms, institutions and so on. Distributed Ledgers utilize the technology that Bitcoin uses, which is blockchain. Distributed Ledgers exist in several locations and can be accessed by various individuals. 

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* User-facing application
* Smart contract
* Ledger

Three interdependent components of blockchain applications

- Blocks and blockchain networks
- Distributed ledgers
- Participants
- Assets, transactions, and channels
- Consensus
- Smart contracts and chaincode
- Peer-to-peer replication
- Digital signatures
- Cryptographic hashes
- Wallet

Blockchain Key Terms

The program that users interact with to access the blockchain network

User-facing application

Distributed Ledgers

Smart contracts are self-executing programs that are coded with the terms of agreement between a buyer and a seller. They run when predetermined conditions are fulfilled. Smart contracts automate transactions to meet two main goals: reducing time loss and participant involvement. 


Smart contracts

There are two types of blockchain networks: 
- Permissionless networks are open networks that are available to anyone
- Permissioned networks are closed, private networks 

Blockchain networks

Every participant on blockchain acts as a publisher and subscriber. Each node
can receive or send transactions to other nodes, and the data is synchronized across the network as it is transferred.

Peer-to-peer replication

Written in Go, the chaincode defines the terms of the smart contract. When a transaction occurs, chaincode functions read and write the appropriate values into the ledger.


Chaincode

Consensus is what ensures that the shared blockchain ledgers are exact copies of each other. Consensus is defined as 50% + 1 of the mining community which is comprised of enough members that it is extremely difficult to create fraudulent transactions.

Consensus

Cryptographic Hashes are computational algorithms that ensure any alteration to a transaction input, which result in a different hash value being computed. This process guarantees that changes to the ledger must once again be reviewed by all miners and go through the consensus process.

Cryptographic Hashes

Digital signatures are unique keys to each blockchain user that ensures transactions originated from the correct senders. Digital signatures function to  mitigate the risk of fraud by serving as an additional layer of security.

Digital Signatures

Software that stores one's private key, public key, and blockchain address. It is used to communicate with the blockchain network. One can use the wallet to send and receive tokens.

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