The first, and possibly the most significant difference the distributed ledger technologies have with other value-transferring enabling services is that they are not subject to on one, centralized and trusted intermediary (Nakamoto, 2008; Kotilainen, 2017). The first distributed ledger, the Blockchain running under Bitcoin, was first presented as a service technology enabling shared transactions, which would make the trust-creating third parties redundant (Nakamoto, 2008). The motivation behind why the distributed nature of the Blockchain was and still is changing is that it eliminates the possible disturbance of the central counterparty, which would influence all the transactions occurring. The single point of failures could be deliberate, for example, corruption or criminal actions, or accidental, such as global economic shocks. In spite of the intermediating third parties, for example, banks, are intended to be trusted and function under stressful events, they are vulnerable, particularly to things not related to them, and in this way not able to maintain trust in all conditions.
As the intermediaries always have numerous vulnerable features and risks that need to be covered by regulation and other intermediaries, such as supervisors, there is unquestionably room for some different conceivable approach to process the transactions. The solution offered by distributed ledger technologies is that there is an unlimited amount of copies of the transaction history, continuously distributed to all “nodes”, that are the different actors participating in the ledger, with the aim that everyone has access to the same information all the time (Fridlmaier et al., 2016). The reality of having as many copies of both historical and current transactions as there are nodes limits the possibility of history being changed or deleted close to zero, as there is always a consensus of the real version of the transactions available (Mattila, 2016). Additionally, it strengthens the community, be it small and local, or big and worldwide, against potential intentional or inadvertent disturbance, as the information is protected by every node (Fridlmaier et al., 2016).
Best services for writing your paper according to Trustpilot
In the distributed ledger model the acceptance of transactions is very different compared to the intermediary-model. While the central party can accept transactions as it likes, most of the network holding copies of a distributed ledger must achieve an agreement if the transaction can occur or not (Crosby et al., 2016). Nonetheless, this is not as difficult as it might appear, as all the nodes, which have identical duplicates of past, are almost simultaneously offered the newest proposals to be accepted (Nakamoto, 2008). Therefore, the decision of accepting the transaction or not is already made when the transactions are occurring, as the consensus is reached simultaneously: every party knows whether the value was owned by the party which eventually tries to spend it.
