In crypto, a ledger is the record of every transaction on a network. No single company holds it. Many independent computers, called nodes, keep copies of it, check each new entry against the same rules and agree on one shared history. A blockchain is the best-known way to build such a ledger. It groups transactions into blocks and links each block to the one before it with a cryptographic hash, so changing an old entry is easy to spot and costly to carry out. NIST describes blockchains as "tamper evident and tamper resistant digital ledgers implemented in a distributed fashion (i.e., without a central repository) and usually without a central authority" (NIST IR 8202, October 2018).
From an accounting book to a shared database
In accounting, a ledger is the book where transactions are recorded. Crypto keeps the idea and changes who holds the book. A bank's ledger sits in the bank's own database, and customers trust the bank to keep it accurate. A distributed ledger is copied across many participants, and each one can check it.
The UK Government Chief Scientific Adviser's report Distributed Ledger Technology: beyond block chain (19 January 2016) defines a distributed ledger as "a database that can securely record financial, physical or electronic assets for sharing across a network" through transparent updates. The same report calls block chain the technology's "first incarnation," dating it to 2008 and to Bitcoin.
How a blockchain ledger works
Blocks chained by hashes
The Bitcoin white paper (31 October 2008) describes a network that "timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work." It adds: "Each timestamp includes the previous timestamp in its hash, forming a chain."
Bitcoin's developer documentation puts it in concrete terms: "Each block also stores the hash of the previous block's header, chaining the blocks together." Ethereum's documentation describes blocks the same way, as "batches of transactions with a hash of the previous block in the chain." If one byte of an old block changes, its hash changes, and every later link in the chain breaks.
How nodes agree on the ledger
Nodes do not vote on transactions. Each node checks every block against the protocol's rules itself:
- Bitcoin (proof of work). The white paper says "Nodes accept the block only if all transactions in it are valid and not already spent," and "Nodes always consider the longest chain to be the correct one." The developer guide gives the more precise version: peers follow "the most difficult chain to recreate." Difficulty is retargeted every 2,016 blocks towards a two-week window, which works out to roughly one block every ten minutes.
- Ethereum (proof of stake). Ethereum moved from proof of work to proof of stake at the Merge on 15 September 2022, and ethereum.org gives the cut in energy use as about 99.95%. Time is divided into 12-second slots. Validators re-execute proposed blocks and add only valid ones. When blocks compete for the same slot, the network follows the one backed by the most staked ETH.
Why the history is hard to rewrite
"To modify a past block, an attacker would have to redo the proof-of-work of the block and all blocks after it," the Bitcoin white paper says. The developer guide adds that "the cost to modify a particular block increases with every new block added to the block chain." Security comes from that growing cost and from the fact that anyone can check it. It does not rest on any company's promise.
Where new coins enter the ledger
On Bitcoin, the white paper says that by convention "the first transaction in a block is a special transaction that starts a new coin owned by the creator of the block." This entry is called the generation transaction. It is how new bitcoin enters the ledger and how miners are paid.
Three ways to build a shared ledger
Compare how Bitcoin, Ethereum and IOTA's original Tangle store entries and decide which history counts.
| Ledger | How entries are stored | How a new entry is accepted | Which history counts | Timing | Source |
|---|---|---|---|---|---|
| Bitcoin (proof of work) | Blocks, each storing the hash of the previous block's header | Each node checks that all transactions in a block are valid and not already spent | The most difficult chain to recreate | Difficulty retargets every 2,016 blocks, roughly one block every ten minutes | |
| Ethereum (proof of stake since 15 September 2022) | Batches of transactions with a hash of the previous block | Validators re-execute proposed blocks and add only valid ones | When blocks compete for a slot, the one backed by the most staked ETH | 12-second slots | |
| IOTA's original Tangle (historical) | A directed acyclic graph (DAG), not a chain of blocks | Not covered in this article | Not covered in this article | Not covered in this article |
This table only summarises the designs described in the article: it does not rank them, covers no other networks, and protocol details change with upgrades.
Distributed ledger vs blockchain
Every blockchain is a distributed ledger. Not every distributed ledger is a blockchain.
| Distributed ledger (general) | Blockchain | |
|---|---|---|
| What it is | A database copied and synchronised across many participants | One way to build a distributed ledger |
| Data structure | Any structure: blocks, a graph, per-transaction records | Blocks, each holding the hash of the previous block |
| Consensus | Depends on the design | Typically proof of work or proof of stake on public chains |
| Example | IOTA's original Tangle (a directed acyclic graph) | Bitcoin, Ethereum |
Graph-based ledgers. IOTA's original design, the Tangle, stored transactions in a directed acyclic graph (DAG) rather than a chain of blocks. Academic work such as Ferraro, King and Shorten (arXiv 1901.07302, first submitted December 2018) studies how new transactions attach to that graph. IOTA's documentation now describes a move away from its earlier UTXO model to an object-based ledger, so the Tangle is best read as a historical example of a non-block design.
The original version of this article said distributed ledgers in general "provide better scaling options" than blockchains. We could not verify that general claim, so we removed it. Each design has its own trade-offs.
What this means in practice
- You can check the ledger yourself. A full node, in bitcoin.org's words, is "a program that fully validates transactions and blocks," and "a new node has to download the entire blockchain." The site lists the full chain at roughly 740 GB. It also gives a 7 GB minimum, which applies to pruned mode, where old block data is discarded after it has been checked.
- Public does not mean anonymous. On public blockchains, any node can read every recorded transaction. Addresses are visible even when the people behind them are not named.
- Tamper-resistant does not mean correct. The ledger shows that an entry was recorded and has not been changed since. It cannot show that the information was true when it was entered.
Limitations: this explainer covers how ledgers work in general, and design details differ between networks and change with protocol upgrades.
