Basically speaking of distributed accounting is talking about blockchain; they are concepts that go hand in hand with one another because distributed accounting is about the possibility of executing any type of online transaction without the need of third parties or intermediaries, providing users with the possibility of making transactions much faster and safer than with other financial technologies.
DLT or Blockchain, why is it safer than traditional accounting?
This technology is not only safer due to the concept of transactions in blocks or chain transactions, it is also due to the group of elements that make it a way to manage finances almost invulnerable to attacks and counterfeits, not counting the possibilities and facilities that it offers its users. Next, we are going to know some of its main characteristics.
Mining: the base of cryptocurrencies
In the previous article titled What is bitcoin mining? We have already explained this process a bit by means of which we can obtain the new cryptocurrencies by deciphering complex mathematical operations whose unique result passes to an evaluation by consensus among all the members of the blockchain to be approved as valid and thus obtain a token from which a reward will be received. The miner who has managed to find the right result.
Digital wallets: a smart new way to save money
If we were previously accustomed to the use of bank accounts in order to “store” the money we receive, we can easily understand the concept of a digital wallet. It is something similar, only that the money that is stored is digital money, that is, they are cryptocurrencies and, unlike bank accounts, do not allow access to anyone but only those to whom their owner shares their key public (something similar to an account number).
The nodes: the fundamental element of distributed accounting
This is a fundamental element because it is about the computers that support the network; they are a group of computers that are in charge of keeping a record or copy of the great accounting book that contains the records of all the transactions that are made. Additionally, the nodes are responsible for ensuring that each of its members meets the rules established within the blockchain, otherwise, consensus is not reached and transactions would not be confirmed.
A great digital accounting book
This is precisely distributed accounting. If we are a little familiar with the concepts of accounting, we will be clear that there is a daily book where all transactions are recorded, with each of its details: amounts, concepts, debtors and creditors. However, this book can be altered at any time, in the distributed accounting can never be altered or delete any record, because it requires a consensus and the approval of the members of the blockchain so that a new block is added, this means, a new record.
What do you think about this topic? Did you know the fundamental elements of distributed accounting?
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