This article is a wrapper on thoughts shared on the topic by Balaji S
What is a ledger of record?
The ledger of record is the set of all cryptographically signed feeds of on-chain data. It subsumes social media feeds, data APIs, event streams, newsletters, RSS. It will take years to build, but will ultimately become the decentralised layer of facts that underpins all narrative.
Think of the ledger of record as a decentralised wire service. Every person and organisation slowly moves from posting to centralised social media platforms to posting to decentralised protocols. The latter have monetisation, permissions, distribution, and programmability built in.
For example, The Weather Channel posts cryptographically signed feeds of weather data. Redfin posts real estate transactions. Foursquare posts location data. And they can make them free to all, or put them behind a crypto paywall.
Right now each crypto oracle in the ledger of record can credibly establish at least three kinds of metadata:
Who - Digital signature
What - Hash
When - Timestamp
A simple example is a Bitcoin transaction: we know who sent what when, with high probability.
That's how we establish unambiguous truth in an adversarial environment.
To understand the ledger of record, you need to understand a few core concepts. Let’s go through them.
Digital signatures
Just as written signatures tie a person to a particular document, digital signatures cryptographically link an identity to a particular message.
Digital signatures use a system called public key cryptography in which users own both a public key and a private key, forming a pair. The public key can be thought of as the identity of the owner and the private key can be thought of as secret information that allows the owner to prove their ownership of the public key.
In the example below, Alice can use her private key in the signing algorithm to create a signature linked to her message and public key. No party can derive Alice’s private key, or forge a valid signature for Alice, with just her signature and public key. However, anyone that knows Alice’s public key can easily verify that the message is signed by Alice’s private key.
Hash functions
Hashing is an algorithm that calculates a fixed-size bit string value from a file, where a file contains blocks of data. Hashing transforms this data into a far shorter fixed-length value or key which represents the original string. The hash value can be considered the distilled summary of everything within that file.
For example, if we apply a has function to the Input (“Fox”) below it generates a unique Digest represented on the right hand side.
Merkle trees
Merkle tree is defined as a way data is similar to a visual of a tree. Merkle trees are used for efficiently summarising, verifying, and securing large amounts of data. The process of making a merkle tree involves hashing.
A Merkle tree works like this:
Two units of information are individually hashed. These are known as Merkle leaves.
Those two hashes are then hashed together. These are known as Merkle branches.
Multiple branches are hashed together finally getting one single hash. This is known as a Merkle root.
A Merkle tree is useful because it allows computers to verify information at the bottom of the tree, the leaves, without having to store the entire set of information.
Blockchain timestamps
The timestamp is data stored in each block as a unique serial whose main function is to determine the exact moment in which a block has been mined and validated by the blockchain network.
Timestamps help the network determine how long it takes to extract blocks for a certain period, and from there adjust the mining difficulty parameter. Another functionality of the timestamp is to create a mechanism to avoid double spending.
Nakamoto consensus
Consensus algorithms are paramount to verifying the authenticity of distributed blockchain platforms and are the process of building agreement among a network of mutually distrusting participants.
Nakamoto Consensus refers to the set of rules, in conjunction with the Proof of Work consensus model in the network, which govern the consensus mechanism and ensure its trustless nature. In doing so, Bitcoin became the first Byzantine Fault Tolerant (BFT) open and distributed Peer to Peer (P2P) network that utilises a distributed network of anonymous nodes that are free to join and leave the network at will.
Blockchain oracles
Blockchain oracles are third-party services that provide smart contracts with external information. They serve as bridges between blockchains and the outside world.
Blockchains and smart contracts cannot access off-chain data (data that is outside of the network). However, for many contractual agreements, it is vital to have relevant information from the outside world to execute the agreement.
This is where blockchain oracles come into play. They provide a link between off-chain and on-chain data. Oracles are vital within the blockchain ecosystem because they broaden the scope in which smart contracts can operate. Without blockchain oracles, smart contracts would have very limited use as they would only have access to data from within their networks.
It’s important to note that a blockchain oracle is not the data source itself, but rather the layer that queries, verifies, and authenticates external data sources and then relays that information.
Every new proof-of-X (like proof-of-location) expands the scope of what the ledger of record can prove.
The ledger of record is subsidised by prediction markets. They subsidise the creation of a verified past.
Block explorers are a high-traffic example of a subset of the ledger of record, namely the set of all Bitcoin and Ethereum events. But if you look at what’s going on with crypto oracles and prediction markets (Chainlink, Augur, Kleros, etc), you get a sense of what is coming.
Talking about the ledger of record in 2021 is a bit like talking about rich web apps in 2000. We need to dramatically scale on-chain capacity to build it. But fortunately some of the smartest people in the world are working on that.
What could the future look like?
“The Akashic Chronicle is a compendium of all human events, thoughts, words, emotions, and intent ever to have occurred in the past, present, or future.
They are believed by theosophists to be encoded in a non-physical plane of existence known as the mental plane.
It is believed all thoughts, words, intent etc. generates its own unique "frequency or vibration" which is stored in the Akashic Records.”
Immutable money, infinite frontier, eternal life ~ Balaji S