Ledgers over the years - from ancient Egypt to blockchain, DAG and beyond
The use of ledgers to record exchanges — most commonly assets, such as money and property — between parties has been around for countless centuries. The main purpose of a ledger was to serve as a medium for recording financial transactions that could be easily accessible to anyone, anytime. From Mesopotamia to ancient Egypt, ledgers are not a novel idea and have evolved to computerized versions, distributed blockchains and DAG-based models.
Time travel
Transactional recording methods date back more than 7,000 years to Mesopotamia, where ancient documents uncovered lists of expenditures and goods received and traded. At the time, the ledgers of Mesopotamia were safekept in temples that were considered the banks of the time. Other early ledger accounts were also found in the ruins of ancient Babylon, Assyria and Sumeria where people relied on primitive recording means to track the growth of crops and herds.
During the Mauryan Empire period in India around 322 BCE, Chanakya penned a manuscript that read like a financial management book of sorts. His book “Arthashasthra” expounds on the aspects of maintaining books of accounts for a sovereign state.
Between the 4th millennium BC and the 3rd millennium BC in Iran, clay scripts with bookkeeping records were found. In the archaeological city of Godin Tepe, scripts contained tables with figures, while in Tepe Yahya, the scripts also contained graphical representations.
By about the 4th century BC, the ancient Egyptians and Babylonians had auditing systems for checking movement in and out of storehouses. This included oral audit reports as taxation began to create a need for payment recording.
With the advent of the 3rd century AD, Roman Egypt began to piece together the Heroninos Archive, which was a massive collection of papyrus documents that related to the management of a large, private estate. All information was summarized on a papyrus scroll as one yearly account for every estate subdivision.
Double entry bookkeeping emerged as medieval Europe began to move to a monetary economy in the 13th century. In an effort to oversee simultaneous transactions financed by bank loans, double-entry bookkeeping created debit and credit entries for each transaction. By the 15th century, the notable Italian mathematician Luca Pacioli became the first person to publish a work on double-entry bookkeeping that introduced the idea in Italy.
By the 19th century, the modern accounting methods we’ve grown accustomed to began to take hold with the professionalization of the accounting field.
From clay tablets and papyrus to the digital era
With the notable innovation of computers, the time came for a transfer from paper to digital bytes. Using blockchain technology, a distributed ledger can now be shared across a network of computers all around the world. Each network participant has a copy of the ledger, which contributes to the decentralized nature of the blockchain system. Any changes to the
ledger are reflected in all copies of the ledger in a matter of minutes, or on some platforms, seconds. The security of such a globally distributed ledger is maintained cryptographically when miners with the necessary computing power solve complex hash sequences. Distributed ledgers have now become the preferred method for providing a trustless payments network without the need for third party financial intermediaries.
Some digital currencies have begun delving into alternative technologies that will make up for the many downfalls present with current blockchain technologies. Many blockchain-based cryptocurrencies that use proof-of-work (PoW) consensus methods have issues in scalability, slow processing times and massive energy consumption bills due to rising computing and electricity costs to solve hash sequences. Directed acyclic graph (DAG) systems eliminate the need for proof-of-work (PoW) and proof-of-stake (PoS) systems. With a DAG-based consensus, an algorithm adds a new transaction only when two other transactions have validated it.
All nodes contain a series of transactions and are acyclic in nature, meaning any given transaction cannot be encountered a second time on another node. This eliminates the problem of double spending while foregoing the need for miners and stakes. What’s more, all transactions are immutable as all nodes flow in a specific direction and cannot be traversed on an opposite trajectory, meaning A → B is not B ← A. Because miners are eliminated in a DAG, processing times will be cut drastically, as well as fees.
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