Understanding On-Ledger Currency
An on-ledger currency is a type of currency that operates within a blockchain system.
It forms the foundation of all cryptocurrencies, which rely on a distributed ledger shared among participants.
Exploring an Alternative to Off-Ledger Fiat
On-ledger currencies offer a potential alternative to off-ledger currencies, such as fiat currencies.
They are typically characterized by openness, transparency (with transactions and balances visible to all), pseudonymity (users are not directly identifiable), the requirement for continuous and incentivized provision of computational power or adherence to consensus mechanisms, resistance to counterfeiting, and decentralization.
These currencies are stored in digital wallets.
Attributes and Considerations
On-ledger currencies can be classified based on various attributes, including supply, the public or private nature of the underlying database, the consensus mechanism employed, the size and activity of the community, usage and liquidity levels, emission rates of new currency units, wallet support, and other factors.
Additionally, owing to the open-source nature of blockchain code, an on-ledger currency can be forked to create a new currency with modified parameters.