Off-Ledger Currency Definition
Off-ledger currency refers to the type of currency that is not managed, tracked, or accounted for on a blockchain ledger. Unlike on-ledger currencies, these currencies exist outside the blockchain system and can include physical currencies such as USD, GBP, EUR and digital currencies which are not tied to a specific blockchain.
Off-Ledger Currency Key Points
- Off-ledger currency is not managed or tracked on the blockchain.
- It includes both physical currencies like USD, GBP, EUR, and digital currencies not tied to a specific blockchain.
- It operates outside the confines of a blockchain system.
- The transactions of off-ledger currency are not subject to the transparency and immutability of the blockchain system.
What is Off-Ledger Currency?
As the name implies, off-ledger currency operates independently of any blockchain system or ledger. This means these types of currencies, whether physical or digital, aren’t subject to the usual constraints, benefits or structure of a typical blockchain. They exist independently of this system.
Why is Off-Ledger Currency used?
Off-ledger currency is utilized for its freedom from the blockchain system. Certain transactions may benefit from the absence of the transparency and permanent record that a blockchain ledger offers, providing more privacy. Additionally, physical currencies are naturally off-ledger as they predate the invention of blockchain technology.
Where is Off-Ledger Currency used?
Off-ledger currency, especially physical currency, is used globally in typical in-person transactions. Meanwhile, digital off-ledger currencies, like certain types of e-money, can be used online or in digital transactions where blockchain isn’t involved.
When is it appropriate to use Off-Ledger Currency?
It makes sense to use off-ledger currency when not needing or wanting the transaction recorded on a blockchain. Transactions requiring more privacy, or those made with individuals or entities not operating within the blockchain ecosystem, would also appropriately use off-ledger currency.
How does Off-Ledger Currency work?
Off-ledger currency operates outside of the blockchain, meaning it is neither monitored nor policed by this system. Transactions aren’t recorded on the blockchain and don’t need to comply with its rules or protocols. Essentially, off-ledger currency operates independently of any specific blockchain’s reach or influence.
