Payment and exchange transactions in shared ledgers

Abstract

This paper examines three alternative architectures for financial ledgers: (1) centralised databases, (2) bitcoin-style blockchains and (3) Ethereum-style blockchains. It outlines the transaction model for these three types of ledger, covering both one-way payments and two-way atomic exchanges (delivery versus payment). Of particular note is how these architectures assign responsibility for maintaining the integrity of the ledger, to ensure that transactions do not create or delete funds and only move assets with the proper authorisation of their owners. Although Ethereum-style blockchains have many similarities to centralised databases with stored procedures, bitcoin-style blockchains are fundamentally different both at the ledger and transaction level.