A central ledger is a record-keeping system that is centralized and controlled by a single entity or authority, usually a central organization or a trusted intermediary.

In a central ledger system, all transaction records and data are stored in a single, controlled database managed by a central authority, such as a bank, government, or a large corporation.

Central ledgers rely on trust in the central authority. Users trust that the central entity is accurately recording and safeguarding transaction information.

This often involves the presence of intermediaries like banks, payment processors, and clearinghouses to facilitate and verify transactions.

Centralized ledgers have a single point of failure. If the central authority’s database is compromised or experiences technical issues, it can disrupt the entire system and cause data loss or security breaches.

Examples: Traditional banking systems, stock exchanges, and government-issued digital currencies (Central Bank Digital Currencies or CBDCs) typically rely on central ledgers.

In summary, a central ledger is a centralized record-keeping system controlled by a single entity. It relies on trust in that central authority and can be vulnerable to manipulation or errors.