In traditional finance almost all financial transactions had to go through a trusted central third party. That means that all transactions from person a to person b will go through the service of a bank or corporation before being passed on. During this process the centralized third party usually takes a massive fee.
For example Paypal. Money is transferred to different accounts within the PayPal infrastructure.
In this example Paypal is the trusted third party and it has a centralized database or ledger that they use to keep track of the transactions.
On the other side, in a decentralized ledger, there is no single trusted third party (bank or corporation). Instead, there is a large number of nodes or peers that come to a consensus on each transaction that takes place. This is the key technology of Nerva, Bitcoin and similiar crypto currencies.
When a Nerva transaction is made it goes through multiple computers on the Nerva network that are running specialized software, which checks that transaction for accuracy and completeness.
The nerva network also utilizes ring signature technology. Ring signatures protect a user’s privacy and ensure that transaction are untraceable.
This means, no single entity (bank or corporation) controls the transactions. The transactions are verified and approved in a peer-to-peer manner by different computers on the network running specialized software which anybody can download and run on his or her own computer!