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General Considerations

The reader is introduced to the main distributed ledger storage models.
City skyline view with connections.

In distributed ledger technologies (DLTs), there exists two fundamental ways to track assets.

Asset Tracking Models

  1. The Unspent Transaction Output (UTXO) Model
  2. The Accounts Model

DLTs using the UTXO model include Bitcoin, Corda and Cardano. Whereas DLTs using the Accounts model include Ethereum, Hyperledger Fabric and Stellar. There are also DLTs which allow a selectable asset tracking model per DLT network implementation, such as Avalanche.

Asset Tracking Model Impact

Which asset tracking model is chosen affects all aspects of the distributed ledger state machine. To recap, these are:

  • State Model: How does the state machine model the current and future state?
  • State Transition Function: How are valid transactions formed and how are they processed by the state machine?
  • User Defined Code: How can user defined code (commonly referred to as smart contracts) be added to the ledger and processed?

Over the following two sections we will dive deeper into the two different asset tracking models.

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