A ledger is a record of transactions and balances. Very simplified, it’s a book of records that the bank keeps remembering how much everybody has in their account. Similarly, a treasurer of a club might keep a ledger for certain club purposes. One of the distinct and useful features of blockchain is that its ledger is “immutable” and thus known as an immutable ledger.
Immutable means nobody can go back and change or remove a certain transaction. Even the organization or entity that runs this ledger. If it’s running on a public blockchain it’s virtually impossible. If an organization runs its own private blockchain technically it could go and modify the data directly, however, this will break the whole blockchain, and the cryptographic Merkle tree will compute no more, meaning anybody with basic technical/cryptographic knowledge would be able to understand if the ledger has been tampered with.
Thus, immutable ledger results in the concept of Verifiable Trust appearing. This means parties who are using the system can trust each other more, with all other parameters being equal. You don’t have to blindly trust some centralized data gatekeeper such as a bank or a club treasurer in our example. Instead, you can have multiple blockchain nodes to maintain the distributed ledger, and depending on the blockchain, you may be able to run such a copy of a ledger yourself on your personal computer. Even if you don’t do so, and the ledger is still maintained by other parties, you can always go and check the ledger cryptographically, keeping you assured it no changes have been backdated.
This is an important concept that has made possible the appearance of novel economical models and communities, where all parties don’t necessarily need to know each other or trust each other to be able to transact value between each other. Such communities and ecosystems are decentralized and self-organized, without any single centralized body controlling the system or its data.
The first and most famous system of such kind is the Bitcoin network which has introduced the breakthrough concepts of a blockchain and decentralized cryptocurrency to the world.
There are downsides to the immutable ledger technology of course. Unlike traditional data storage, blockchain does not allow the typical Remove, Update or Delete types of operations, only Create is allowed. There are higher costs associated with decentralized ledger transactions as opposed to conventional centralized databases. The performance and throughput capacity of modern blockchain networks cannot compete with centralized systems of conventional banks or credit card issuers due to additional technology constraints of the decentralized immutable ledger and Merkle tree-based data architectures.