For one, the elder could tamper with the ledger, creating false entries and increasing the balance of himself or his friends. This could cause inflation in the market. Also, if the ledger was lost or damaged, it would be impossible to retrieve the transaction history.

To solve these issues, Satoshi Nakamoto proposed the concept of a decentralized ledger – the blockchain. The aim was to create a public ledger that everyone could maintain together in a trustless environment. Each transaction on the blockchain requires consensus among all participants, and every person has a copy of the same ledger. Therefore, the risk of fraud or data loss is minimal.

However, decentralized ledgers have their own set of challenges. One of the most critical problems is maintaining consistency among all the participants’ ledgers. Additionally, since everyone has a copy of the same ledger, all transactions are public, and maintaining anonymity is challenging. Another issue is verifying the authenticity of transactions and preventing fraudulent transactions. Lastly, maintaining a decentralized ledger requires a considerable amount of storage and energy.

To address these problems, blockchain technology has evolved into a seven-layer architecture, including the Application Layer, the Smart Contract Layer, the Consensus Layer, the Network Layer, the Transport Layer, the Data Link Layer, and the Physical Layer. Each layer has its own set of functions, such as data storage, consensus mechanism, and communication protocols.

In conclusion, the blockchain is a decentralized, tamper-proof database that solves the problems of centralized ledgers. The seven-layer architecture provides a comprehensive framework to address the challenges of maintaining a decentralized ledger.