A currency that is both minted on the blockchain ledger and also used on the blockchain ledger, such as Bitcoin.
An on-ledger currency refers to a currency residing on a blockchain. This is the basis of all cryptocurrencies, which must utilize a distributed ledger (a single copy of the same database) shared among all participants.
On-ledger currencies have the potential to become a better alternative to the off-ledger currencies or fiat. They are usually open, transparent (display transactions and balances for everyone to see), pseudo-anonymous (no direct recognition of the user), require continuous and incentivized provision of computational power (or other consensus mechanism requirements) to maintain form/function, impossible to counterfeit and decentralized. Furthermore, they are stored in digital wallets.
Bitcoin is the first and prime example of an on-ledger currency, though there currently exists many such currencies. An on-ledger currency is significant in the sense that it’s not possible for any single party or group of people with considerable influence to change its parameters. This means that an on-ledger currency must typically be devoid of centralized control.
They are classified on the basis of their supply, public or private nature of database, consensus mechanism used, community, extent of usage, liquidity, emission rate, wallet support and other attributes. An on-ledger currency can also be forked, due to the open-source nature of a blockchain code, and be used to start a new on-ledger currency with modified parameters.