The Distributed Ledger Technology (DLT)

Distributed Ledger Technology (DLT) refers to an infrastructure and protocols that allows simultaneous access, validation, and updating of records in a highly immutable fashion to multiple entities or locations available throughout a network.

Blockchain technology, also known as Distributed Ledger Technology (DLT) was introduced by Bitcoin and has now become a buzzword in the technology world due to its potential in a variety of industries and sectors, apart from the safe and secure Bitcoin wallet. The DLT is all about creating a “decentralized” network versus the standard “centralized” system, and it’s deemed to have far-reaching implications for sectors and organizations that have long relied on third parties for trust.

Explaining Distributed Ledger Technology (DLT)

A distributed ledger is a protocol that makes it possible for decentralized digital databases to function securely. Using a distributed network, there is no need to keep a check on manipulation by a central authority.

Through the use of cryptography, DLT allows all information to be stored in a secure and accurate manner. The same data can be accessed using cryptographic signatures and keys. The information stored becomes an immutable database controlled by network rules after it has been stored.

A distributed ledger is not a totally new concept, and many organizations maintain data in multiple locations. Typically, each location is connected to a central system, which continuously updates each one. The central database is therefore exposed to cyber-crime and prone to delays since a central body has to update each note that is remotely located.

Due to the very nature of a decentralized ledger, they are immune to cybercrime, as to be successful an attack would have to be carried out at one time on all the copies across the network. Besides, simultaneous (peer-to-peer) record sharing makes the whole process faster, more efficient, and cheaper.

There is a great possibility that DLT will revolutionize the way governments, institutions, and corporations operate. The program can assist governments with recognizing tax revenue, issuing passports, recording land registries and licenses, and administering Social Security benefits, as well as assisting with voting procedures. There are many industries that are making use of the technology, including finance, music and entertainment, diamond and other precious assets, art, and supply chains for a variety of commodities.

A number of big tech companies, including IBM and Microsoft, are also experimenting with blockchain technology. Distributed ledger protocols like Ethereum, Hyperledger Fabric, R3 Corda, and Quorum are among the most popular.

The importance of DLT

It is possible to drastically improve record-keeping by changing some of the fundamental ways in which organizations collect and share the data used to maintain their ledgers by implementing distributed ledger technology.

In order to comprehend this, consider the fact that both paper-based and conventional electronic ledgers require changes to be tracked through a central point of control.

A centralized control system for such an organization requires a great deal of labor and computer resources.  In addition, centralized control doesn’t always mean ledgers are complete or up-to-date.

Moreover, any location that contributes data to the ledger can become a source of error or fraud, further making the process prone to mistakes.

In addition, none of the other participants who contribute data to the central ledger are able to verify the accuracy of that data.

A distributed ledger, however, allows real-time data sharing, meaning the ledger is always current.

This also allows transparency, since every participating node can see the changes.

By nature, decentralized ledgers are more secure, since they eliminate the single point of failure and single target for hackers and manipulation.

Due to the elimination of the middle man or central authority, distributed ledger technology is capable of speeding up transactions. On the other hand, DLT could reduce transaction costs. Running the highly decentralized verification process and distributing copies of the ledger can be computationally intensive, which hurts the performance of DLTs compared to centralized ledgers in certain networking environments.