Cryptocurrency and blockchain technology are the most disruptive technologies of our age. The scope of their potential is enormous: they can be used to record any kind of information end‐to‐end, thus disrupting key barriers to efficiency, commitment, and scaling.
In the case of banks and their real‐time transaction settlements, blockchain offers substantial support.
What Is DLT (Distributed Ledger Technology)?
Distributed Ledger Technology (DLT) is the technological system and protocols that make accessing, validating, and record updating of commerce happen across a network that’s spread across multiple entities or locations. It is more commonly known as blockchain technology. Blockchain technology is fundamentally a distributed database that anyone can change, view the current status of an operation, and see where all transactions are documented. It’s also peer-to-peer—think of it as a massive global database that runs on zillions and zillions of computers (or “nodes”) around the world. It also doesn’t require any controlling intermediaries to authenticate the transactions.
The technology was first used by Bitcoin and has now caught on in the wider world of technology because it promises to reshape many different industries. In simple terms, a “decentralized” network is just one that works differently from a traditional “centralized” one—
It is expected to have a significant impact on industries and institutions that have long relied upon trusted third parties.
In theory, DLTs possess certain properties that make them practically applicable to industries like healthcare, law, and so much more. Let’s take a look at the properties that make DLT what it is today:
1. It is Programmable
DLT allows for automatic, independent validation of actions. This is cheaper and more efficient than relying on the work of agents or workers, making it better overall.
2. It is Encrypted
The main benefit of DLT is that it’s secure. Solid encryption protects each asset in the network, making it impossible for humans or computers to edit them.
3. Protects User Identity
DLT allows users to remain anonymous or identifiable. There is no need for a user to create an account with any necessary information: simply make an account and protect your wallet, if you so choose. But when it comes time to unmask yourself within the ledger’s community, that’s where your personal info will be revealed—if at all.
4. Promotes Unanimity
DLTs are distributed across many users, and all or most of those users must agree on whether an action is valid. Because of this decentralization, no corrupt or biased party can rig it.
5. Makes Changes Irreversible
Data changes made in DLT are irreversible. Editing or deleting a file does not change what was previously recorded, but rather creates another version of the document with an additional entry in its history log. Everything is time-stamped, too, so no two versions can be mistaken for each other.
6. It is Distributed
This is the basis for its name: a ledger records everything that happens within a system. It contains content, current owner, history of past owners—and actions. This data doesn’t belong to any single entity; they share different servers between them. As a result, shutting down the blockchain is difficult because it will continue to run as long as servers that share the ledger remain active.