Distributed ledger technology (DLT) is a digital system for recording and verifying transactions that is decentralized and distributed across a network of computers. It is the underlying technology behind many cryptocurrencies, such as Bitcoin, and has the potential to revolutionize various industries beyond just finance.
A ledger is a record of transactions, and in a distributed ledger, multiple copies of this record are stored across a network of computers. Each copy is identical and is constantly updated as new transactions occur. This creates a tamper-proof and transparent record of all transactions on the network.
One of the key features of DLT is that it is decentralized, meaning that there is no central authority or intermediary that controls the network. Instead, it is maintained by a community of users who work together to validate and record transactions. This decentralized structure makes it much more difficult for governments or other entities to freeze or seize assets and makes it more secure and private way of transacting.
DLT also uses a technique called “consensus mechanism” to ensure the security and reliability of the network. A consensus mechanism is a protocol that helps to ensure that all copies of the ledger are identical and that any new transactions added to the ledger are valid. Examples of consensus mechanism used in DLT include Proof of Work (PoW) and Proof of Stake (PoS).
DLT is being used in various industries and sectors, such as finance, supply chain management, voting systems, and internet of things (IoT). In finance, DLT allows for faster, cheaper and more secure transactions, and it has the potential to revolutionize the way we do banking and financial transactions. In supply chain management, DLT can be used to track the movement of goods, from the manufacturer to the end consumer, providing transparency and security.
In conclusion, Distributed ledger technology (DLT) is a digital system for recording and verifying transactions that is decentralised and distributed across a network of computers. It is tamper-proof, transparent and secure, and it’s hard to manipulate or freeze the assets. It uses a consensus mechanism to ensure the security and reliability of the network. DLT has the potential to revolutionise various industries such as finance, supply chain management, voting systems and IoT, by providing faster, cheaper and more secure platforms.
