A Quick Intro to Distributed Ledger Technology (DLT)


Distributed ledger technology (DLT) is a digital structure used for documenting/recording transactions of assets across multiple locations simultaneously. DLT, unlike traditional databases, is decentralized and has no governing body or central storage unit. Instead, transactions are authorized and stored by nodes spread across the globe, after which a consensus on every item is verified.

DLT is, without a doubt, a revolutionary data storage, gathering, and dissemination format.


How Ledgers Originated

Ledgers have been in existence for more than a thousand years in paper form. They became digitized with the advent of computers in the late 20th century, however, it retained many of the existing limitations of paper ledger systems.

Fast-forward to the 21st century, the invention of systems like cryptography, advanced algorithmic systems, and powerful computing power has helped create more reliable record-keeping systems like the distributed ledger.


Correlation Between DLT and Blockchain Technology

A very popular kind of DLT is Blockchain technology, which powers digital currencies like Bitcoin. Blockchain clusters transactions into blocks, which are later chained together and broadcasted to every node in the network.

‘Blocks’ on the blockchain comprise digital fragments of information. Blocks play three roles including:

1- Storage of information about transactions like time, date, and amount of purchase.

2- Storage of information about participants in a transaction. Transactions are identified using digital labels and not the real names of participants, for security reasons.

3- Storage of information that distinguishes one block from the other. Each block on the blockchain is stored using a code called a “hash.’ Hashes are cryptographic codes formed by unique algorithms.


Importance of Distributed Ledger Technology

DLT can streamline and speed transactions thanks to the removal of middlemen or a central body. This attribute, consequently, makes transactions very transparent and cheap.

Also, a distributed ledger technology is extremely secure, difficult to manipulate, and largely impenetrable to cyber-attacks thanks to the fact that every individual node holds a copy of all transactions.


Benefits of Distributed Ledger Technology

DLT can completely revolutionalize the process in which governments, institutions, corporations, and organizations function. By streamlining data collection and storage, distributed ledger technology can help in the issuance of passports, recording land registries, licenses, security benefits, and voting processes.

Currently, the technology is getting heavy adoption in several industries including finance, music and entertainment, diamond and precious assets, artwork, and supply chains of various commodities.

While DLT has several benefits, it is still yet to receive widespread adoption across industries. However, one sure thing is that decentralized ledger technology is an integral and important part of the future.

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Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.