What Is Distributed Ledger Technology (DLT)?

Distributed Ledger Technology (DLT) refers to the technological infrastructure and protocols that allows simultaneous access, validation, and record updating in an immutable manner across a network that's spread across multiple entities or locations.

DLT, more commonly known as the blockchain technology, was introduced by Bitcoin and is now a buzzword in the technology world, given its potential across industries and sectors. In simple words, the DLT is all about the idea of a "decentralized" network against the conventional "centralized" mechanism, and it is deemed to have far-reaching implications on sectors and entities that have long relied upon a trusted third-party.

Distributed Ledger Technology (DLT) Explained

Distributed Ledger Technology (DLT) is a protocol that enables the secure functioning of a decentralized digital database. Distributed networks eliminate the need for a central authority to keep a check against manipulation.

DLT allows for storage of all information in a secure and accurate manner using cryptography. The same can be accessed using "keys" and cryptographic signatures. Once the information is stored, it becomes an immutable database and is governed by the rules of the network.

The idea of a distributed ledger is not totally new, and many organizations do maintain data at different locations. However, each location is typically on a connected central system, which updates each one of them periodically. This makes the central database vulnerable to cyber-crime and prone to delays since a central body has to update each distantly located note.

The very nature of a decentralized ledger makes them immune to a cyber-crime, as all the copies stored across the network need to be attacked at the same time for the attack to be successful. Additionally, the simultaneous (peer-to-peer) sharing and updating of records make the whole process much faster, more effective, and cheaper.

DLT has great potential to revolutionize the way governments, institutions, and corporations work. It can help governments with tax collection, the issuance of passports, recording land registries and licenses, and the outlay of Social Security benefits as well as voting procedures. The technology is making waves in industries such as finance, music and entertainment, diamond and other precious assets, art, supply chains of various commodities, and more.

In addition to startups, many big companies such as IBM and Microsoft are experimenting with the blockchain technology. Some of the most popular distributed ledger protocols are Ethereum, Hyperledger Fabric, R3 Corda, and Quorum.