What is Distributed Ledger Technology (DLT)?


what is distributed ledger technology

Along with the popularity of using cryptocurrencies such as Bitcoin, blockchain continues to be a hot topic of conversation in various circles. Now, blockchain has been considered a new alternative that will influence the financial world in the future.

However, maybe many still don’t know about the “roots” of blockchain, namely Distributed Ledger Technology (DLT). Because basically, blockchain is an implementation of DLT. Then, what are the ins and outs of DLT, which is considered the originator of the blockchain.

Let’s look at the discussion through this article.

What is Distributed Ledger Technology?

Distributed Ledger Technology (DLT) is a technology infrastructure and protocol that enables simultaneous access, validation, and updating of records across networked databases.

Simply put, DLT is a database that does not require third-party intervention to ensure the validity of a transaction. Users are usually granted access to the database at different levels.

DLT allows any user to view any changes and who made them. That way, they can conduct data audits while ensuring that the data is appropriate without needing third-party assistance.

Even so, not all DLTs can make changes. There are those who cannot make changes at all and others who can make changes but can be tracked by other users. In essence, any data changes will be recorded automatically and cannot be changed by users who do not have permission to do so.

How Distributed Ledger Technology works

Distributed Ledger Technology (DLT) enables more secure and accurate information storage by utilizing cryptography. Any data can be accessed using a “key” and a cryptographic signature. Information that has been stored can be used as a database that cannot be changed by writing in the database programming code that governs the general ledger.

Every device on the DLT network maintains a copy of the ledger. These devices are called nodes. The function of the node is to record any changes that occur in the general ledger, such as moving data from one block to another. Each node will then publish its own version of the ledger containing the latest transactions.

If all parties in the network have reached an agreement on the validity of the most recent ledger, the transaction is considered complete. Then the ledger will be encrypted and used as a basis for further transaction processing.

Once stored, the information will become an immutable database. A “key” and a cryptographic signature are required to access it. It is this decentralized concept that makes distributed ledgers safe from cybercrime risks.

Because to make the attack successful, the hackers must attack all the copies stored on each network simultaneously. In addition, the system of sharing and updating peer-to-peer records makes the entire transaction process faster, more effective, and cheaper.

Type of Distributed Ledger Technology

Distributed ledgers is created for various purposes. Among them is as a platform for industrial needs. One of the most popular DLTs is IBM’s Hyperledger Fabric.

Several businesses have widely used this modular and scalable DLT platform as a solution that spans multiple industries. Some of them are:

  • Aviation (flight),
  • Brand protection
  • Education
  • Healthcare (health),
  • Insurance,
  • Logistics (logistics),
  • Manufacturing (manufacturing)
  • Transportation
  • Utilities.

The blockchain industry can significantly benefit from DLT. This is because, with DLT, many factors make data collection tend to be efficient, accurate, and prone to corruption and other losses.

One is from Fujitsu, a global data and information technology company, which has designed a DLT called Rice Exchange (Ricex) to increase supply chain transparency and prevent fraud risks by securing and tracking data.

Ricex was created to carry out rice-buying and selling transactions. Where every data regarding the source, price, insurance, delivery, and settlement is recorded in the general ledger. Everyone involved can see accurate information about the entire process. All data entered on the platform will be automatically secured, not changed arbitrarily.

History of DLT

Distributed computing systems like DLT is actually nothing new. Several business and government sectors have used this concept for decades. Since the 1990s, many users have been troubleshooting using computers from different locations.

Advances in data science, computing, software, hardware, and other technologies are making ledger capabilities ever-expanding. Improved connectivity through internet protocols allows more data to be collected, analyzed, and used later. However, the number of users with access makes someone need to verify every change.

Computer scientists began to develop programs to reduce the need for audit data. As a result, programs are created that use automation and data encryption techniques to verify changes in database status.

DLT then evolved into programmable platforms like Ethereum and IBM’s HyperLedger Fabric. Where solutions, from tokenization of physical assets to streamlining manufacturing and other business processes, can be built using databases or ledgers.

DLT vs. Blockchain

There are several key factors that differentiate blockchain from DLT. Here are some of the most popular.


dlt vs blockchain

Advantages of Distributed Ledger Technology

Although the adoption of DLT is still imperfect, this technology has provided various benefits for its users. One of them is related to the level of security. Hackers will find it very difficult to attack DLT, which is widely open and spread globally. This can reduce the risk of fraud and data manipulation.

The DLT system lets its users know about every change made. Starting from who did it to ensure the suitability of the data. However, only users with permission can change the big data book.

Besides that, blockchain is also present as a technology that can be accessed 24/7, and the alias never closes. That way, you can make transactions anytime on Sundays or on red dates.

In the supply chain industry, every result obtained will be written directly by the sensor to the blockchain without third-party interference. The absence of delays in updating the ledger will make the transaction process faster. Operational costs are also lower and cheaper.

Technology Revolution

Please note that this distributed ledger technology is not just a blockchain monopoly. Precisely its implementation is not limited to the financial sector alone. This breakthrough has revolutionized work systems in various industrial sectors, such as government, entertainment, to health.

DLT is here as an innovative technology to make the recording process faster and more efficient. Every transaction recording will be carried out in real-time throughout the global network.

Now, there is no need to pay expensive fees to buy sophisticated servers and computers. Because everything needed is available in the cloud service company via the internet, this method is believed to save costs as much as 30% to 50%. Depends on the complexity of the business.

Indeed, this digital technology still carries various risks. But with proper management, every user can get optimal benefits. It all depends on the readiness to change and how quickly to adapt.

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