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Distributed Ledger Technology or DLT is an electronic system or database for recording information that is not run by one single entity. DLTs allow us to store and use data that can be both decentralized (stored in several places) and distributed (connected and can communicate) either privately or publically.
Since DLTs have no central data store. Instead, the information is stored in several places across the network. This is achieved by using a peer-to-peer system and consensus algorithms. The data is spread across several nodes within the network, replicated and synchronized. Every time the ledger updates, all files are time-stamped and given their own cryptographic signature. This creates a database of information that is both secure and auditable.
Although these terms often overlap because they are both systems of recording information in a transparent way using a decentralized network, blockchain is effectively one type of distributed ledger.
DLT is a technology which allows us to distribute data, and blockchain was the first functional type of DLT.
Distributed ledgers use nodes to record transactions and then copy this information across the network. Blockchain gathers this data into blocks and chains them together.
Blockchains are usually public, which makes them useful for viewing transactions history. This means that anyone can use blockchain and subsequently act as part of the governing network. This removes the control of any single governing entity. Distributed ledgers, on the other hand, don’t necessarily enable these public features. There can be ‘permissioned’ features that restrict access.
Blockchains are essentially a sequence of time-stamped blocks that record the overall state of the chain. This is then validated by cryptographic processes and ‘proof-of-work’ which is necessary to ensure Once you've bought or received bitcoins; you now need to keep them as safe as possible. This guide will provide... More. In theory, DLTs offer improved scalability options.
It was thanks to the creation of Blockchain and that DLT gained worldwide recognition; however, this technology can be useful in many areas in addition to financial transactions. As DLT is still a relatively new concept, there are still issues to be resolved. As developments are moving quickly, the number of industries that DLT has the potential to improve is extensive.