Distributed ledger technology (DLT): What is it and how does it work?

Distributed ledger technology (DLT) is a decentralized data storage system with information and records distributed across many different servers or network nodes. This allows access, authentication, and updates without the involvement of third parties.

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What is distributed ledger technology (DLT)?

Distributed ledger technology (DLT) is a term used to refer to a decentralized data storage system that uses nodes to record, share, and synchronize data. This entire process is done in an electronic ledger instead of centralized data storage like in a traditional ledger.

In other words, with distributed ledger technology, users can access, validate, and update records on a database without the participation of third parties. And because there is no fixed intermediary, DLT will be managed by all participants, thereby ensuring the highest security.

Because of the above characteristics, this technology is mainly used in applications that require high security and reliability such as Blockchain or distributed financial systems.

Also, if you are interested in learning more about Blockchain technology, here are some suggestions for you: Futures Contracts, NFT ownership, Blockchain in Healthcare, IOTA…

How does distributed ledger technology (DLT) work?

Distributed ledger technology works by storing data that is only accessible via cryptographic keys and signatures. Accordingly, all data information, once successfully stored, will become a fixed database and cannot be changed.

Besides, distributed ledger technology also possesses distributed, non-centralized properties, so it brings very high security, making it difficult to be attacked by hackers. The reason is that each device on the network contains a copy of the ledger, which means that if you want to attack, you have to attack the entire network at the same time, which is almost impossible.

Thanks to the two factors mentioned above, distributed ledger technology can ensure that all stored data information cannot be changed or attacked.

Application of distributed ledger technology (DLT)

Distributed ledger technology (DLT) has currently been applied in many different fields for many different purposes, such as:

Finance

In finance, DLT is used to record transactions in the most distributed, secure, and transparent way without having to go through any other third party. Along with that, it is low cost, ease of use, and fast transaction speed.

Thanks to DLT technology, even those living in areas with poor banking access have the opportunity to participate in modern finance.

Entertainment

DLT in the entertainment sector is used as an accounting solution to pay artists within a reasonable period and with less cost and time. At the same time, ensure that no party can manipulate this payment process.

Besides, DLT in entertainment is also used as a solution to manage copyright products most effectively.

Real estate

DLT use in real estate will help buyers and real estate agents better understand the history of any property where information is stored. This ensures transparency regarding ownership rights, renovations, and sales history.

In other words, the application of DLT in real estate will help all investors grasp more information before making decisions as well as ensure their ownership rights.

Health care

In the field of health care, DLT has the role of recording and storing medical history information for all patients. Thanks to that, doctors can much more easily find and diagnose patients in all situations.

This data is also guaranteed to have the highest security, minimizing illegal intrusion from outside.

Collect votes

Collecting and checking votes for every election so far has always had many potential risks of manipulation that could change the results. However, the application of DLT can be completely solved because of its transparency and unmodifiable nature.

At the same time, there is an extremely strong security ability that makes it difficult for anyone to change the election results to their liking.

Difficulties when using distributed ledger technology (DLT)

Although it can bring a lot of positive values, using distributed ledger technology at present is still relatively difficult because:

• There is no standardization and it is difficult to integrate with old technologies.
• Haven’t made too many changes compared to old financial technologies.
• Requires huge storage resources corresponding to the time of use.
• This entails other cost issues to maintain operations.

Conclusion

So we have successfully shared with you all the most general content about the concept of distributed ledger technology (DLT). Hope you find this content useful. Thank you for reading and hopefully we will see you again in the future with other content from AZCoin.