Distributed Ledger - what is it?

Distributed Ledger is a technology that is an alternative version of an electronic database.

The digital technology landscape is constantly being updated with the introduction of new solutions that provide users with certain benefits. The main condition that is observed when using such technology is the absence of a centralized supervisory authority. Data in the system is stored simultaneously on different servers, and the nodes are in constant interaction. Such networks are created public or private.

How DLT works

Since no supervisory authority exists in distributed registry systems, information is stored on several nodes, mainly peer-to-peer networks. A special consensus algorithm is used to update the data.

Information transfer is carried out over nodes that are connected to one network. Each node is regularly independently updated until a complete copy of the registries is created. A unique cryptographic signature is used to protect each updated version. These operating principles provide both transparency and a high level of database security.

The main advantages of Distributed Ledger

Excellent prospects for the development and already current application of Distributed Ledger technology are due to the following advantages:

  • High degree of efficiency.
  • Absolute transparency of all processes.
  • Automation of network operation.
  • Lack of a supervisory authority, regardless of the scope of the Distributed Ledger system.
  • Excellent potential for low-cost transactions with high payment processing speeds.
  • There is no need to involve intermediaries to conduct secure transactions, regardless of the payment amount.
  • Its high resistance to hacking, forgery, and unauthorized data modification is a significant aspect.

Application of DLT

The most striking introduction and successful application of DLT technology is noted in the financial system of cryptocurrencies. However, this system also has good prospects for organizing voting and ensuring data protection in the healthcare system, logistics, oil production, and agriculture. Considering the current assessment of the advantages of using DLT, there is a high probability of further implementing such technology in other areas of activity.