In this article I'll be explaining what distributed ledger technology (DLT) is for those that have just started using cryptoassets. Since I've only begun using cryptoassets myself, I thought it would be useful to write this article, as not only will it help others, but assist in my own learning.
Image by Pete Linforth from Pixabay
So, what is distributed ledger technology?
DLT is a kind of technology that allows the sharing and updating of records in a distributed and decentralised manner. With DLT, those participating can securely propose, validate and record updates to a synchronised ledger (a type of database), that is distributed between the participants.
Image by Gerd Altmann from Pixabay
How is distributed ledger technology used?
DLT plaforms are used like most ordinary databases that record who owns what or who did what. These platforms can store a variety of data, namely the ownership of financial assets (for instance, shares), tangible assets (like cars and homes) or digital assets (Bitcoin as one primary example).
Image by Megan Rexazin from Pixabay
Current Generation of DLT & Applications:
There is a current generation of DLT which has its origins in the blockchain powering Bitcoin, the first and most popular cryptoasset. Since the development of Bitcoin in 2008 the technology and market has evolved and now cryptoassets are just one of the many applications of DLT.
At the moment there is no standard form of DLT. The ones that are being developed for financial services are quite different to the original Bitcoin blockchain and may not be fully distributed or decentralised.
I hope this article has underlined the key concepts of DLT and explained in a simple and clear form what distributed ledger technology is.
This work is based on a final report produced by the cryptoassets taskforce lead by the HM Treasury, Financial Conduct Authority and Bank of England.
The report can be found here: https://www.gov.uk/government/publications/cryptoassets-taskforce
Article written by: https://www.instagram.com/tiago_hands
Lead Image attribution: Image by Pete Linforth from Pixabay
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