What is distributed ledger technology (DLT) ?
Pratik Jain
By: Pratik Jain

What is distributed ledger technology (DLT) ?

Ledger is a basic way for maintaining records of money in accounting. As time progressed, the way of maintaining ledger improved. With advent of technology, the ledgers were stored in single central server node. All client nodes created and stored their ledger copies in central server. Due to central server, came the issue of centralized data storage threat; single storage node runs a risk of single point of failure. Also, centralized ledger runs a risk of anyone with access to ledger can tamper the data stored.

Hence, there is need found for decentralized ledger technology wherein the entire data of ledger can be stored in distributed manner. By distributed, it means that the entire data is stored in different nodes or computers and hence, at any given point of time, no one can tamper the data stored in multiple distributed nodes/computers.

Distributed Ledger Technology or DLT has gained relevance in current times because of Blockchain applications like Cryptocurrencies. In cryptocurrencies, there is a requirement to maintain distributed ledger which stores all data related to the transaction logs. The data of cryptocurrency is stored in distributed ledger technology or DLT in order to instill trust & non-tamperable parameters.

Computing power and breakthroughs in cryptography, along with the discovery and use of some new and interesting algorithms, have allowed the creation of distributed ledgers. In its simplest form, a distributed ledger is a database held and updated independently by each participant (or node) in a large network. The distribution is unique: records are not communicated to various nodes by a central authority, but are instead independently constructed and held by every node. That is, every single node on the network processes every transaction, coming to its own conclusions and then voting on those conclusions to make certain the majority agree with the conclusions.

Once there is this consensus, the distributed ledger has been updated, and all nodes maintain their own identical copy of the ledger. This architecture allows for a new dexterity as a system of record that goes beyond being a simple database.

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