A distributed ledger is a ledger that contains a copy of the ledger of all the transactions that are to take place in a shared, virtual database. The main difference between traditional ledgers and DLT is the fact that a distributed ledger uses many participants in a distributed network to process the ledger.
Why Is A Distributed Ledger So Important In Business?
The replicated ledger eliminates the need for a central authority to keep track of the transactions, thus making the creation of digital currencies more accessible. How is DLT used in the crypto economy? Distributed ledger technology is used in cryptocurrencies such as bitcoin. DLT is used to maintain a database of all the transactions that are going on in a market and allow them to be seen simultaneously by all participants.
DLT and its uses
DLT has some major advantages over traditional financial systems.
- Safety of transactions Transparency of all transactions
- Speed and certainty of all transactions
- Cost of transactions
- Availability of fast payments
Distributed ledgers gained attention and increased in popularity as they found their application as the core underlying technology of Bitcoin.
The development of the first decentralised application (DApp) by the Ethereum Blockchain is what helped popularise the technology and made it popular within the wider fintech sector.
What commercial applications did distributed ledgers find so far?
Distributed Ledger is the underlying technology for Bitcoin, one of the first distributed ledger systems with a wide commercial application.
The biggest benefit of DLT is the fact that the information recorded can be updated by multiple parties independently without any administration on their part.
The process is a peer to peer, allowing transactions to be sent to multiple participants and updating each transaction at the same time. The distributed ledger technology in itself has the ability to track money transfers, manage the transfer of assets, and monitor access to payment services.
As the adoption of DLT increases, it has the potential to transform the way transactions are recorded.
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