In this article, we talk about how the Distributed Ledger Technology (DLT) works. The purpose of this technology is to eliminate the issue of centralization that most databases suffer from. It’s important to note the initial applications of blockchain started with Bitcoin, where it’s used to record transactions and ensure their validity. DLT is the system behind the popular buzzword “Blockchain”.
What is Distributed Ledger Technology (DLT)?
To better understand this, let’s first define what a Blockchain is. You can think of a Blockchain as a physical block of information that holds together by a chain. Once you combine a number of blockchains, you will get Distributed Ledger Technology.
The system consists of a network of participants holding equal control. This is beneficial to the system as it makes it difficult to control or hack. In addition, this allows the network to be more transparent.
What Does DLT Do?
This process speeds up transactions as it removes any middleman or through a central authority. So this means Distributed Ledger Technology (DLT) is made up of a network of participants holding equal control making it hard to hack or control. DLT helps users and businesses record and store data in a way that is transparent and immutable. Furthermore, DLT provides a framework for efficient and transparent transactional data for any business that involves data and transactions.
How Does "Hash" Relate to DLT?
The “Hash” provides the network with the necessary transparency it needs to maintain its integrity. Before storing information onto the blockchain, all the information must first acquire validation from the network participants. Once the system gives approval for the information, then it will generate a unique identifier known as a “Hash”. The Hash helps users identify different blocks in the blockchain.
Moreover, each block also contains the data of the previous, so the addition of new blocks will strengthen the overall structure of the network. This makes it hard for a person to change a single block in the chain since it would require the confirmation of all participants in the network. If anyone wants to change the hash of a single block, it would require them to change the whole blockchain. Therefore, the system would usually reject the transaction and would be highly unlikely to happen.
In order to store information onto the blockchain, the information must receive approval and validation by the network’s participants. Every time a new individual joins the network, they will receive a copy of the ledger that makes them part of the network. So each individual will also possess the role of being a validator, having to verify transactions. This provides additional security as any changes to the chains will need to be approval by network participants making it nearly impossible to hack, change, or corrupt.
DLT Visibility and Trust
Distributed Ledger Technology in Blockchain will act as a fundamental framework for industries in the future as it provides visibility and accuracy. In addition, Blockchain technology’s application is in processing data across a network. it allows industries to digitize and automate record keeping. It provides better visibility, more accurate and reliable data, and increases trust among all participants in the network. Despite Blockchain being a relatively new concept, its functionally provides a fundamental framework for any industry that involves with data and transactions.