A Distributed Ledger is a database shared within a network in multiple geographic locations. Distributed in this context means controlled by multiple parties and spread out globally. Therefore a distributed ledger is basically a database that is held and updated by multiple individuals in various locations. The database is synchronized between the networks in order to ensure accuracy.
What Is Distributed Ledger Technology?
A Distributed Ledger Technology or DLT refers to the technological infrastructure and protocols that allow the simultaneous access, updating, and validation of records that characterize distributed ledgers. It runs on a computer network spread over multiple locations or entities. DLT leverages cryptography to store data securely. The cryptography keys and signatures allow access only to authorized users.
The Distributed Ledger Technology also creates an immutable database, meaning that stored information cannot be deleted, and all the updates are permanently recorded. This architecture represents a successful change in how information is gathered and communicated by moving from a single authoritative location to a decentralized system. DLT offers utmost transparency, which provides a high level of trust among the participants and practically eliminates any chance of fraudulent activities occurring in the ledger.
DLT also eliminates the need for entities using the ledger to rely on a trusted central authority that controls the ledger.
Why Is DLT Crucial?
Distributed Ledger Technology can bring a revolutionary change when it comes to record-keeping by changing some of the fundamentals of how organizations can collect and share the transaction data that does into the ledger. To understand the concept of DLT better, consider both paper-based and conventional electronic ledgers requiring all additions and alterations to go through a centralized point of control.
In systems like that, organizations must commit significant labor and computing resources in order to maintain centralized control. Furthermore, centralized control means that ledgers aren’t always complete or updated. The process is also exposed to mistakes as every location that contributes data to the ledger could become a source of errors or fraud. Additionally, no other participants contributing data to the central ledger are able to efficiently verify the accuracy of data coming from all the other contributors.
DLT can potentially speed up transactions by eliminating the need to go through a central authority or mediator. Likewise, it could also reduce the overall cost of transactions. However, running the decentralized verification process and distributing copies of the ledger requires substantial computing resources, which has been proven to affect the performance of DLTs in specific networking environments compared to centralized ledgers.
Benefits of Distributed Ledger Technology
Distributed Ledger Technology helps enable individuals to control their personal information by allowing them to share parts of their records when restricting access or limiting the time information is available to other entities. In addition, proponents say that digital ledgers can help better track intellectual property rights and ownership for commodities, art, music, films, and more.
Here are a few benefits of Distributed Ledger Technology that has the potential to make your lives easy.
● Enhanced visibility into the transparency of data contributed to the ledger.
● Fastens the transaction speed s there are no lags in the ledger updation.
● Reduced operational costs because of the elimination of a centralized authority.
● Reduced risks of fraudulent activities, manipulation, and tampering.
● Improved reliability and resiliency as there is no longer a central system that creates the potential for a single point of failure.
● Advanced levels of security.
Spread is a Green Finance Platform that uses Distributed Ledger Technology to establish a mutual trust mechanism among investors, project developers, and portfolio managers. The process followed by Spread includes building trust, matchmaking, reducing risk, increasing efficiency, increasing liquidity, and lowering entry barriers
