Traveling the World of Blockchain: What is the Distributed Ledger Technology (DLT)

5 min readMay 26, 2021

Distributed ledger technology (DLT) can remain virtually immune to hacking, which is a very important feature for blockchain technology.

DLT is an important component of the blockchain

The dictionary definition of an accounting book is a horoscope, or financial accounts. Before the advent of electronic storage, government and financial institutions kept their records in paper ledgers.

While the thought of old-fashioned paper books filled with handwritten notes is somewhat charming, the data stored in these paper journals was extremely vulnerable to … well, everything that paper is subject to: fire damage, water damage, and even just loss.

When it became possible to store data digitally, it became much easier to replicate the data. What previously had to be copied manually could now be copied at the touch of a button, and if the server fails for one reason or another, the probability of having an available backup is significantly increased.

However, even with backups, digital data that is stored centrally is still vulnerable to many factors. Backups must be kept up to date, otherwise new data may be lost.

In addition, the central server or its backups may be vulnerable to hacking. Any hacker who gets access to the data through the source server or any of its copies will have access to all the data stored on it. For example, a hacker who gained access to a bank’s private server may have access to personal information associated with thousands of accounts.

Today, most of our personal information is stored on centralized servers or (in some cases) on paper. Our bank accounts, marriage certificates, and mortgage contracts exist in forms and locations that make them vulnerable to a variety of factors.

The Rise of decentralized registries

In recent years, a decentralized, cryptograpy-based method of data processing and storage has emerged. This technology, called “distributed ledger,” often abbreviated as DLT, stores data in a way that makes it virtually immune to hacking or anything else that could compromise its security or permanence. It is a part of the innovative Blockchain technology.

Blockchain is a form of distributed ledger on the basis of which cryptocurrencies are formed, but blockchain applications go far beyond cryptocurrency.

The distributed registry is not stored in any centralized location. Instead, it works in hundreds, or thousands, of locations on a computer network. Because of this, it is not vulnerable to hacking or other kinds of potential problems that compromise data stored on a centralized server. The decentralized nature of the blockchain makes it virtually immune to hacking, forgery, or any other type of data destruction.

Computers that support a distributed registry network are called nodes. Nodes also perform the tasks required to verify transactions on the network. The process by which these tasks are performed is called mining. In exchange for their work as miners, nodes are rewarded with cryptocurrency tokens.

For a distributed registry to be hacked or otherwise corrupted, more than half of the nodes must be compromised in some way. Since blockchain-based networks often have hundreds or even thousands of nodes, the probability that this will ever happen is very small.

Although the identity of users is protected by many different methods, the registry is open to everyone. This ensures that transactions that occur on the network are valid and not repeated simply because everyone can see what is happening.

Why are distributed registries called “untrustworthy”?

Distributed registry networks are not trustworthy. When readers first encounter this term, it may seem negative — is a lack of trust a good thing? Isn’t that bad?

However, in this scenario, a lack of trust means that users of the system do not need to trust any centralized organization (such as a credit card company or bank) to ensure that their transactions are valid. With the help of distributed registry technology, it is impossible to forge a transaction.

Although distributed ledger technology and cryptocurrency are still at an early stage of their development, many new use cases for these technologies are being conceptualized and implemented every day, including:

  • Creating a digital Identity using public and private cryptographic addresses
  • Record keeping, including the storage of legal documents (such as marriage certificates and mortgage agreements). The data can be encrypted or hashed
  • Acts as a computational layer for the development of decentralized applications.
  • It serves as a platform for creating and executing smart contracts

Although there are new types of cryptocurrencies based on new types of distributed ledger technology (for example, IOTA’s “Tangle”), most cryptocurrencies are based on blockchain technology.

How does the blockchain work?

If you’ve been in the crypto community for more than a few seconds, you probably heard or read the word “blockchain” before you even got out. However, what exactly is a blockchain?

In fact, this is quite simple: the blockchain is a kind of distributed registry that stores data about all transactions that occur in a peer-to-peer network. In other words, it is a public record of all transactions that occur in a decentralized network. No third party owns or manages the network.

A distributed registry running on a peer-to-peer network

Let’s take a closer look at this, and compare it to a credit card company. Let’s say you buy coffee for $5 paying with your credit card. The credit card terminal sends a signal to the company that $5 should be withdrawn from your account and placed in the store’s account. All data involved in this transaction is stored on a centralized server that is privately owned and managed by the credit card company.

The credit card company needs hardware and software to complete the transaction and keep records of it. It needs employees to maintain its private system, buildings to house production, a marketing team, a legal team — you understand. The credit card company would also like to make a profit. Accordingly, the credit card company charges its users for using their card.

Since a credit card company stores all its transactional data (and its users ‘ personal data) on a centralized server, a single successful hacker attack is enough to compromise everything stored on the server. While this is less likely, servers can also be compromised by physical damage (such as fire or water).

Now, let’s imagine this transaction as if it occurred in a decentralized blockchain-based network. The transaction will not be confirmed and saved by a central third-party company. Instead, it will be confirmed by other computers on the network and stored in a data group called a block. When a block is “filled”, it is added linearly to the previous blocks, forming a” chain “ of data. Thus, the name “blockchain”is obtained.

Although blockchains are a type of distributed ledger, distributed registries are not always blockchains. Distributed registries can be internal within a business, but not public, in which case they do not fully meet the definition of a “block chain”.





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