Clear DefinitionsDistributed Ledger Technology
Pronunciation
[dis-trib-yoo-tid lej-er tek-nol-uh-jee]
Analogy
Imagine a spreadsheet that is duplicated thousands of times across a network of computers. The network is designed to regularly update this spreadsheet with new information, and all copies remain identical without anyone managing the process centrally.
Definition
A digital system for recording transactions and related data in multiple places simultaneously. Unlike traditional databases, distributed ledgers have no central data store or administration functionality.
Key Points Intro
DLT fundamentally changes how information is gathered and communicated by eliminating central control.
Key Points
Information is stored across multiple nodes rather than a single location.
Changes are reflected simultaneously across all copies of the ledger.
No central authority controls or validates the data.
Supports various consensus mechanisms to validate transactions.
Example
Hyperledger Fabric is a distributed ledger technology used by enterprises to create permissioned networks for supply chain tracking, where multiple companies can access and verify shipment data without trusting a single central database.
Technical Deep Dive
DLT encompasses various implementations, including blockchains, but also alternatives like directed acyclic graphs (DAGs). While all blockchains are a form of DLT, not all distributed ledgers use the block-and-chain structure. Some DLT implementations prioritize scalability and transaction throughput over the properties that make permissionless blockchains unique.
Caveat
The level of actual distribution varies greatly between implementations. Some systems labeled as DLT are still fairly centralized in practice, with a small number of entities controlling most nodes.
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