November 30, 2021

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Distributed Ledger: This is how the technology behind the blockchain works

DLT Distributed ledger technology stands for distributed ledger technology. What is meant is that all network Shares and verifies all information about transactions. This means that there is no central instance, rather there are many data points. The Blockchain It is based on this principle.

DLT, the DNA of Bitcoin

DLT, distributed ledger technology, is the principle on which the blockchain is built. Bitcoin was used for the first time, followed by almost all cryptocurrencies. DLT works over a network where data is shared with multiple nodes. These are the users of the technology and in their entirety they confirm the data. The central point that manages the data is not necessary.

This is exactly how the blockchain works. Users verify new blocks of data using a consensus procedure (Proof of Work). The information is shared with all participants. So if you participate in the Bitcoin network, you also get access to the blocks of data. And you can confirm the new by mining.

A distributed ledger is more than a blockchain

As a principle, DLT forms the DNA of Bitcoin and Co. But as a technology, DLT can do more than the blockchain behind the cryptocurrency. It sets a principle that the financial sector in particular will follow in the future. Ledger also refers to the general ledger and refers to financial transactions. These are documented in the general ledger. DLT distributes this knowledge so that this documentation is done in a decentralized way.

Blockchain is a form of DLT. Other uses are insurance policies or tax collections, such as Investopedia mentioned. The great thing about this is that the data is not shared with all network participants. Instead, there is a specific set of participants with whom the information is stored. Sensitive data is only shared with authorized users. The focus remains on decentralized control. If you are bothered by other terms, it is worth taking a look at our crypto dictionary.

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Sources: Investopedia. private search

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