Distributed Ledger Technology

Definition

Distributed Ledger Technology, often called DLT, is a digital system for recording transactions across multiple nodes in a network. Unlike traditional centralised databases, DLT has no single point of control, which increases transparency and resilience. Every participant holds a copy of the ledger, and updates are validated through consensus mechanisms.

For example, blockchain and hashgraph are both types of distributed ledger technologies, but they use different methods to achieve consensus and validate transactions.

Advanced

DLT can be structured in different ways, such as blockchains, directed acyclic graphs, or hashgraphs. Consensus protocols vary from proof of work and proof of stake to virtual voting or Byzantine fault tolerant methods. These ensure that the ledger remains secure and tamper resistant.

Advanced applications include tokenisation of assets, real time settlement of payments, decentralised identity, and supply chain visibility. Businesses often choose between public, private, or consortium ledgers depending on their need for transparency, scalability, and governance. DLT also integrates with IoT and AI to enable automation in complex systems.

Why it matters

• Increases transparency with decentralised record keeping.
• Reduces reliance on central authorities for validation.
• Improves resilience against fraud or single point failures.
• Enables innovation in finance, logistics, and identity.

Use cases

• Recording peer to peer transactions without intermediaries.
• Tracking supply chain data to prove product authenticity.
• Managing digital identities for secure authentication.
• Supporting tokenised assets and decentralised finance.

Metrics

• Transactions per second supported by the ledger.
• Consensus finality time for transaction validation.
• Network size and participation rates.
• Energy efficiency per transaction.

Issues

• Scalability challenges for high volume usage.
• Interoperability gaps between different DLT systems.
• Regulatory uncertainty across global markets.
• Security risks in poorly designed consensus mechanisms.

Example

A logistics company adopts a consortium based DLT to track goods across suppliers, manufacturers, and distributors. Each participant can view the same verified data, reducing disputes and increasing trust across the supply chain.