Distributed Ledger Technology (DLT) is an emerging field that has the potential to revolutionize the way we store and transfer data. DLT is a decentralized database that enables secure and transparent transactions among multiple parties without the need for a central authority. The technology is based on a shared database that is spread across a network of computers, making it highly resistant to fraud and hacking.
Blockchain is the most well-known example of DLT. However, there are other types of DLT that are gaining traction, such as Directed Acyclic Graphs (DAGs) and Hashgraph. In this article, we will explore the basics of DLT, its advantages, use cases, and the potential impact of this technology on various industries.
Advantages of DLT
DLT offers several advantages over traditional databases, including:
- Decentralization and Security: One of the primary advantages of DLT is its decentralized and secure nature. Unlike traditional databases, which are centralized and rely on a single point of failure, DLT systems are distributed across a network of nodes, making them more secure and resilient to attacks. As each node has a copy of the ledger, there is no single point of control or failure, making it difficult for bad actors to manipulate the data. As stated by Vitalik Buterin, the creator of Ethereum: “The blockchain is the first technology that enables strangers to trust each other, creating a world without intermediaries”.
- Transparency: DLT is also known for its transparency, as every transaction that occurs on the network is visible to all participants. This creates a level of trust and accountability, as participants can verify that all transactions are legitimate and have not been tampered with. This is especially valuable in industries where trust is crucial, such as finance and healthcare. Brad Garlinghouse, the CEO of Ripple, noted that “Blockchain is one of those technologies where if you don’t believe it will change the world, you’re not paying attention.”
- Efficiency: DLT can also increase efficiency by reducing the need for intermediaries and automating processes. For example, DLT can streamline supply chain management by providing real-time visibility into the movement of goods, reducing the risk of fraud and errors. In the words of Marie Wieck, the former General Manager of IBM Blockchain, “blockchain is a team sport. It’s about creating new ecosystems and new economies.”
- Cost savings: By eliminating intermediaries and automating processes, DLT can also reduce costs for businesses. For example, Walmart’s blockchain-based supply chain management system has reportedly reduced the time it takes to track food from days to seconds, resulting in significant cost savings. Frank Yiannas, the Vice President of Food Safety at Walmart, said that “[Walmart is] committed to providing [its] customers with safe, quality food. By using blockchain, we can improve traceability of products and reduce waste and fraud.”
- Innovation: DLT has the potential to enable new business models and innovations, as it provides a platform for secure and transparent peer-to-peer transactions. For example, Maecenas’ blockchain-based platform for investing in fine art has created a new way for investors to access the art market, increasing liquidity and transparency. As stated by Marcelo Garcia Casil, the CEO of Maecenas, “We believe that blockchain technology can revolutionize the art market by creating a more open, transparent and democratic ecosystem.”
Use cases for DLT
DLT has a wide range of potential use cases across various industries. Some of the most promising use cases for DLT include:
- Supply chain management: DLT can also revolutionize supply chain management by providing real-time visibility into the movement of goods and reducing the risk of fraud and errors. For example, IBM’s blockchain-based platform, Trust Your Supplier, streamlines supplier onboarding and verification, reducing the time it takes to onboard a new supplier from weeks to days. As stated by Renee Ure, the Vice President of Supply Chain at Lenovo, “We see blockchain as a game-changer in the supply chain industry, unlocking efficiencies and reducing costs.”
- Identity management: DLT can also improve identity management by providing a decentralized and secure way to manage personal data. For example, Civic’s blockchain-based identity verification platform allows users to securely store and share their identity information with businesses and governments. According to Vinny Lingham, the CEO of Civic, “blockchain technology is uniquely suited for identity management because it enables individuals to maintain control over their own data.” The United Nations has already launched a blockchain-based digital identity system for refugees.
- Voting systems: DLT can also be used to create secure and transparent voting systems, increasing trust in the electoral process. For example, Voatz’s blockchain-based mobile voting system has been used in several elections, including the 2020 Utah Republican Convention. Sierra Leone is also working on a blockchain-based voting system.
- Finance: DLT has significant implications for the finance industry, as it can streamline processes, increase transparency, and reduce costs. For example, JPMorgan’s blockchain-based payment system, Interbank Information Network, has reportedly reduced the time it takes to resolve compliance issues from weeks to hours. According to Umar Farooq, the CEO of JPMorgan’s blockchain business, “we’re seeing very significant efficiencies, and that’s what’s driving our interest in this space.”
- Healthcare: DLT can also transform the healthcare industry by improving data management and patient care. For example, Medicalchain’s blockchain-based platform allows patients to control their medical records and grant access to healthcare providers, increasing patient privacy and efficiency. As reported by Dr. Abdullah Albeyatti, the CEO of Medicalchain, “blockchain technology can help to make healthcare more patient-centric, efficient and secure.”
DLT is an exciting and rapidly evolving technology that has the potential to revolutionize the way we store and transfer data. While there are still challenges to be overcome, such as scalability and regulatory uncertainty, the potential benefits of DLT are significant. As more use cases for DLT are developed and tested, we can expect to see increasing adoption of this technology across various industries. As stated by Don Tapscott, a leading expert on blockchain technology, “The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”