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DLT is a database system in which ordinarily, multiple independent computers (referred to as nodes) are used to record, share and synchronize transactions in their respective electronic ledgers, instead of keeping data centralized as in one traditional ledger. This does not only minimise the risk of a cyberattack but also ensures that the participant at each node of the network can access recordings shared across the network. All the data stored on such database system is secured through keys and cryptographic signatures, making it a safe and secure medium for transactions.
DLTs are also being regarded as being very practical as they remove the need for a central authority or middleman, speeding up transactions in the process. Thus, the cost of trust which one places in third parties when conducting transactions of value is avoided. Trust on the other hand is being placed in this new technology as it enhances transparency and accountability.
Notably, DLTs can be either public/permissionless or private/permissioned. An example of a public/permissionless DLT is bitcoin’s blockchain whereby everyone can be a node and join the network. On the other hand, an example of a permissioned DLT is Bankchain, where the participants are known and access to the network is limited to such participants who have been given permission.
Currently, a lot of DLT’s hype revolves around its application in financial transactions. However, it would be wrong to limit its use to one sole function. Proponents of DLT state that it can be used in multiple areas, for instance for charities, where the use of a public DLT can boost fundraising transparency and hold charities a lot more accountable for the impact of their work; or for the academic community, where academic qualifications on blockchain would entail validation and evaluation that is reliable internationally. Notwithstanding what it is used for, DLT caters for an exciting future which could end up revolutionising the way how governments and industries operate.