how distributed ledger technology dlt works
dlts allow information to be stored securely and accurately using cryptography the data can be accessed using keys and cryptographic signatures once the information is stored it can become an immutable database the rules of the network written into the coding of the database programming govern the ledger if something is immutable it is unable to be changed distributed ledgers are only immutable if they are programmed to be that way blockchains are immutable because they are decentralized and cryptographically enhanced public ledgers because they are decentralized private and encrypted distributed ledgers are less prone to cybercrime as all the copies stored across the network need to be attacked simultaneously for the attack to be successful additionally the peer to peer sharing and updating of records make the whole process much faster more effective and cheaper every device on a distributed ledger network stores a copy of the ledger these devices are called nodes a network can have any number of nodes any changes to the ledger such as moving data from one block to another are recorded across all nodes because each node has a copy of the ledger each one publishes its version with the latest transactions if the network reaches a consensus about the validity of the latest ledger the transactions are finalized encrypted and used as a basis for the following transactions this is how blockchains develop each block contains encrypted information about the proceeding block which makes them impossible to change industries using distributed ledger technologydistributed ledgers are created for many different purposes but one of the most used ways is as a platform for others to scale and use one of the more well known distributed ledgers is hyperledger fabric it is a modular and scalable dlt platform several businesses have used to create solutions that span many industries some industries that have implemented dlt solutions include aviation education healthcare insurance manufacturing transportation and utilities 2supply chains can benefit greatly from dlt many factors make these chains inefficient inaccurate and susceptible to corruption or losses fujitsu a global data and information technology company has designed distributed ledger technology to enhance supply chain transparency and fraud prevention by securing and tracking data fujitsu s rice exchange was created to trade rice ensuring data regarding sources prices insurance shipping and settlement are recorded on the ledger anyone involved can look at any data and find accurate information regarding the entire process because it cannot be changed all data is entered and secured automatically by the platform it will eventually provide tracking information for rice shipping containers as they are shipped to their final destinations 3uses of distributed ledger technologyaside from specific industries there are also specific situations where dlt solutions have proven to add value some examples of specific dlt uses include dlt may also be referred to as a shared ledger as it requires a ledger to be shared across a peer to peer computer network advantages and disadvantages of distributed ledger technologydlt holds many benefits over more traditional centralized ledger systems because dlt is a decentralized system there is no central point of control or failure this makes dlt more resilient to attacks and less vulnerable to system wide failures also because dlt uses cryptographic algorithms to secure data it is nearly impossible to tamper with or forge records this enhances the trustworthiness of the data and reduces the risk of fraud dlt allows for transparent access to data and transactions allowing all users greater visibility into the operations of the system this may lead to greater buy in from users due to transparency and accountability of records dlt can streamline processes by removing intermediaries and automating transactions through smart contracts because smart contracts may automatically execute when contract conditions are met there may be less need for human interaction or administration this can reduce costs and increase efficiency lastly dlt can enable greater financial inclusion some people may not have access to traditional banking services as dlt often relies only on an internet connection individuals who would be otherwise limited may have access to a greater range of services this extends to the use of different platforms and networks via interoperability due to dlt s infancy there are still considerable downsides to the technology dlt is still complex and difficult to implement and maintain leveraging the solution often requires specialized knowledge and expertise especially to implement dlt can struggle with scalability as the number of participants and transactions increases as a result dlt processes may lead to slower processing capabilities or higher use costs in addition some dlts such as bitcoin require a significant amount of energy to maintain the network and process transactions this can have negative environmental impacts the lack of regulation and standardization in the blockchain industry blockchains are derived from dlt can lead to risk for users and investors by extension dlt requires widespread adoption to be effective and many industries and organizations may be hesitant to adopt new technologies due to these security concerns distributed ledgers might be immutable but this benefit also comes with a significant downside if mistakes are made they cannot be changed unless there are users with permission to do so in a public dlt like the bitcoin blockchain this can be problematic for instance if a user typed an erroneous address in their wallet and sent the wrong person some bitcoin they cannot reverse the transaction spreads systematic risk around minimizing the risk of a single point of failure