What is Distributed Ledger Technology (DLT)?

Distributed Ledger Technology (DLT), AKA blockchain and other similar technology, is a way to describe the technology behind distributed databases secured by cryptography and consensus.

In simple terms,

  • Blockchain is one type of distributed ledger technology. Other crypto systems use other types of distributed ledger technologies. For example, IOTA uses a DLT called Tangle.
  • With substantially all cryptos, there is a public ledger of data (ledger) submitted and held by many users/computers (distributed),
  • That ledger is verified by may different users/computers running software (distributed),
  • The data is recorded in sequential time stamped blocks on the ledger (for example with blockchain) or recorded using another unique method (for example with other DLTs) and is generally secured by cryptographic hashes (crypto aka cryptographic).

This creates a partially encrypted public ledger of data that is transparent as it is trustworthy.

The many users agreeing on the current version of the data secures the ledger via consensus, the cryptographic hashes secure the ledger via cryptography, and the ordering of blocks of data secures the data in terms of a sequence of events.

This is useful because the ledger, and any sort of transactions or data recorded to the ledger, is alway transparent and easy to access, doesn’t require the trust of a central party (it is trustless), doesn’t live on a single server that can go down, and can if needed be deployed on a global scale.

DLT, blockchain, fancy decentralized and distributed database protocol, hash-based distributed timestamp server technology, etc, call it what you want; the bottom line is this is the technology that underlies digital assets like Bitcoin and Ethereum and has a variety of other uses.

NOTE: Blockchain both describes the ledger and the technology behind the ledger. Bitcoin is a blockchain-based digital asset that utilizes digital ledger technology, and is in ways the killer app of blockchain, however Bitcoin and blockchain are not the same thing. Bitcoin’s blockchain is one example of how DLT applies to a digital asset, but there is so much more going on than that with DLT and Bitcoin.

NOTE: One thing Distributed Ledgers can double as is a place to store executable programs and their data. Ethereum’s smart contracts utilize the Ethereum ledger in this way. So not only can a public record be kept, but trustless programs can be used alongside the ledger to create what is essentially a distributed and decentralized computer! Learn more about smart contracts. Of course, these are only two of many technologies that the crypto community has developed over the last decade.

Bottomline: Distributed Ledger Technology and Smart Contracts generally belong in the same sentence as Cloud when thinking about new and useful tech for businesses and customers. That said, since blockchain is associated with the market-based price action of Bitcoin, it can be helpful to refer to to blockchain tech by another name… like DLT.

Author: Thomas DeMichele

Thomas DeMichele has been working in the cryptocurrency information space since 2015 when CryptocurrencyFacts.com was created. He has contributed to MakerDAO, Alpha Bot (the number one crypto bot on Discord),...