Distributed Ledger Technology Key Points

Behzad Pournouri
4 min readFeb 28, 2020

Distributed ledger technology (DLT) is using for recording the transaction of assets in which the transactions are recorded in multiple places at the same time. in other words, It’s a database that is spread across several sites.

Distributed ledger technology is the umbrella term to describe any system that distributed data across multiple computers.

There are several types of distributed ledgers like Blockchain, Tempo, DAG, etc.

All Blockchains are distributed ledgers but all distributed ledgers are not Blockchains. It more synonymous with google and search engine where google is a specific type of search engine, similarly Blockchain is a specific type of distributed ledger.

Some benefits of distributed ledgers technology

Distributed ledger technology has the potential to speed up the transaction because of removing the middleman.

apart from that DLTs also have the potential to reduce the cost of transactions too, as fees taken by the middle man is removed from the process.

Distributed ledger technology also is much more secure than traditional technology because each node of the network holds all of the records. that is more difficult to manipulate or successfully attack compare to the central technology.

It also gives control of all its information and transactions to the users and promotes transparency.

How distributed ledger technology affects businesses?

DLT creates a permanent, decentralized, global, trustless ledger of records. One of the primary examples of distribution created by DLTs is cryptocurrency.

whenever a new cryptocurrency is created, the cryptocurrency is not their product. it’s more of like a market for distributed ledgers technology. they are created a new economic system where the tokens are the unit of exchanges and the DLT dictates the rules of each participant in their economic system. They are developing the rules of a new game that anyone can participate in.

This kind of market enables and fosters new types of collaborations and also allows for the participation of previously uninvolved parties.

Let’s divide the effect of DLTs over businesses into 3 major components:

  • Transforming internal processes and operations
  • Transforming business models
  • New opportunities

Now let’s look at each of the 3 component steps by steps.

Transforming internal processes

This one looks into the benefit potential along with the internal processes and interactions within the business value network. It can be in the form of Payments, Asset tracking, Data sharing, and Identity management.

  • payments: Distributed payments cut out the middleman and their additional charges. moreover, they are also reducing the administrator cost.
  • Asset tracking: A distributed ledger can permanently store all the details of the data. for example, if you are doing or tracking for the ownership of goods in the supply chain.
  • Data sharing: This one is a major driving force because we require the exchange of data without any cost of running third-party services. we also need to maintain the security and integrity of data. for example, if we do a KYC of public records over DLT.
  • Identity management: Where we require to reduce the redundancy and storing user control identities. we also require to reduce the cost of doing the same process multiple times. an example could be if we run an academic credential verification process using DLT.

Transforming business models:

The second type of transformation which can happen using Distributed ledger technology is transforming business models. This includes looking beyond the technology and including the value potential related to new types of customer interactions and innovative ideas for business models.

  • Customer engagements: If we create an economy with the integrative incentives for the participant, then customer engagement will be much higher than the traditional technology.
  • Micro transactions: Current processes only allow customers to do full transactions. they cannot go and buy the micro property or pay for what is actually consume at their end.
  • Creating new markets: It could be related to the asset on top of blockchain which can be related to the real asset in the physical world.

New Opportunities:

Distributed ledger technology might create new opportunities which are neither part of the core value chain nor the core business model.

  • Funding: We have seen the ICO in 2007 which made the cryptocurrency offerings and acceptable funding for early-stage startups.
  • Access to data: Token economies can create market places where the right incentives will allow for the creation and exchange of personal data and data from privately own devices.
  • Crowd collaboration: Where mechanism offers a token economy to provide incentives based on actions and behaviors that can lead to collaboration beyond the boundaries of the organization.
  • Self governed organizations: We can use a Distributed ledger to perform virtual organizations without any employees running the actual offices.

Realizing of challenge

  • Digital disruption has pushed more than half of the fortune 500 companies out of business since 2000, and the adoption of DLT is likely to aggravate this trend.
  • The adoption of new digital technologies brings pressure on profitability through competitors as everyone wants to deliver faster and better products.
  • Some businesses run through a middleman and cutting them out would be challenging.
  • The risk of being decentralized over token economies might affect market shares for businesses.

So that was about some of the key points of distributed ledger technology. In the next article, we will get familiar with Hyperledger fabric and see how it uses the Distributed Ledger Technology.

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Behzad Pournouri

I build smart contracts and distributed applications | Blockchain developer | Hyperledger Fabric | Ethereum