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What Is Distributed Ledger Technology

DLT tecnologias

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12 views2 pages

What Is Distributed Ledger Technology

DLT tecnologias

Uploaded by

rosemeire.ferraz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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21/11/2023, 15:10 What is distributed ledger technology?

What is distributed ledger technology?

 BIS Quarterly Review | September 2017 | 17 September 2017

(Extract from page 58 of BIS Quarterly Review, September 2017)

Distributed ledger technology (DLT) refers to the protocols and supporting


infrastructure that allow computers in different locations to propose and
validate transactions and update records in a synchronised way across a
network. The idea of a distributed ledger - a common record of activity that is
shared across computers in different locations - is not new. Such ledgers are
used by organisations (eg supermarket chains) that have branches or offices
across a given country or across countries. However, in a traditional distributed
database, a system administrator typically performs the key functions that are
necessary to maintain consistency across the multiple copies of the ledger.
The simplest way to do this is for the system administrator to maintain a
master copy of the ledger which is periodically updated and shared with all
network participants.

By contrast, the new systems based on DLT, most notably Bitcoin and
Ethereum, are designed to function without a trusted authority. Bitcoin
maintains a distributed database in a decentralised way by using a consensus-
based validation procedure and cryptographic signatures. In such systems,
transactions are conducted in a peer-to-peer fashion and broadcast to the
entire set of participants who work to validate them in batches known as
"blocks". Since the ledger of activity is organised into separate but connected
blocks, this type of DLT is often referred to as "blockchain technology".

The blockchain version of DLT has successfully powered Bitcoin for several
years However, the system is not without drawbacks: it is costly to operate
(preventing double-spending without the use of a trusted authority requires

https://www.bis.org/publ/qtrpdf/r_qt1709y.htm 1/2
21/11/2023, 15:10 What is distributed ledger technology?

transaction validators (miners) to employ large amounts of computing power to


complete "proof-of-work" computations); there is only probabilistic finality of
settlement; and all transactions are public. These features are not suitable for
many financial market applications. Current wholesale DLT payment
applications have therefore abandoned the standard blockchain technology in
favour of protocols that modify the consensus process in order to allow
enhanced confidentiality and scalability. Examples of protocols currently being
tested by central banks include Corda and Hyperledger Fabric. Corda replaces
blockchain with a "notary" architecture. The notary design utilises a trusted
authority and allows consensus to be reached on an individual transaction
basis, rather than in blocks, with limited information-sharing.

See also Chapman et al (2017), CPMI (2015) and Benos et al (2017). The amount of energy
currently being used by Bitcoin miners is equal to the energy consumption of Lebanon and
Cuba (see http://digiconomist.net/bitcoin-energy-consumption). For a detailed description of
proof-of-work, see https://en.bitcoin.it/wiki/Proof_of_work.

Related information
Full chapter: Central bank cryptocurrencies

https://www.bis.org/publ/qtrpdf/r_qt1709y.htm 2/2

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