Chain Reaction: Distributed Ledger Technologies (DLT) simply explained



is it a revolution or just hype perhaps something in between one thing is clear blockchain is one of today's big taking points experts see a technology that will influence our life a new phase of the internet but what is the belief based on blockchain is momentarily the best-known distributed ledger technology DLT for short this is primarily due to the hype surrounding the Bitcoin cryptocurrency which is based on blockchain technology the lt''s describe digital databases in which every member can supplement the data stored they're not centrally in a cloud but locally on each computer on the network functioning as ad central peer-to-peer network one of the features the D central consensus mechanisms that are implemented through algorithms on the participating computers this so-called mining verifies the data in the D central network makes DL T's transparent safe and D central and by that the backbone for future transactions and verification processes in the case of blockchain a new digital block with a distinctive signature containing the hash value of the preceding block is written for every new set of information the members check the new information using a consensus protocol before it has incorporated as a block within the chain and becomes immutable from then on proof of work which is the best known consensus mechanism uses computing capacity of the members to validate the transactions this form of mining is very resource-intensive due to the laborious computing caused by complex calculations however this effort is part of the secure consensus protocols design and protects the network from being manipulated as it renders attacks an economic at the same time there are more flexible ways to secure the consensus such as proof of stake for use cases where the safety requirements are not as high in proof of stake users with more tokens have more power in the consensus finding process this happens with the assumption that the user has no interest in damaging his token value and his influence by harming the system if one has significantly higher speed requirements then one can use DLT for framework contracts and perform the exchange of information by a so-called second layer mechanism on the second layer transactions are processed at higher rates an alternative approach for use cases with higher transaction rate requirements could be making use of the DLT variant directed acyclic graph da g in contrast to blockchain consensus finding in da G's is achieved if the user validates for each new transaction at least two previously not validated transactions with every user participating in the network the transaction rate is increased at least in theory however this advantage of scalability is at a research stage and not yet completely proven in practice distributed ledger technologies are highly relevant in the future because they enable an economy of things safe transactions between humans and machines immutable indisputable information and as a consequence the capability for smart contracts embedded in a program code to be able to guaranteed these central automated contractual transactions intermediaries will become redundant businesses will be decentralized and ultimately be performed between machine and machine cars charge themselves negotiate the prices at the charging station and settle the bill in an economy of things distributed ledger technologies create and ensure the basis for trust fairness and participation in the decision-making process as a result DLTS enable inter-sectoral of value creating networks

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