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Distributed Ledger Technology (DLP) is a digital system for recording transaction transactions in which transactions and related details are recorded in multiple locations at the same time. Unlike traditional databases, distributed accounting books do not have data storage or central administration capabilities.
In a distributed ledger, each node processes and verifies each element, thus generating a record of each element and creating a consensus on the veracity of each element. A distributed ledger can be used to record static data, such as a log and dynamic data, ie transactions.
This computer architecture represents a significant revolution in maintaining registers by changing the way information is collected and communicated.
Origins of the registers
Account books – which are essentially a record of transactions and similar data – have existed in paper form for millennia. They became digitalized with the advent of computers in the late 20th centuryth century, although computerized records generally reflected what once existed on paper.
However, throughout history, a central authority needed to validate the authenticity of transactions recorded in the registries. For example, banks must verify financial transactions.
Now, 21st The technology of the century has allowed the next step in record keeping with cryptography, advanced algorithms, stronger computing power and almost ubiquitous computing power, making the distributed register an increasingly vital form of record keeping.
Implementation of generalized accounting
Blockchain, which groups the transactions into chained blocks and then transmits them to the nodes of the network, is probably the best known type of distributed ledger technology. It powers Bitcoin, the digital currency created in 2009. Bitcoin is also known as a peer-to-peer network.
Other entities using blockchain include Overstock.com, the Salt Lake City-based online retailer who delivered the first when trading shares on a blockchain-based platform in December 2016.
Because they are important
Generalized accounting technologies have the potential to speed up transactions by eliminating the need for a central authority or an intermediary. Likewise, distributed registries can reduce transaction costs.
Experts also believe that distributed register technology is much safer because each node in the network contains records, thus creating a system that is more difficult to manipulate or attack successfully.
Many also consider a distributed ledger to be a much more transparent way of handling records because the information is shared and then tested across a network, which makes a successful cyber attack far more unlikely.
Benefits of distributed general accounting
Much of the first interest in distributed register technology was its application in financial transactions. This is understandable, considering that bitcoin cryptocurrency has gained worldwide use, while at the same time demonstrating that DLT can really work. Banks and other financial-related institutions have also become early innovators in this space.
However, DLT advocates say digital registers can be used in multiple areas, including government and commercial relationships, as well as financial transactions. Experts believe that digital registers can be used in tax collection, in the transfer of real estate, in the distribution of social benefits and even in voting procedures. They also say that DLT can be used to process and execute legal documents and other similar exchanges.
Some believe that people can use this technology to better contain and control personal information, and then selectively share pieces of those records when needed; The cases of use here include individual medical records and company supply chains.
In addition, supporters say digital records can help better track intellectual property rights and ownership for art, raw materials, music, movies and more.
The future of distributed ledger technology
If generalized accounting technologies, such as blockchain, will revolutionize the way governments, institutions and industries work is an open question. Academic and financial press articles have wondered whether distributed accounting technologies as they exist now are sufficiently reliable to be used on a large scale. The problems include the scarcity of regulations for this new form of exchange and security concerns.
