What is distributed ledger technology (DLT)?

A distributed ledger technology is a type of database used to record transactions related to assets or data. The transaction details are recorded at multiple locations simultaneously. The distributed ledger does not involve any central authority, intermediary or central data storage system but instead involves the distribution of data among numerous participants spread across various geographical locations. 

In a distributed ledger, participants are allowed to record, share, replicate and synchronise transactions and data across the decentralised network. The participants are responsible for governing and using consensus mechanisms to approve changes to the transaction records. These transactions in a distributed ledger are auditable and immutable, as all transactions in the distributed ledger have a unique cryptographic signature and timestamp.

Blockchain & Distributed Ledger Technology: How It Works?

Distributed ledger technology is one of the elements that make up the blockchain. Blockchains use various other technologies, such as distributed networks, digital signatures, encryption and decryption methods, to make blockchains functional. 

A blockchain can be described as a digital ledger of transactions that are distributed throughout the network of nodes or computers. It uses distributed ledger technology to record, replicate, share and synchronise transactions on various independent nodes, in their respective ledgers, instead of a centralised server.

DLT uses cryptography, which makes transactions on the blockchain ledger impossible to alter. Blockchain technology makes digital asset transactions more transparent, secure and trustworthy. 

Distributed Ledger Technology (DLT) vs Blockchain

Distributed ledger technology and blockchain are often mistaken to be the same and are used interchangeably. However, it is important to note that blockchain is a type of distributed ledger. In short, all blockchains are distributed ledgers, but not all distributed ledgers are blockchains. Although they are very similar, it is essential to understand what makes them different.

Advantages of Using Distributed Ledger Technology In Blockchain

  • Integrity 

Transactions once recorded on the network cannot be altered, this ensures the integrity of the blockchain is preserved. Its immutable and irreversible nature makes the blockchain reliable.  

Chances of fraud or errors are also tremendously reduced as it does not have a single point of failure.

  • Reduce overall costs 

The use of DLT in blockchain reduces operational inefficiencies. This is because the need for a third party is eliminated in a distributed ledger, increasing automation and speeding up the process, all of which contribute towards reducing the overall costs for organisations that use them.

  • Traceability

Data on the blockchain ledger is timestamped, making tracking and verifying information easy.

This simple flow of information creates a very secure audit trail which comes in handy for financial audits.  

  • Empowers the user 

DLT and blockchain allow users to participate without any central authority overlooking them. This gives the users control over the information and data on the digital ledger, empowering them to maintain the network.

Types of distributed ledger technology 

This technology can be categorised into three types: 

  1. Permissioned distributed ledger

In this type of distributed ledger, the nodes are required to take permission from a central authority to access or modify data on the ledger. The permission controls usually include identity verification. 

  1. Permissionless distributed ledger

In permissionless distributed ledgers, all nodes on the network have access to the complete and updated copy of the ledger. As the name suggests, no permission is required as there is no central authority. All the nodes are responsible for validating transactions on the ledger.

  1. Hybrid distributed ledger

Hybrid distributed ledgers are a mix of both permissioned and permissionless types providing benefits of both these ledgers.  

Uses of Distributed Ledger Technology

  • Finance and banking

Distributed ledger technology is transforming the financial industry as multiple processes are being streamlined and automated, such as trade finance, clearing and settlement, and identity verification. The banking sector also leverages DLT’s decentralised structure to make cross-border payments less complex, quicker, and cost-effective.

  • Supply chain management

The use of distributed ledgers improves the transparency and traceability of supply chains. Its immutable and secure nature makes recording interactions and transactions between various parties easy to track. This improves accountability and efficiency while reducing the risk of fraud and errors.

  • Healthcare

In the healthcare industry, patient records can be securely stored and managed using DLT. Clinical trials and drug supply chains are also made more efficient and transparent. 

  • Governance

Distributed ledgers make voting systems more transparent and secure as they provide an auditable and secure record of votes. Other government processes that involve issuing permits and licenses and managing public records can be made more efficient using DLT.   


Blockchains were born out of distributed ledger technology, which brought about recognition and popularity for this technology. DLT is now becoming necessary in modern businesses to increase efficiency and security. Due to its benefits, several industries like finance, banking, supply chain, healthcare and many more are relying on DLT. To use these technologies for you or your business, understanding how blockchain and distributed ledger technology work together is essential to make the most out of these technologies. 

More contents to be discovered

If you are interested in discovering how blockchain is implemented in the industry, these are some of the best resources that can help you out!

This image has an empty alt attribute; its file name is 40-1024x284.png
This image has an empty alt attribute; its file name is 41-1024x284.png

Learn the skills of Fintech

Learn the skills of Fintech

More To Explore

Frequently Asked Questions

The Centre for Finance, Technology & Entrepreneurship (CFTE) is a global education platform that aims to equip financial professionals and organisations with the necessary skills to remain competitive in a rapidly changing industry. Our leading training programmes, curated by global industry experts, help talent build skills to join the digital revolution in finance. CFTE’s courses are globally recognised with accreditations from ACT, IBF, CPD, SkillsFuture and ABS.

At CFTE, our mission resonates with every learner’s goals to rapidly advance in their career, to thrive in their next project or even to lead the disruption in finance with their own venture. To help you do this, CFTE gives you the tools you need to master the right skills in digital finance. We bring exclusive insights from leaders that are steering the developments in the financial sphere from global CEOs to disruptive entrepreneurs. With CFTE you don’t just learn what’s in the books, you live the experience by grasping real-world applications.

If you are looking for rich insights into how the Financial Technology arena is transforming from within, we can help you get the latest knowledge that will stir things up in your career. CFTE offers leading online programmes in digital finance, covering an expanse of topics like – Payments, AI, Open Banking, Platforms, Fintech, Intrapreneurship and more, that will help you conquer the financial technology landscape. With this expertise at your disposal, you will be on track to turbocharge your career.

You will be learning from a curated line-up of industry leaders, experts, and entrepreneurs hailing from Fortune 500 companies and Tech Unicorns, among others. They will each be presenting their knowledge and experience in the field of digital finance. No matter if you are embarking on a new journey or fortifying your role, these lecturers and guest experts will guide you through the perspective of established institutions like – Starling Bank, Wells Fargo, tech giants like – Google, IBM, successful startups such as – Kabbage or Plaid, among many more!