Distributed Ledger Technology (DLT) refers to technological infrastructure and protocols that allow simultaneous access, validation, and record updating in an immutable manner across a network spread across multiple assets or locations. In a market dominated by the traditional market, brokerage firms oversee the changes that take place in transactions. For example, when our salary is credited to our account, a bank controls this process. Today, we carry out most of the transactions that need to be recorded through banks. At this point, the banks that keep and supervise the records, or the other organizations that carry out these records, have the sole power.
When you look at it, it is necessary to have a great deal of trust in an organization to which you entrust your assets. From a historical point of view, securing the books in which our assets are recorded with such intermediary institutions has been the most preferred method. To give an example to explain this situation, if our salaries that you receive from the place where we work were controlled by the companies we worked for, this situation could be manipulated by malicious people and would allow changes to be made in the book. In order to prevent malicious acts of malicious people, it is preferred for an impartial intermediary institution to supervise and record these transactions to ensure the necessary trust.
Of course, the need for a brokerage firm, which we have mentioned until recently, is now changing. We can say that the central ledgers, which have ceased to be the only option, have now been replaced by distributed ledger technologies. In this way, we can now easily carry out our transactions without the need to trust a bank. Unlike centralized organizations being vulnerable to cyber attack, this is more difficult for Distributed Ledger Technology because a successful cyber attack requires it to attack all distributed duplicate ledgers at the same time. In addition, the fact that no changes can be made to be made on it increases the confidence in this system.
In addition to its use in financial markets, we are able to eliminate intermediaries in many sectors such as healthcare, energy, telecommunications and supply chain. With this technology, individuals or institutions can safely trade and invest, including cash, immovable property and intellectual property they hold.
Unlike banks, which are the most preferred brokerage firm today, this technology, which works 24 hours a day, 7 days a week, eliminates the need to wait for transactions to take place. In many cases, we lose time for the transactions we try to carry out through the intermediary of banks. For example, if the transaction we are going to make is an EFT transaction, we may need to wait for working hours for it or pay a high transaction fee if this transaction is Swift. Thanks to the technology that prevents these situations, it will be more preferred by users in the future.
The Relationship Between DLT and Blockchain
If we talk about Blockchain, which is the most well-known of Distributed Ledger Technology today, blockchain is not the only example of Distributed Ledger Technology. It was launched in 2009 for the crypto currency Bitcoin. Thanks to this technology, users obtain secure and unchangeable data with a permanent record after verifying transactions. Unlike banks or other brokerage firms, blockchain is more cost-effective and convenient, so assets can move instantly without the need for a broker. The fact that the records cannot be changed and that they are recorded by many users increases trust. While performing these transactions, it reduces the intermediaries and does not need paper transactions, which increases efficiency while the transactions are carried out faster.
Distributed Ledger Technologies allow institutions or individuals to carry out their transactions quickly and securely without the need for an intermediary institution to perform their transactions. Thanks to this technology, which does not have intermediaries, the control of the recorded ledger is distributed and offers a more cost-effective, accessible and secure platform than centralized structures.
