Distributed Ledger Technology (DLT)

DLT represent a new form of a decentralized database with the ability to establish trust among participants without the necessity of a third-party [2]. Trust in this ledger shifts towards multiple copies and with a reasonable large network ensures safety against corrupted and manipulated information. Consequently, a central authority storing transactional data is not required anymore. However, an additional and  independent mechanism is needed to govern which transactions should be executed and stored. Technical-wise, it must be defined which systemic truth is eventually propagated in the network, the so-called consensus [3]. One concept establishing trust among unknown participants was implemented in the Bitcoin protocol [4]. In fact, it was the first functional solution that enabled a fully public permission-less distributed ledger [1].

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Consequently, the basic concept relates to four main pillars which unified years of research [5]:

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• Peer-to-peer network: The architecture enables the database structure for a distributed ledger

• Transaction logic: Cryptographic methods and digital signatures are used to secure and validate the transactions process between unknown participants

• Immutability of data: The ledger entails consecutive data blocks representing transactions with cryptographically methods stored, interlinked to prior data within a chain

• Consensus mechanism: An algorithm ensures a by all users agreed single true systemic state of the network to synchronize the shared ledger