What Is Distributed Ledger Technology?



While the concept of distributed ledgers has been around for a long while, it wasn’t until in recent years that it became a reality. The most popular implementation of distributed ledgers is blockchain, the technology that supports cryptocurrencies such as bitcoin and ethereum.

Blockchain uses computing power and cryptography to maintain its distributed ledger. Every node that participates in the network stores a copy of the blockchain. Blockchain records are grouped into blocks and are sequentially linked together through cryptographic hashes. Hashes are mathematical representations tied to the data structure of each block. The slightest change in any transaction changes the hash of its block and all blocks that come after it, making it invalid. This mechanism further protects the blockchain against tampering and makes it easier for the nodes to validate new transactions.

Blockchains have a consensus mechanism that enables the participants in the network to agree on transactions that can be added to the ledger. Every few minutes, a network of computers called “miners” runs mathematical operations to create new blocks from recently submitted transactions. Once a new block is confirmed, all the nodes append it to their copy of the blockchain (learn more at Blockchain explained and How does bitcoin mining work?).

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