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Global Fintech Series
6d
234
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Why Distributed Ledger Technology Is More Than Just a Buzzword
- The surge of Bitcoin in 2017 brought distributed ledger technology (DLT) into mainstream consciousness, showcasing its transformative potential.
- DLT is not merely about volatile crypto markets but an architectural innovation for data structuring and sharing across decentralized networks.
- It consists of pillars like data entry structure, inter-node communication rules, and consensus mechanisms ensuring data integrity.
- In fintech, DLT eliminates intermediaries by distributing ledgers across a network, enhancing transparency, reducing friction, and boosting security.
- DLT enables decentralized consensus, whether through permissioned systems for enterprises or permissionless systems like Bitcoin.
- Key traits of DLT include distributed architecture, peer-to-peer communication, tamper resistance, consensus mechanisms, and cryptographic security.
- DLT is crucial for financial inclusion, as evidenced by initiatives like the Better Than Cash Alliance focusing on DLT-based payment projects.
- DLT is being used in real-world applications to help underserved populations access financial services, underscoring its potential for large-scale impact.
- Transparency in DLT is a deliberate design choice, not automatic, and efficiency and security of DLT systems depend on contextual factors.
- While DLT offers benefits like tamper resistance, challenges like energy costs in certain models and vulnerabilities in connected systems must be considered.
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