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What is the Distributed Ledger Relationship?

The most significant point here is the method of sharing, approving and recording information by users within the network.
2020-10-12 16:57:01

What is the Distributed Ledger and its Relationship to Cryptocurrencies?

Distributed Ledger Technology (DLTs) is basically a method that operates according to the principle of consensus. Thus, a multilateral system emerges in which participants agree on the information they share without any central authority and their validity. Distributed ledger technology (now referred to as DDT) is defined as a type of umbrella term that operates on a multilateral ground without a central authority or any operator against parties that may be unsafe and malicious.

Blockchain technology can be considered as a defined subset of the much wider DDT world based on mixed algorithm and consisting of information blocks called "hash” and using a certain information structure. Yet, DDT existed before blockchain technology. In order to prevent confusion, blockchain technology can be considered as part of DDT, which is a more comprehensive technology. Distributed ledger technologies are defined as a specific database version in which information is recorded, synced and shared within a distributed network by computers or users. It is a proprietary distributed ledger technology version that utilizes cryptology science to record and synchronize information in blockchain technology.

The most significant point here is the method of sharing, approving and recording information by users within the network. To put it briefly, all blockchain versions are distributed notebook technology, but not all distributed notebook technologies are blockchain. Blockchain is a chronological database that operates within a distributed network of many nodes or computer systems that track information transactions. It is called blockchain because of the methods in which the information is recorded and approved. In this environment, a certain number of transactions are edited and blocks are encrypted. Each new block is approved when a consensus is reached on computers or node network.

Blockchain should not be considered as a new technology; rather, it should be considered as a unique mix of technologies such as inter-user networks, encryption methods, agreement protocols and distributed data storage etc. This combination was first developed in 2008 to form the basis for Bitcoin, the first decentralized cryptocurrency introduced by Satoshi Nakamoto with a statement. As can be seen, blockchain and DDTs are technologies that provide digital information to circulate independently between the parties under a very high level of security without a third participant or intermediary institutions. The digital information business unit circulating within this network can be a cryptocurrency as well as the metadata of the participants. For example, contracts may represent land data, insurance policies, medical records, purchase or sale of goods and services, marriage and birth certificates or any asset or transaction that can be converted in digital form.


Decentralization, one of the key concepts in the terminology of distributed book technologies, is often misleading as a tool in the system itself rather than as an objective. The approach of system theory can be defined as the absence of a privileged participant party to decentralization, or vice versa, the ability of a participant party to choose other parties to which it relates, or the freedom to choose a party it trusts. One aspect of decentralization in the context of distributed ledger systems is the distribution of information structures created through user participation in the environment to many independent machines under the control and supervision of parties that do not know one another. Here, one party trusts the other and this guarantee also specifies the replication of other critical features of the information.

The theme renewed in all definitions of decentralization is the institutions and processes that participate explicitly and freely and encourage live discussions, rather than leaving the management or decision-making of the system in the hands of a fixed authority. As virtually pure decentralization is an ideal that can be achieved very rarely at both software and hardware levels, it is more useful to identify the elements that contribute to centralization and decentralization in a given spectrum. A system created by a distributed ledger technology may have different levels of decentralization within each of its levels. For example, data layers, protocols, and network layers may be distributed and controllable on a single side, or data and network layers may be centrally connected. However, the protocol layer can be made centralized. As a matter of fact, the distributed ledger system cannot be accepted as centrally or decentralized without considering how it will potentially operate under different scenarios and at different levels and where it will work. Distributed ledger systems may have different levels of decentralization in different layers. Some systems, on the other hand, can deliberately and partially centralize to better meet certain objectives.

Distributed ledger and blockchain technology usage areas

Public and unauthorized decentralized distributed ledger systems, such as Bitcoin, cannot be closed by a single participant, ledger data cannot be manipulated or censored. This enhances flexibility and, as a whole, ensures that the algorithm is always standing, including the losses of network users. Blockchain systems are associated with disputes about scalability, security, continuity, anonymity, the preservation of sensitive and personal information. Blockchain systems will be compatible and complementary with legacy information technology systems in many cases.

It relates to the potential intersection of the blockchain with other digital technologies, such as robotics, artificial intelligence, the Internet of Things, or additive production. Due to the special mix of technical details, it is expected that blockchain-based systems will generate various benefits in many areas such as reducing operational costs, enhancing transaction efficiency and security, proving the authenticity or origin of goods, records and contents, and executing smart contracts. In this respect, it can be stated that distributed ledger technologies have the potential to reshape the market at high innovation levels.

Internet of Things (IoT)

Internet of things (IoT) and blockchain are within an innovative union. IoT networks are often used to gather information from independent and distributed sources. Blockchain technology allows the information collected through the interaction of objects with each other to be recorded in a transparent and unalterable log ledger with the Internet of Things devices. In addition to security procedures and cryptocurrencies applications, blockchain technology provides a very suitable basis for the transactions requested to be performed from device to device.

It is now known that blockchain and distributed ledger technologies will access our lives more in the future and affect almost every sector. Today, blockchain technology used in banking, data science, defence industry and military technologies, tourism and health sectors has started to take part in the context of protection of identity and personal data in terms of individual use. 

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