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Central databases are everywhere. Whether it's listening to your favourite Spotify playlist, checking your email on Gmail, paying for a coffee using your contactless card at Starbucks or sending a message via WhatsApp, we all use centralised databases everyday.
But this current system presents a number of challenges.
*🔓 Security - If these centralised databases get hacked into, they can expose all the data at once. We've seen that happen more and more recently.
💵 Cost - Building centralised systems is often expensive as a company needs to provide all the digital capacity to make a system run smoothly.
📊 Your data - In these centralised systems, your data is not your own, and is often monetised by the networks you give that data too.
🌫️ Transparency - How information gets used, by whom and for what is a bit of a grey area today.
The decentralised internet can change that.
What is Distributed Ledger Technology
DLT stands for Distributed Ledger Technology. A distributed ledger is an online record of data and transactions.
It is similar to the databases we highlighted above, except data is stored in multiple places at the same time. DLT is the collective name given to any technology which uses this kind of system. Some well known examples of Distributed Ledger Technology include:
- 💰 CryptoCurrencies - A digital currency like Bitcoin or Ethereum. One of the biggest uses of DLT we see today is to keep a record of monetary transactions.
- 🔗BlockChain - A decentralised system for recording transactions. Blockchain was first used to store transactions on the Bitcoin network. Blockchain is probably the most widely known example of DLT. But there are many others.
- 💻 Git - Git is distributed source control software. Anyone who is a developer will be familiar with using Git to manage different versions of the code they are writing. Git is everywhere.
Centralized, Decentralized, Distributed
These are 3 the key words in this space which are often confused. Lets break them down:
Centralised - Data stored in one central location - in reference to control being held at one point or entity.
Decentralised - Data stored in many locations.
Distributed - A network where devices are connected and talk to one another, like in communication and computing.
The words centralised and decentralised are opposites. But the words decentralised and distributed are linked but do not have the same meaning. For example, you can have a centralised, distributed system (like DropBox) and decentralised, distributed system (like FileCoin).
A New Movement
Distributed Ledger Technologies are creating a version of the internet that is both decentralised and distributed.
This means instead of a big company like Amazon or Google having one huge database, a new type of record can be kept simultaneously on many connected devices.
In a decentralised model, the value and benefits can be shared across a network of users. Typically large companies capture and control this value themselves.
If Distributed Ledger Technologies are built successfully it can mean:
- 👐Greater accessibility
- 👀Greater transparency
- 🏭Greater efficiency
- 💸Higher user reward
- 🚀New possibilities
The Future 🔮
We're just at the beginning of what this technology can do. Like the internet in the early days, it faced a number of challenges, especially when it came to scaling. DLT is no different.
The majority of applications of DLT are yet to be discovered. However, the space is moving incredibly quickly, and developers are building new solutions all the time.
The future is distributed.