The Top Three Applications of Distributed Ledger Technology Or DLT
Distributed ledger technology (DLT) is one of the hottest issues in the computer world. With each passing day, the need to understand various DLT use cases becomes more apparent. Simultaneously, many individuals have mixed up blockchain with distributed ledger technologies. Yes, blockchain is one of the most well-known examples of distributed ledger technology, not the technology itself.
Many individuals confuse the terms blockchain and distributed ledger technology. It is crucial to highlight, however, that distributed ledger technology, such as the blockchain, has the potential to offer many beneficial use cases. The following discussion will help you understand the top use cases for distributed ledger technology with several examples.
What is DLT (Distributed Ledger Technology), and how does it work?
The review of distributed ledger technology applications sheds insight into blockchain’s practical applications. On the other hand, it’s critical to recognize the distinctions between blockchain and DLT. Currently, distributed ledger technology is essentially a distributed database with various records and the ability to validate nodes. In distributed ledger technology, the database of records necessitates node validation before adding changes to the ledger.
The discussion on the usage of distributed ledger technology will now focus on the most promising DLT applications. Currently, the majority of talks on DLT’s applications and value advantages are focused on blockchain. However, it’s also worth noting how the contrasts between blockchain and distributed ledger technology take center stage in various DLT application cases.
Top three Distributed Ledger Technology Use Cases (DLT)
1. Making Use of Smart Contracts to Simplify Industrial Processes
Smart contracts are mentioned as the first answer to the question, “What is distributed ledger technologies used for?” Smart contracts are one of the most well-known applications of DLTs in the industrial sector. Individual pieces of code that define relationships and interactions between two parties are known as smart contracts.
The term “contract” is appropriate because the code specifies some specified conditions and parameters for carrying out a predefined action or behavior. Surprisingly, smart contracts’ fundamental form makes them suitable for a wide range of applications, including describing all facets of a partnership.
- The following are some significant smart contract use cases in industries for process automation.
- Maintaining shipment deadlines from the time of order until when the products are received.
- A procurement system determines a high or low price threshold for various materials.
- Taking care of quality assurance requirements that must be met before forwarding products to the next stage of production.
- Creating invoices and settlement circumstances.
Smart contracts and blockchain and distributed ledger technology application cases are likely to gain public attention in the next years. How will they provide any value-added benefits? The following are some of the most noteworthy advantages of using smart contracts.
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Smart contracts should be considered as a technique for providing greater transaction transparency. In DLT examples with smart contracts, accountability is one of the most important value benefits. Smart contracts’ availability on a globally accessible blockchain network has the potential to promote transparency.
Smart contracts can be found in the immutable blockchain record, providing simple fraud protection.
The next important benefit of using distributed ledger technology with smart contracts is huge cost reductions. Smart contracts can help you save time by reducing the amount of time it takes to manage various processes and operations. The reduction of paper used in many procedures demonstrates the importance of saving.
Another significant feature of distributed ledger technology applications is speed. Smart contracts make it possible to circumvent the need for traditional approval processes. As a result, DLT can assist in the elimination of traditional intermediaries from traditional transactions.
2. Identify Theft Prevention
One of the primary DLT examples, blockchain, also makes a strong case for preventing identity theft. We’ve seen the internet grow alongside the need for personally identifiable information throughout time. Access to various online services requires personally identifiable information or PII.
As a result, PII has laid the groundwork for an increase in dangers such as identity theft and data exploitation. It’s worth noting that about 2.6 billion records were compromised in 2017, and the number of incidents increased dramatically in the following years.
The current rate of the internet, as well as all other connected services, indicates that they are unlikely to slow down anytime soon. Simultaneously, emerging technologies such as the Internet of Things (IoT) make things more complicated. As the Internet of Things (IoT) solutions have become more widely adopted, personal data has become more vulnerable. What instances of distributed ledger technology will be useful in this situation?
To begin with, one could consider how blockchain’s immutability could provide desired security benefits. Blockchain might be the foundation for innovative and secure methods of identifying people. Civic’s Secure Identity Platform, or SIP, is the most well-known example of DLT use cases for secure personal identity.
It’s a decentralized platform that facilitates the execution of various secure transactions using cryptographically protected PII. Customers can use services like Civic SIP to help with security verification, validation, and encryption of personally identifiable information. Banks and financial organizations, as well as other suppliers, can validate transactions using an individual’s digital profile. As a result, banks and retail vendors would be able to readily identify and verify valid transactions.
Also, read – Understanding Blockchain’s Layer 3 Protocol
3. Transaction Security and Immutability
Almost every response to the question “What is DLT used for?” revolves around another key characteristic of distributed ledger technologies. Immutability is an intrinsic feature of distributed ledger technology, regardless of the type of DLT network. It’s worth noting that in the event of changes to the SoR, the immutable ledger in DLTs acts as a zero-trust network for multiple-party data validation. You should also be aware that no one can change or modify the record when validated and entered into the ledger.
The immutability property of DLT is a key indicator for fraud prevention and security applications of distributed ledger technology. Wells Fargo was one of the most well-known examples of financial hazards, having to pay hundreds of millions of dollars in fines to the US Federal Trade Commission. In recent years, the corporation has had to pay large fines as a result of fraudulent behavior.
Through audit trails that go beyond change, immutable ledgers can aid in the prevention of such fraudulent operations. Furthermore, compared to existing systems, you may look forward to higher data validity requirements. Many cryptocurrencies, for example, have recently gained public acceptance without incident.
On the other hand, cryptocurrency has seen a promising rise in value over the last decade. In fact, blockchain and distributed ledger technology application cases play a critical role in promoting cryptocurrency adoption. DLT and blockchain networks have the potential to have a huge impact on the financial sector.
Banks and financial organizations have begun to recognize how cryptocurrencies, blockchain, and distributed ledger technologies (DLTs) might be used to replace traditional banking procedures. The popularity of distributed ledger technology will grow as the number of applications that use cryptocurrency as payment methods grow. Thanks to distributed ledger technology, the use of cryptocurrency wallets and other financial services solutions have been made more transparent and convenient.
Distributed ledger technologies, such as cryptocurrencies and better blockchain-based financial services and protocols, may pose a serious challenge to banks. The conventional banking system, on the other hand, may be able to discover additional ways to promote the use of DLT in the financial industry.
Ripple and Bitpesa, for example, provide a perfect environment for B2B transactions by acting as mediators between large financial institutions and clients interested in blockchain transactions. Currently, banks and large financial organizations may be able to assist in the adoption of DLT solutions in the future.