Distributed ledger technologies (DLT) are digital systems that allow data to be recorded, stored, and managed in a decentralized, immutable, and highly secure manner. However, because it is a relatively new technology, some myths have arisen about its use. Below, we’ll explore the most common myths about distributed ledger technologies (DLT).
Distributed ledger technologies are blockchains
Many people and companies believe that distributed ledger technologies (DLT) are blockchains. However, there are several differences between DLT and blockchain technologies. For example, DLT technology has a “higher” category than blockchain, as we can say that all blockchain networks are DLT technologies, but conversely, not all DLT technologies are blockchain technologies. Other notable differences include the location where the information is stored, the consensus system, and its level of applicability.
They are invulnerable
Many people and companies believe that distributed ledger technologies (DLT) are invulnerable digital systems. However, even though DLTs are known for their high level of security (due to their cryptography and decentralization features), they are somewhat vulnerable to 51% attacks, Sybil attacks, and even potential DAO hacks (which can lead to errors in smart contracts). It’s essential to note that the security level of DLT technologies depends on various factors, including network design, consensus mechanisms, and others.
Designed only for cryptocurrencies
Some people and companies believe that distributed ledger technologies (DLT) are designed only for cryptocurrencies. However, DLT technologies are systems that have applications not only in the financial or cryptocurrency ecosystem, but also at the industrial or business level, as they offer more transparent and reliable management. For example, DLT technologies can be applied in various sectors, including the energy sector, voting systems, smart contracts, supply chain management, the Internet of Things (IoT), data management, and healthcare, among others.
Users must have advanced technical knowledge
Many people believe that distributed ledger technology is highly complex and that end users require advanced technical knowledge. However, the truth is that DLT technologies are generally designed with an intuitive and user-friendly interface, making them more accessible to different people, companies, businesses, organizations, and institutions.
To interact with applications based on DLT technology, no advanced knowledge is required. It is enough to understand basic concepts such as public/private keys, transactions, and basic security (for example, not sharing our users’ private key), which means a level of complexity “similar” to that of a traditional banking application.
They are a replacement for traditional databases
Some people think that distributed ledger technologies (DLTs) will replace traditional databases. However, although DLT technologies are characterized by being “immutable” and are used in environments or systems where greater trust is needed, we must keep in mind that their applicability does not optimize all processes or systems. It’s important to note that traditional databases are still used today, as they are more efficient, offering greater speed and lower costs when managing private data, such as payroll management. However, in recent years, hybrid systems have been implemented, combining DLT technology with traditional databases, allowing both systems to benefit.
What are your thoughts on this topic? Would you like to learn more about Pilsenga’s distributed ledger technology (DLT) applications?
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