Distributed Ledger Technology

A conventional ledger is simply a records system that is managed and maintained by a trusted authority. For example, a bank records its customers’ financial transactions and the Driving and Vehicle Licencing Agency maintains an up-to-date ledger of everyone who has a driving licence. Traditionally these records were paper based, however, modern ledgers usually exist electronically on a database. Distributed ledger technology (DLT) is a technology that allows multiple identical copies of a ledger to be stored on different computers on a network and updated by multiple different users.

DLT has attracted a lot of attention in recent years as it is the technology that underpins cryptocurrencies including Bitcoin. Cryptocurrencies are the main application of DLT, however, there are a variety of other emerging applications of the technology. The finance sector has been particularly interested DLT for activities including transferring financial assets (such as shares) and streamlining cross border payments. DLT is also being explored for applications including supply chain management, energy trading and government operations. A number of DLT trial projects are taking place across industry and UK Government.

This POSTbrief provides a technical overview of the different types of DLT and how they work. It discusses some of the main applications of DLT and highlights the benefits and challenges of the technology.

Acknowledgements

POSTbriefs are responsive policy briefings from the Parliamentary Office of Science and Technology. This POSTbrief is based on a literature review, interviews with external stakeholders and peer review. POST would like to thank interviewees and peer reviewers for kindly giving up their time during the preparation of this briefing, including: 

• Dr Alvin Orbaek White, Swansea University*  
• Dr Cathy Mulligan, Imperial College London 
• Dr Ruzanna Chitchyan, University of Bristol* 
• Dr Tom Wilkinson, Department for International Development* 
• Genevieve Leveille, TechUK* 
• Giles Pavey, Department for Work and Pensions 
• Leanne Kemp, Everledger* 
• Martin Glasspool, Government Office for Science 
• Matthias Bauer, Financial Conduct Authority* 
• Nick Davies, HMRC 
• Phil Brown, DISC Holdings*  
• Philip Treleaven, University College London*  
• Professor Steve Schneider, University of Surrey* 
• Professor Tomaso Aste, University College London 
• Robleh Ali, Massachusetts Institute of Technology* 
• Raghavasuresh Samudrala, Tata Consultancy Services* 
• Roger Oates, Tata Consultancy Services* 
• Simon Taylor, 11:fs* 

*Denotes external reviewers of the briefing

Image: © FlyerDiaries.com