Distributed Registry Technology in Simple Words


What is a distributed registry

Blockchain was created to destroy the current financial system, but after ten years, experts see it as a technology that can modernize the entire existing world – the distribution register. It is universal, applicable in almost all industries and has significant advantages over standard data storage systems.

Distributed Ledger Technology is a data storage technology that distributes information between multiple communication nodes or computing devices. It has several key features:

  • Lack of a central administrator;
  • Sharing with synchronization according to a given algorithm;
  • Decentralized geographical distribution of database copies between all communication nodes.

At its core, this is the first database that eliminates the need to use a central service, distributes the database to all communication nodes, making them responsible for maintaining the system and checking information.

Each node makes changes to the registry independently of other nodes, then they all vote for changes and, when consensus is reached, the registry is supplemented with new data. Each member of the network at the same time has its own identical copy of the registry, and the changes themselves are added within a few minutes.

The distribution register has become known to a wide range of people mainly due to its use in the cryptocurrency blockchain, but any data can be entered into it: financial, legal, statistical, electronic and others.
Unlike traditional databases, distribution registers are much better protected from attacks and unauthorized data changes, since copies are geographically distant from each other and for a hacker change you will need to attack all communication nodes at once. In addition, nodes will detect unauthorized changes and will not support data entry.

Types of Distributed Registers

Bitcoin’s distributed digital transaction registry is just one type of registry-based database. Conventionally, all of them can be divided into:

  • Public. They are used in most cryptocurrencies and are an open source database. They work on Proof of Work algorithms. In such a system, each participant can download a database to his local device and participate in the coordinated process of making changes. Also, anyone can view all the added information.
  • Federated. Federated databases are managed by a group of people. Unlike open registries, they do not support the introduction of new data by anyone. The process of changing the registry is controlled exclusively by pre-selected communication nodes. They are mainly used in the banking sector and provide greater confidentiality.
  • Private Only a certain centralized organization has the right to make changes to such a register. Information may be open to public reading or be limited to an arbitrary degree. Private distribution registries are typically used by companies to store internal information and conduct audits. Such systems are more vulnerable than the public blockchain, but they can modernize outdated information storage systems in companies.

DLT technology is quite diverse and allows you to store information of any kind, which makes it easily applicable in all industries where secure data storage is required.

Where are DLT used

The main area of ​​use of distribution registers is now cryptocurrencies, where transaction information is stored on such a system and the balance of user wallets is calculated.

By fully understanding the technology, the government and the private sector will be able to significantly modernize the process of storing and using information. For example, the government of many countries is gradually introducing DLT technology in different sectors of its work.

In Estonia, KSI has been under development for several years on the basis of a distribution register that will allow citizens to verify the accuracy of information in a state database. The British government has created a committee to research DLT technology and develop government projects based on it.

The business community also quickly appreciated the benefits of using DLT and deployed it to their companies. So, Everledge provides a distribution database that guarantees the authenticity of diamonds, which is very important for a market full of fakes.

According to experts, the banking sector and the insurance sector are considered the most promising for the implementation of the distribution register.

What is the difference between blockchain and distributed registry

Many people mistakenly believe that the blockchain and the distribution registry are one and the same. In fact, blockchain is one of the types of distribution registry. The information in it is recorded strictly in blocks that are interconnected in series.

Each blockchain is a distribution registry, but not all data registries are blockchains. Both of these concepts are combined by decentralized data storage and the need to achieve consensus between communication nodes for making changes, and the information itself can be recorded in any form.

In practice, distribution registers do not require the creation of blocks and do not need proof of work. Due to this, they have theoretically less scalability issues.

 DLT Prospects for the Financial Industry

Now the financial sector is experiencing a wave of modernization of the entire infrastructure, leading to the automation of payments. An increase in the number of online transfers and transactions requires an improvement in the security system, fast mass processing of information, and lower commission costs. Implementation of all this helps the introduction of distribution register technology in the financial sector.

In the near future, DLT is able to radically transform the financial industry, increase security through cryptographic data protection and level the participation of intermediaries in transactions.

Using this technology, the bank of the future can exist without branches and only be an Internet platform based on the distribution register, and all banking services will be provided through applications.

Smart contracts work on the basis of the distribution registry, allowing you to enter into secure remote transactions and implement them automatically subject to the prescribed conditions. This is especially important given the increase in investments in intangible assets.


Distribution ledger technology provides public authorities and private companies with a way to store information that can reduce errors and increase security. DLT has the potential to predetermine the relationship between government and the population, which will reduce corruption and significantly reduce the cost of storing information compared to paper documents.

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