TLDR:
DLT is a digital system for recording, sharing, and synchronizing transactions across multiple locations without a central administrator, with blockchain being the most well-known form.
DLT vs. Blockchain
All blockchains are DLTs, but not all DLTs are blockchains. DLT is the broader category; blockchain is a specific type using chained blocks and consensus mechanisms.
Why DLT is Important
DLT eliminates the need for a central authority to validate and record transactions, which reduces costs, increases speed, and removes single points of failure. In financial services, DLT enables real-time settlement of securities trades (traditionally T+2), cross-border payments without correspondent banking intermediaries, and tamper-proof audit trails for compliance purposes. Governments and central banks are also exploring DLT for land registries, identity management, and central bank digital currencies (CBDCs).
DLT in Practice — Beyond Blockchain
How DLT Differs From Traditional Databases
Traditional databases store data in centralized servers controlled by a single entity. DLT distributes copies of the ledger across many participants, with cryptographic linking ensuring that entries cannot be retroactively altered without consensus. Blockchain is the best-known form of DLT, but other architectures exist: directed acyclic graphs (DAGs) used by IOTA and Hedera, permissioned ledgers like Hyperledger Fabric, and hybrid public-private models. Each architecture trades off speed, scalability, decentralization, and finality differently.
DLT in Financial Services
Financial institutions have explored DLT for cross-border payments (SWIFT GPI, RippleNet), securities settlement (DTCC’s Project Ion, ASX CHESS replacement), trade finance (Marco Polo, we.trade), and central bank digital currencies (CBDCs). Production deployment has been slower than initial hype suggested — many promised efficiency gains require coordination across institutions, regulators, and legacy systems that take years to achieve.