Lawyers for Distributed Ledger Technology (DLT) Solutions
Experienced DLT Solutions Team
Do you need legal assistance with DLT? Does your business use DLT or are you considering expanding your business to use DLT solutions? If so, then you need the assistance of a DLT team of attorneys and consultants.
Beginning in 2017 and 2018, businesses and individuals in various industry sectors started using DLT to launch their business ideas and gain access to markets in all countries. Anyone in the world could participate in business opportunities.
That said, the increased reliance and acceptance of DLT has caught the watchful eye of several federal agencies.
Remember that federal agencies are even more suspicious of technology that they do not fully understand—making DLT a peak area of interest.
If you are using or seeking to use DLT, you should retain a team of attorneys and consultants experienced in DLT to help you evaluate your compliance obligations.
At Oberheiden, P.C., we can help with compliance, DLT advice and navigation, and federal investigation defense.
Put Oberheiden, P.C. on your side today to limit your liability exposure and guide you into the future.
What is the Distributed Ledger?
Distributed Ledger Technology (DLT) is a broad term that refers to the infrastructure that facilitates multi-access and multi-validation as well as storage abilities across a system of networks.
DLT is a database that is managed by many individuals across networks called nodes. It was introduced by Bitcoin.
A key factor of DLT is that it eliminates the need to rely on a centralized authority. Instead, DLT is decentralized and allows for all transactions and information to be kept secure by using cryptography.
Businesses that use DLT can expect to see their transaction speed, volumes, and amount of data processed increase exponentially. Transactions are verified practically instantaneously, and cost efficiencies can be achieved.
The possibilities of DLT are endless. That said, it is important to understand the key terms associated with DLT and how it is already helping businesses today.
Blockchain versus DLT
What is the difference between blockchain and DLT? The first and most important distinction is that blockchain is just one type of DLT. Thus, all blockchains are DLTs but not all DLT are blockchains.
The blockchain is a series of blocks, each connected to the prior block to form a chain. DLT does not require a sequence chain to operate. It is not structured in blocks but instead represents a database that is spread across several sties, or “nodes”, often in multiple states or regions.
With blockchains, the blocks form a sequence. Every time a transaction is verified, or “mined,” it is transferred to the blockchain in the order they are processed to form this sequence. DLT does not require the same type of sequencing that connects each transaction to the prior one.
DLT is typically considered more scalable than blockchain technology. The main reason for this is that DLT does not use proof of work consensus, which most blockchains use.
Lastly, blockchain technology generally uses some type of cryptocurrency or token. The blockchain uses a great deal of energy and is often harder to manage. On the other hand, DLT does not have these limitations.
As for similarities, both DLT and its sub-part blockchain—although probably the most important sub-part—remove the need to rely on third-party intermediaries.
They are both therefore decentralized and transfer all power to the individual users and out of the hands of centralized authorities such as governments and banks.
Finally, DLT and of course blockchain technology are increasingly being used by governments, businesses, and individuals. Their implementation today by users is growing, although the use of blockchain technology is probably more common than DLT.
Centralized versus Decentralized Solutions
We already know that DLT and the blockchain are decentralized. We also know that such systems replaced centralization for these transactions. But what is the distinction between centralized and decentralized systems?
In the past, businesses used centralized systems. Even though they stored data at many locations, each location was usually connected to a main, centralized system.
This was the essence of a centralized system: control and authority over the system rested with one entity—typically a bank—or with the government.
In any event, centralization was especially vulnerable to fraud, theft, and cyber-attacks. One can imagine the problem with centralized systems within the financial industry if the system was hacked.
Decentralized systems were developed as a solution to these problems. These systems are distributed ledgers that allow for the sharing of information across multiple computers.
A decentralized ledger is virtually immune to hacking and other cyber threats. The information in a decentralized network is spread across multiple nodes. This means that each node in every location would have to be attacked at the same time to complete a successful cyber-attack—which is almost impossible.
Each individual can access the decentralized system on their ledger—which makes every transaction transparent. New transactions are recorded on the distributed ledger in just seconds.
Distributed ledgers facilitate peer-to-peer transactions without the need to have a single entity or government in control of its operation. In fact, decentralized systems eliminate the need to rely on third-part intermediaries altogether.
Thus, users are in complete control of their data with decentralized systems. They can trust that the system will execute their transactions securely and with transparency.
They can also be assured that their transactions cannot be altered, modified, or deleted since all transactions are immutable.
Business Potential with DLT
As mentioned, the business potential from the use of DLT is endless. It can transform the way companies, governments, institutions, and individuals do business and interreact.
For instance, companies can streamline their operations and be assured of transactional transparency and security. Governments can use DLT for procedural tasks such as passport issuance and tax collection. And individuals can engage in transactions in little speed without having to rely on third-party intermediaries.
One particular industry sector that stands to fundamentally benefit from DLT is the financial industry sector. DLT can verify financial transactions and enable “trust” between parties that have never met one another. This allows more transactions to be made in less time.
Most importantly, DLT gives start-ups access to capital growth in a way that was never seen before. Access to finance opportunities outside the traditional centralized banking systems is now possible.
Other industries that stand to benefit include the manufacturing, art, supply chain, accounting, and energy sectors.
Need Advice with Distributed Ledger Issues?
Distributed ledger technology has great potential for businesses in virtually every industry sector. With new opportunities also comes new obligations under the law.
Federal agencies are not 100% knowledgeable about DLT and all its applications. This makes them extra wary of companies that use DLT, thus placing your company at risk of increased federal scrutiny and a federal investigation.
Check to make sure you are complaint in the first instance. Get the advice you need about DLT right away.
At Oberheiden, P.C., we have a team of attorneys and consultants experienced in DLT. We can offer you solutions to prepare your business for transacting with DLT, dealing with compliance issues, and defending you and your business against a federal investigation.
Do not wait any longer. Call or contact us today for a free consultation and let us guide you on the specifics of DLT.