What is Distributed Ledger Technology (DLT)?
Experienced DLT Team
Do you need legal advice on distributed ledger technology (“DLT”)? Are you worried about whether your incorporation of DLT into your business triggers any compliance obligations? If so, then you need the compliance advice of an experienced DLT Team.
DLT has numerous applications whether you are considering launching a new token, streamlining supply chain management or logistics, or incorporating them into your business operations.
At the same time, federal agencies have been both eager and willing to investigate projects involving DLT.
Because federal agencies do not have a full grasp of the complexities of DLT, they view this technology as suspicious and with a high potential to harm investors, capital markets, and competition.
Do not let your business get pulled down into a protracted investigation without first assuring that you are compliant.
At Oberheiden, P.C., we have a dedicated and experienced team of DLT attorneys who can advise you on your current and future compliance obligations.
Get in contact with an experienced attorney today. Put Oberheiden, P.C. on your side to advise you on DLT compliance.
What is DLT?
DLT is an infrastructure of shared, digital data that is spread and processed across multiple networks—referred to as nodes—without using any centralized systems. Instead, it relies on decentralization.
The most common example of a DLT is the blockchain. Therefore, all blockchains are DLTs but not all DLTs are blockchains.
DLT allows anyone from anywhere in the world to participate in ventures and projects on an instantaneous and cost-efficient basis. Individuals and businesses can process deals and transactions in greater speeds and volumes.
That said, DLT is still not well understood by the public and the federal government. As a result of this information gap, DLT is unable to fully flourish and has instead been met with federal scrutiny and investigations.
The best way to limit your liability exposure would be to receive comprehensive compliance advice from an attorney experienced in DLT issues.
The Importance of Cryptography in DLT
Cryptography with DLT solutions secures data through cryptographic signatures and algorithms that allows access only to authorized users.
Cryptography is the general practice of securing communications in a way that allows only the sender and the receiver of a communication, transaction, or document to view and decrypt the message.
The use of cryptography within businesses that use DLT will dramatically improve the way businesses, the government, and individuals share data and process information.
For instance, businesses can save time and money by automatically ensuring that their customer’s data is secured and safeguarded.
Further, the fact that no centralized authority has access to or control over such information greatly enhances the security of the system.
DLT in Various Industries
As mentioned, DLT offers virtually endless opportunities for individuals and companies. Even the government can stand to benefit from using DLT. There are many reasons for this.
First and foremost, DLT provides security. The system for recording and storing information across networks makes the ledger practically impervious to cyber-attacks. Also, DLT is transparent. All users can view the transactions and be assured that everything is complete.
Another obvious benefit is decentralization. With DLT, there is no central authority such as a bank or government controlling or accessing the information. Everything is distributed across the network, or nodes. There is no need to rely on third-party intermediaries with DLT.
The use of DLT has provided start-ups with access to capital in new ways. Individuals do not need to find a venture capitalist or investor who is willing to give them money for their business plan. Decentralization has allowed businesses to get funded without needing to solicit large sums of money and without having to rely on centralization.
This section highlights a few industries that have already begun to make significant uses of DLT:
- Art Industry: Individuals in the art industry that have taken advantage of DLT include artists, painters, collectors, art dealers, and gallery owners, as some examples. Because art is an asset and assets need to be protected, a key issue for artists is intellectual property rights such as copyright, trademark, resale rights, royalties, and sales and resales. DLT helps the art industry by providing immutable and authentic IP protection.
- Real Estate Industry: Individuals dealing with real estate transactions are increasingly making use of smart contracts as well as projects involving tokenization. DLT helps streamline operations by cutting out the middleman or intermediary in the transaction. Imagine closing a deal to buy a house without needing to speak with escrow, or the real estate agent, or the banker. DLT is completely decentralized in this respect and increasingly utilized by the real estate industry to sell property as well as launch real estate tokenization projects.
- Healthcare Industry: The healthcare industry deals with a lot of sensitive patient data. Healthcare professionals and practices need to take active steps to ensure that such data and sensitive information are protected. DLT solutions are being used within the healthcare industry to safeguard patient data and maintain a tamper-free system for recording data.
- Banking Industry: The banking industry also deals with critical customer information such as bank accounts, transfer activity, commercial agreements, and so on. Bank institutions are required by law to develop Compliance Programs and have comprehensive AML/KYC policies in place. DLT safeguards this sensitive customer data and ensures that all information is verified and secured.
- Governmental Industry and Public Sector: The government, its various federal agencies, and the personnel involved are using DLT solutions to save time and costs as well as improve efficiencies. Whether the government is dealing with contractor procurement issues, funding and solicitation, or other civil and public services, DLT has proven to be a cost-effective means of operation.
The above are just a few instances of how DLT solutions are being implemented. Other industries such as auditing and accounting, supply chain management, telecommunications, and even the legal industry are also making use of DLT to enhance and optimize their business operations.
Do You Need Legal Advice with DLT?
If your company is looing to adopt DLT solutions to incorporate within its business or is looking for general compliance advice, then do not wait to secure the advice of a DTL attorney and law firm.
DLT is important for individuals and companies seeking to streamline their operations, create cost efficiencies, save time, and implement a system that is transparent and secure against tampering and instances of fraud.
At Oberheiden, P.C., our attorneys and consultants are experienced in DLT and its various uses across multiple industries. We can give you a detailed compliance review to ensure that your business operations are following applicable federal rules and regulations.
Get the advice you need today. Call or contact us today for a free consultation and ask to speak with one of our DLT attorneys.