FAQs
Overview
What’s DLT?
Distributed ledger technology is essentially a very secure database that is shared with all parties on its networks. A network can be a business, an organization, individuals, the government, or a combination of any of these entities.
For those not in the accounting or finance business, a ledger is a record of the network’s transactions. What started as a paper-based system of recording credits and debits, today’s ledgers are tracking much more than the money coming in and out the door. Now housed in databases and digital files, ledgers collect and store valuable information from behind each transaction. DLT helps networks manage and use this data, while also keeping it safe.
Why was it developed?
DLT was created to address the need for networks to have an efficient, economical, reliable, and secure system for conducting and recording financial transactions in a digital world. Its security and audit features are also extremely useful for government compliance operations. Because of these shared use cases, DLT is perfectly suited to transform campaign compliance and other government functions.
What’s blockchain?
Blockchain is a specific type of DLT, made up of digitally recorded data that is stored in blocks. Once a block is created, it cannot be changed. (This is what we mean by “immutable.”)
Blockchain uses cryptography to make it hard for a malicious user to manipulate the information contained in the database.
Does DLT = Blockchain?
All blockchains are a form of DLT, but not all DLT is blockchain. Comparing a blockchain to DLT is like comparing a banana to a fruit. A banana is a type of fruit. A blockchain is a type of DLT.
What’s a Distributed (“Shared”) Ledger?
▪A shared ledger is the system of record and a “single source of truth” – it records all transactions across the network
▪A shared ledger records transactions only once, eliminating duplicative work that is typical in compliance operations
▪A shared ledger is distributed to all participants in the network and each participant has a duplicate copy of the record
▪A shared ledger is permissioned – although all participants have access to the ledger, participants choose what data they share and can only see transactions they are authorized to view
What’s a Smart Contract?
One of the technologies behind bl
ockchain is the smart contract. A smart contract is a computer application on blockchain that runs a set of business rules. These business rules govern the transaction and tell the blockchain whether to accept the transaction and then, what to do with the data. For example, “if-then” statements such as “if the contributor’s employer contains “Facebook” record it as “Facebook, Inc.”
Smart contracts can also be used to trigger events at certain dates or thresholds. For example, “if aggregate contributions from a person or company exceed $3,000, trigger a flag.” These contracts can become very complex, but anyone with solid computer science training can learn how to write them.
How does bcd blockchain use smart contracts?
Work smarter, not harder. Smart contracts enabled us to provide better data and greater security. Here’s how we put them to work:
▪When a transaction occurs, a computer on the network (also known as a blockchain node) records the transaction on the distributed ledger network
▪This is the only time the transaction will be recorded, and once it is logged, it cannot be erased
▪At the time of the transaction, the node runs a smart contract to verify the transaction and then broadcasts a copy of the transaction data to other nodes on the network
▪A consensus mechanism verifies and records the transaction, ensuring that all copies maintained by the blockchain’s nodes have identical records of information
▪Customized administrative authorizations determine what information from the transaction is accessible to others on the network. Just because the transaction is shared with other computers on the network doesn’t mean that everyone can see everything! Users are only privy to the information they are authorized to access. Approved users can view a comprehensive record of the database at any point in time.
▪A permissioned protocol means that users must be invited to use the system and KYC (Know Your Client) and AML (Anti-Money Laundering) rules apply.
What else makes DLT so groovy?
Here’s a few more reasons why we believe that blockchain is the best solution for government regulation:
A DLT database is immutable, which means that the data can never be overwritten. When a record is updated, a new version of the record is created, allowing users to view the entire history of a transaction.
With this audit trail and the ability to follow data over time, a DLT database is transparent and ideal for detecting fraud. In the case of political contributions, once a contribution is in the campaign’s bank account, the campaign cannot alter the amount of the contribution without immediately raising flags. They also cannot change the name of the contributor, or their address, without creating a new version of the record. This helps our software to detect and predict violations, particularly straw donations and other illicit contributors. It also helps to eliminate duplicative records and conflicting information over time.
DLT is secure because it is cryptographically verified. This is just a fancy way of saying that mathematical calculations are behind the scenes, ensuring that the information doesn’t get into the wrong hands.
What’s bcd blockchain?
bcd blockchain changes how transaction data is saved, stored, and shared. We put together this graphic to explain the process, and would love to talk you through it. Click here to set up a time for a demo. 