What is Distributed Ledger Technology (DLT)?

Although many investors have at least some knowledge of cryptocurrency, distributed ledger technology is an important related subject that isn't nearly as well-known. Blockchains, which are a type of distributed ledger, power cryptocurrencies. It's because of distributed ledger technology that cryptocurrencies can process transactions and maintain up-to-date records without the help of any financial institutions.

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Digital chain. Blockchain technology concept. — Source: Getty Images

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Blockchain Node

A blockchain node is a device, usually a computer, that participates in a blockchain network.

Because nodes -- and not a central authority -- manage a distributed ledger, it's decentralized and doesn’t rely on a single entity. Decentralization is one of the reasons Bitcoin (BTC +1.32%) and other cryptocurrencies became so popular. They provide an alternative to the traditional electronic payment system where everything goes through banks and payment processors.

Related Investing Topics

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Investing in Fintech

Combine finance and technology and you get companies in this space.

Investing in Blockchain

This form of ledger technology is what's behind cryptocurrencies and other tech trends.

Investing in Technology

This vast sector is comprised of some of the most valuable companies in the world.

Investing in Cryptocurrency

These technologies serve as the gateway between the digital blockchain and human society.

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About the Author

Lyle Daly is a contributing Motley Fool stock market analyst covering information technology and cryptocurrency. Lyle has been a contributor at the financial services company since 2018. His work has been featured on USA Today, Yahoo Finance, MSN, Fox Business, and Nasdaq. Before joining The Motley Fool, he wrote for financial brands including Intuit.

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Lyle Daly has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.