Everything you need to know about DLT governance

  • Governance is crucial within distributed ledger technology as it guides the improvement of the underlying technology, and protects it against risks such as malicious security attacks.
  • There are two broad categories of governance in the DLT world: on-chain and off-chain.
  • As DLT is an emerging technology there needs to be some sort of influential off-chain governing body that helps drive direction, especially in the early days.

Representation of paper files being transferred into a laptop

Distributed ledger technology, or DLT, is set to disrupt a number of different sectors — from the financial industry to the automotive industry. DLT is a digital system for recording the transaction of assets in which the transactions and their details are recorded in multiple places at the same time. Unlike traditional databases, distributed ledgers have no central data store or administration functionality.

Why DLT governance is crucial

For DLT networks, governance is crucial as it guides the improvement of the underlying technology, and protects it against risks such as malicious security attacks. Good governance for DLT networks ensures the right mechanisms are in place to reach consensus, and that the right incentives are in place to maintain this consensus. But what is consensus?

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