Distributed Ledger Technology Systems: A Conceptual Framework

Abstract

The distributed ledger technology (DLT) ecosystem is currently plagued by the use of inconsistent definitions and lack of standardised terminology. This report sets out to provide a common terminology and framework designed to serve as a multi-dimensional tool for policymakers, industry participants, researchers and investors to gain a better understanding of the characteristics and inner workings of a DLT system, and the roles that various actors play in the system Specifically, the report lists five key characteristics that a DLT system must be capable of ensuring. The report also clarifies the forms of data within a DLT structure, by classifying the data as 'transactions', 'logs', 'records', 'journals' and 'ledger' – based on the extent the data has been processed by a DLT system's network. The final outcome – the 'ledger' – is defined as a set of records 'held in common by a substantial proportion of network participants'. A conceptual framework is presented that divides a DLT system into three main layers – protocol, network, and data – which can be further subdivided into a set of components and processes. The report outlines various configuration options for each process and demonstrates how specific design choices can lead to different system properties and characteristics. A key takeaway is that trade-offs are inherent to DLT systems, and move along a spectrum according to specific security assumptions, threat models, and trust relationships. The framework is applied to six case studies of existing DLT systems – Bitcoin, Ethereum, Ripple, Alastria, Verified.me, and an anonymised DLT system – to illustrate its use for performing a comparative analysis. The report concludes by presenting a DLT systems ecosystem diagram that visually maps major DLT systems according to various dimensions taken from the framework.