Report Questions (3000 words):Question XXXXXXXXXXwords):1. Explain Distributed Ledger Technology (DLT) and evaluate its strengths and weakness as apayment system in the absence of “central authority...

1st Question:
A. DLT is an universal protocol and framework for securely and widely disseminating data recording. It draws attention to the existence of a system without a centralised control that is managed via a dispersed network. DLT distributes data throughout the network as storage after securing it with encryption. The goal of this technology is to build trust amongst those who do not already have it. Each record is retained in many copies and linked by a cryptographic technique; the intrusion must succeed if all copies of the data are compromised (Sunyaev, n.d).
This technology is broken down into various subcategories based on the structure used to maintain the data record. Numerous technologies fall under each of these divisions, each of which has benefits and drawbacks of its own.
The term "distributed ledger technology" encompasses five sub-technologies: Holochain, Tangle, Hashgraph, Side-chains, and Blockchain. Each of these systems records data and distributes trust among users, but they differ in how they do so and in the consensus method they employ to guarantee the accuracy of procedures. In conclusion, consensus algorithms could be utilised to ensure that every node in the network is in agreement with the records it is storing (Bhardwaj, n.d). Each technology has distinct characteristics, advantages, and disadvantages as a result of the variations in consensus methods.
B. Strengths: Distributed ledgers could potentially outperform traditional centralised ledgers and other shared ledger types in certain situations. Although generalisations are challenging due to the wide range of specifications and designs which permissioned & permissionless blockchains can have, the most significant possible benefits of DLT are outlined below.
· Disintermediation and decentralization: Direct digital value or token transfers between two counterparties are made possible by DLT, as well as decentralised record-keeping, which eliminates the need for a middleman or central authority to manage the ledger. This may result in decreased costs, improved scalability, and a shorter time to market. (World Bank, 2017)
· Improved auditability and transparency: Each member of the network has a complete copy of distributed ledger. Changes cannot be done once a consensus has been reached and they have been instantly broadcast throughout the whole network. This feature has the ability to lower fraud & eliminate reconciliation expenses when combined with the absence of a central authority or the lack of involvement of central authority (World Bank, 2017)
· Programmability and automation: DLT makes it possible to programme pre-agreed requirements that are automatically carried out when specific conditions are met. This is known as "smart contracts," such as bills that settle themselves when a shipment comes, shares that automatically send owners dividends, or cash-for-work schemes that pay beneficiaries after the agreed-upon work is finished (World Bank, 2017).
· Verifiability and immutability DLT can offer an unchangeable and verifiable audit record of all transactions involving any kind of asset, digital or physical. While immutability is generally a good thing, there may be issues with recourse procedures if the system breaks down. However, the ledger's immutability does not exclude the creation of a countervailing event to overturn a challenged transaction.
· Gains in effectiveness and quickness: By eliminating or decreasing frictions in transactions or even in the clearing and settlement procedures and automating activities, DLT has the ability to increase speed and decrease inefficiency. 2017 World Bank
· Cost savings: As DLT-based systems in definition contain the "shared truth," it is not necessary to reconcile one variant of the "truth" with that of one's counterparties, which has the potential to result in considerable cost reductions.
· Increased cyber resistance: Due to its distributed design, which eliminates the specific point of attack, DLT does have the potential to be a more resilient solution than conventional centralised databases and to provide greater defence against various cyberattacks.
Example of Strength of DTL in the Real World
Consider the following scenario: You are considering transferring some money to a relative or friend who lives elsewhere. Of course, you might choose the standard course of action and transfer the funds at the bank or through a payment transfer app.   But under this common alternative, a third party handled both the transaction and the transfer fee processing. Why would you want to pay more money to give the money to anybody you choose?
With DTL (Block-chain): First of all, the procedure becomes considerably simpler and more secure. At every stage, there are no additional or secret fees, and you are the one who transfers and processes the money, doing away with the need for a third party. Additionally, blockchain features a decentralised database, that means that all of the data on the chain are open to the public and that the dataset is not restricted to a single place. No single location where all of the data is kept equates to zero danger of data corruption by a hacker. Win-Win.
C. Weakness:
· Lack of maturity or bleeding edge: The robustness & resilience of DLT, particularly for high volume transactions, the availability of standardised software and hardware applications, as well as a sufficient supply of qualified specialists, are all important concerns at this early stage of the technology's development. The development of DLT goods and services, however, by major traditional IT firms like IBM and Microsoft as well as participants in the financial industry like Visa and MasterCard, could someday give the same level of confidence and trust as current traditional IT systems do (World Bank, 2017).
· Speed of transactions and scalability: The scalability of blockchains is a problem for current versions of permissionless distributed ledgers, both in terms of the transaction volume and verification processing time. The transaction speed of current permissionless blockchains is constrained. Due to the disagreement over the one megabyte block size constraint in the bitcoin ecosystem, Bitcoin, for instance, can only process 4–7 transactions per second (World Bank, 2017).
· Integration and Interoperability: If different DLT systems are to be widely adopted into the financial system, they must be compatible with other ledgers & integrated with current systems. Additionally, there will be considerable costs associated with integrating DLT with financial infrastructures such payment and settlement systems, which would require industry-wide coordination and collaboration. There are initiatives underway to create DL frameworks expressly for the finance industry, such the Fabric via Hyperledger project and the CORDA platform by R3 CEV (World Bank, 2017).
· Cybersecurity: There are always technical flaws in software. According to statistics, there are roughly 15–50 errors for every...