What is DLT and why does it matter to payment leaders?

In this video, I’m going to explain what distributed ledger technology – or DLT – is and what it has to do with you, a payments leader.

DLT and digital assets are almost as old as the internet. We saw the first experiments in crypto in the early 90s.

Fast forward to today and there are more than $1 trillion in cryptocurrencies out there, and 420 million people who use them.

So how did we get here? Let’s take a quick look. Back in 2008, the financial markets crashed, and trust in the banks fell with them. Satoshi Nakamoto published a whitepaper on a "peer-to-peer version of electronic cash" aka "bitcoin", the paper describes a decentralised financial system based on a blockchain, which doesn’t need banks.

So, what’s a blockchain? Blockchains are decentralised ledgers that record every transaction ever made, and the overall balances. You can use them to send cryptocurrency, a type of digital asset. Owning crypto really means owning an online wallet address, which has a balance recorded on a blockchain.

So what does that have to do with payments? 2010 was a big year for crypto: the first ever payment was made using bitcoins. 10,000 of them were exchanged for 2 pizzas – that’s $300 million in today's money.

In 2014, the first ever stablecoin was born. What is a stablecoin you may ask? Stablecoins are a type of cryptocurrency, whose value is pegged to a more stable asset, like the US dollar or gold… meaning they’re more useful for payments. By the end of 2021, cryptocurrencies reached a market value of over $3 trillion, with many global brands getting involved.

Meanwhile, stablecoins were on the rise, with settlement volumes rivalling those of the major card networks. Now, as with all things in life, things aren’t always smooth sailing, and in 2022 things get a bit rocky. Industry scandals shook consumer confidence and market activity slowed.

Regulators also took a stronger interest. Because of that, we’re starting to see:

1. clearer rules develop
2. bad actors being weeded out
3. and digital assets like stablecoins being integrated into the mainstream financial system

We’re also seeing more businesses trying out this technology.  

So, why should you care? Well, with 420 million owners of crypto worldwide, a growing number of businesses are choosing to accept payments in crypto.

But DLT isn’t just for consumer payments. It’s also an alternative way to move money globally. In many cases: faster and more cheaply. In time, it’s likely that all payments will interact with the blockchain in some way, shape or form. And we’ll see more payment teams using it as part of a multi-rail payments strategy.

So it’s an exciting time to be in payments!