From Bitcoin to Digital Ledger Technology: Transforming Financial Systems of the Philippines

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Blockchain vs Distributed Ledger TechnologyThe Bitcoin is the first virtual cryptocurrency released on January 3, 2009, by an unknown individual or group of developers who used the pseudonym Satoshi Nakamoto. Bitcoin is the pioneering of blockchain technology—the backbone of all cryptocurrency. Blockchain is the enter-connected nodes where all users have their own copy of transactions between the network. The nodes are a self-verifier of each transaction in every second to the entire chain—so called the ledger. However, Bitcoin is a decentralized virtual currency, which means it is not regulated by any states, and it was established by the private sector. Like the other cryptocurrency, it was launched and developed through public demand, aiming to make dependents not controlled by any government or state. In the nature of cryptocurrency, the public uses it as regular currency as pay for gigs, suspectedly used for illegal payment transactions and money laundering. Due to its high demand for virtual currency, Bitcoin, altcoins, memecoins, and stablecoins are all used for trading. Based on the data by Statista.com, the highest 24-hour volume this year (2024) is on November 13, 2024, with almost 442.13 billion U.S. dollars. This volume significantly shows the undeniable growth and possible contribution of cryptocurrency to the national economic growth.

The alarming possibility pushed to more central banks diversify and apply Distributed Ledger Technology (DLT) to the financial system of the country. The DLT is the umbrella system that is used to verify, record, and process transactions between the ledgers using the shared database. The Banko Sentral ng Pilipinas uses the open-source DLT for the wholesale financial institutions like a bank to have smooth transactions and liquidity between the banks. It can perform without the presence of a human because the system itself will verify, record, and process the transactions within the shared database.

DLTs may take various forms, while a blockchain uses one specific infrastructure: a linear system of blocks that records information. Blockchains often leverage a proof of work or proof of stake consensus mechanism, whereas a DLT has a much broader range of mechanisms available.-Investopedia

Blockchain is a linear form of Distributed Ledger Technology (DLT), but not all DLTs are blockchain. 

The Central Bank Digital Currency is governed and under the liability of the Banko Sentral ng Pilipinas, but the Bitcoin or Crypto is something no one can control or can be controlled by the private groups who want to overtake the monetary regulations of the nation or the world. We are not discouraging anyone from using the virtual currency, but let us support the effort of the Central Bank in their adaptation of DLT to the national financial system.

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