# Distributed Ledger Technologies and Their Applications: A Review
## 2 Distributed Ledger Technology
### Blockchain
In the example of Bitcoin, a group of transactions will be chosen from a pool of transactions, and a proof of work algorithm will require a mathematically difficult puzzle to be solved, and each participant who solves the puzzle will create data consisting of the transactions chosen from the pool and send the new block for verification to other participants. Other participants will verify the data and the validity of the transaction, such as by verifying the sender and recipient's address and the Bitcoin that is going to be transferred, before approving the new block [49]. With this technology, cryptocurrencies were born. Bitcoin's market and demand have grown so rapidly that, at the time of writing this paper, the price for each Bitcoin is around USD 47,000. Since the introduction of Bitcoin and Blockchain, this technology has been studied by many researchers and has been used in many other applications in addition to  
Figure 1: Blockchain layer architecture. payment processing. As a result, many other Blockchain technologies have been introduced to the world, but all of them have the same key features of transparency, immutability and decentralization [50]. * Transparency Blockchain transactions can be tracked, as it is necessary to verify new transactions against old ones. All the nodes in the Blockchain network hold a copy of the Blockchain, and by checking the last block, the previous block can be found from the hash data [51]. * Immutability Blockchain data are recorded in different copies, which are encrypted and linked to previous data. Additionally, they have a robust consensus algorithm for making new blocks, such as proof of work, making it difficult to change recorded data or introduce fake data into the network [52]. * Decentralization All Blockchain technologies aim for decentralization, but some do have some central management. In some cases, private Blockchain networks are not completely decentralized [53; 54]. The application of Blockchain to real-world problems has gained increased attention in recent years because of the above key features. Bitcoin and other cryptocurrencies were first used as financial and payment systems, and many industries have adopted them as a payment method [55; 56; 57; 58]. Financial services that employ cryptocurrencies can be seen in tourism [59], the trading of digital assets [60] and black markets [61]. While cryptocurrencies are mostly used to make payments, this technology has also opened up many other opportunities. The second generation of Blockchain technologies such as Ethereum and the addition of smart contracts into this technology have evolved. Ethereum was introduced by [PERSON] in 2014 [62]. The Ethereum protocol has a built-in programmability feature that implements [PERSON]'s definition of smart contracts [63]. The introduction of smart contracts opened up the possibility of Defi Applications (decentralized finance), which allowed finance applications to run on the Ethereum network without the need for central validation. In [PERSON]'s definition of smart contracts, a computer program can replace paper contracts and automate the process of implementing contract terms and conditions [63; 64]. Smart contracts have shown a wide range of applications in areas such as secure voting [65], insurance policies [66], healthcare record data security [67; 68] and digital asset trading, among others. Blockchain-based smart contracts have advantages over paper contracts due to their transparency, prevention of errors and fraud, and low cost. Blockchain technology has also shown the potential to compete with and replace other digital solutions. A Blockchain can, for instance, be used to secure a system through its own public-private key authentication. There have been many studies on using Blockchain technology and solving issues in other areas such as supply chain management without involving a third party with greater transparency and immutability. However, this technology has its own limitations in its ability to replace older technologies.