What advantage does a decentralized ledger technology provide in banking?

Decentralized ledger technology offers significant advantages in banking, particularly through increased security via distributed data recording. In a decentralized system, information is recorded across multiple nodes rather than being stored in a single central database. This distribution of data helps to enhance security in several ways.

Firstly, it reduces the risk of data tampering or unauthorized access. Since there is no single point of failure, an attacker would need to compromise numerous nodes to alter the data, which is significantly more challenging than targeting a centralized database. This inherent robustness against fraud and cyber-attacks makes decentralized systems particularly appealing for financial institutions.

Secondly, the integrity of the data is preserved, as each transaction must be verified by multiple parties before being recorded on the ledger. This consensus mechanism ensures transparency and trust among participants, making it difficult to manipulate transaction records without detection.

Overall, the decentralized recording of data creates a more secure environment for transactions, which is essential in banking where the integrity of information is paramount. This foundational aspect of decentralized ledger technology is what makes option B the most accurate choice when considering its advantages in a banking context.