Blockchain Vs. Distributed Ledger Technology: 4 Key Differences
Are you confused about blockchain and Distributed Ledger Technology (DLT)? These are terms often used interchangeably! Do you know they are not the same thing? Indeed, these two technologies have similarities, but there are significant differences. Do you want to learn more? Please continue reading because, in this post, I am going to give you a deep insight without much technical jargon (okay, ‘terms’!) so that you can understand the difference. Still, if you have a question, the comment section is open for you!
What is Blockchain?
It is a very obvious question; let’s take a look at it. Blockchain technology is a type of DLT that was originally created to support the cryptocurrency Bitcoin.
A blockchain is essentially a digital ledger that records transactions in a secure and transparent manner. Each transaction is verified and added to the blockchain using cryptographic algorithms, which ensures that the data cannot be tampered with or altered.
The data on a blockchain is stored in blocks, and each block contains a list of transactions that are verified by a network of nodes.
Once a block is verified, it is added to the blockchain, and the data becomes immutable. It means once a transaction is recorded on the blockchain, it cannot be altered or deleted.
What is Distributed Ledger Technology?
Distributed Ledger Technology is a broader term that encompasses a variety of technologies, including blockchain. DLT is a decentralized database that is maintained by a network of nodes, which makes it highly secure and transparent. Unlike a traditional database, where the data is stored in a single location, DLT stores the data across multiple nodes. DLT allows multiple parties to have access to the same data, which makes it highly transparent and secure.
Differences between Blockchain and Distributed Ledger Technology
While blockchain and DLT share some similarities, there are significant differences between the two technologies. In this segment, I am going to tell you about the difference, so let’s begin:
Centralization
One of the biggest differences between blockchain and DLT is centralization. Blockchain is a decentralized technology, which means that there is no central authority controlling the data. Instead, the data is stored across a network of nodes, and each node has equal authority. However, developers can create private blockchains using DLT, which you can regard as a centralized system.
Consensus Mechanism
Another significant difference between blockchain and DLT is the consensus mechanism. In a blockchain, the consensus mechanism is either Proof-of-Work or Proof-of-Stake. These mechanisms ensure that each transaction is verified and added to the blockchain in a secure and transparent manner.
In a DLT, the consensus mechanism can be customized based on the needs of the network. For example, some DLT networks use a Byzantine Fault Tolerance (BFT) consensus mechanism, which allows the network to function even if some nodes are compromised.
Data Structure
Now let’s look at the data structure- in a blockchain, the data is stored in blocks, which are linked together to form a chain. Each block contains a list of transactions that are verified and added to the chain.
In a DLT, the data can be stored in different formats, depending on the needs of the network. For example, some DLT networks use a directed acyclic graph (DAG) data structure, which allows for more efficient and scalable data storage.
Security
While both technologies are highly secure, blockchain is considered to be more secure than DLT because blockchain uses a highly secure consensus mechanism, which ensures that each transaction is verified and added to the chain in a secure and transparent manner.
DLT, on the other hand, can be less secure than blockchain, depending on the consensus mechanism and data structure used.
Blockchain Vs. Distributed Ledger Technology (DLT): Which is Better for You?
Understanding the differences between blockchain and DLT is important for organizations and businesses that are looking to adopt these technologies. Depending on the specific use case, one technology may be more appropriate for you than the other.
For example, blockchain may be a better fit for applications that require high levels of security and decentralization, such as cryptocurrency or financial transactions.
However, DLT is better suited for applications that require more flexibility and scalability, such as supply chain management or healthcare.
Overall, I think the choice between blockchain and DLT will depend on your specific needs and the organization’s structure. After reading this post, you now have a basic idea. It is time to consult a blockchain developer to create your first blockchain-based application (you can create a private blockchain, too!) for your company.
Meet Rohan, a writer who loves to inspire and motivate others. He’s all about those feel-good quotes that can light up your day! When he’s not crafting words of encouragement, Rohan dives into the world of the latest technologies, exploring what’s new and exciting. But that’s not all—his heart beats for solar products, the kind that harness the power of the sun for a greener future. And guess what? He’s a total pet lover too! When he’s not busy writing, you’ll find Rohan surrounded by his furry friends, spreading joy and cuddles all around. Follow Rohan on Twitter and Facebook
