In this fast-moving age of information, it became quite confusing for many in differentiating one technology from another. Many people who are unfamiliar with new-age technologies are many times tricked by cunning businesses, where they rebrand Blockchain in their name. Such actions may attract some short-term gains but in the long term they end up alienating people from new-age technologies like Blockchain and Distributed Ledger Technology.
In recent months, the web has come across a massive rise of intelligent businesses that have their success objectives planned around the crypto boom. However, there are many who are trying to rebrand their business in the name of blockchain. But the reality is, that using such tech jargon to drive business growth and investment is only likely to deliver limited benefits. In other words, such business strategies only call for branding problems which ultimately results in making people unaware of the true meaning of blockchain.
As long as it is concerned with the fact that distributed ledger and blockchain are the same, then it is absolutely not the case. It is, in fact, the most common misconception surrounding blockchain technology.
DLT and blockchain share a conceptual origin: they are digitalized and decentralized log books of record. Often the terms are confused, but they are differentiated by an unshared set of specific features. With our years of experience working on Blockchain testing services, we are extremely concerned about blockchain technology as a component of security and privacy in the future.
So, first, let’s see what Distributed Ledger and Blockchain basically are.
Blockchain & Distributed Ledger: The Basics
Distributed Ledger: A distributed ledger is a database that can be found across several locations or among multiple participants. However, most companies still use a centralized database with a fixed location. Unlike a centralized database, a distributed ledger is decentralized, which helps to remove the need for a central authority or intermediary for processing, validating, or authenticating transactions.
Blockchain: A blockchain is a form of distributed ledger that has a specific technological underpinning. Blockchain creates an unchangeable ledger of records maintained by a decentralized network after a consensus approves all the records.
However, many people are living with the notion that Blockchain and Distributed ledger are the same things. However, the two are different and even have different potential – having a knowledge of which can make a difference in the future.
Although both blockchain and distributed ledger sounds similar, there are some differences between the two. Blockchain can be categorized as a type of distributed ledger, but you cannot classify every distributed ledger as a blockchain.
We have listed some of the unique aspects of blockchain and distributed ledgers to help you better understand the DLT vs blockchain technology comparison.
One of the first things here to observe is the presence of the Blocks in the structure of Blockchain, but this structure is not the genuine data structure of distributed ledgers.
Whereas in the case of Distributed Ledger Technology, it can be spread across multiple nodes as it’s simply a database, where you may represent this data in different ways in each ledger.
Again from the perspective of architecture, Blockchains are quite different like Smart Contracts are individual blocks of code that are not there in the Distributed Ledger Technology.
This is another thing that can be found in Blockchain technology, as here all blocks are arranged in a particular sequence.
While in the Distributed Ledger Technology, this is unheard of, as any specific sequence of data arrangement is not required in it and this makes Blockchain different from any other Distributed Ledger Technology.
Proof-of-Work: Power-hungry consensus mechanism
The notorious power-hungry Proof-of-Work mechanism in most Blockchains is known to hog up much power for itself, which slows down the network. No wonder, there are many other mechanisms too, but they too use some or the other consensus-achieving mechanisms that end up consuming much power compared to Distributed Ledger Technology.
Whereas in the case of Distributed Ledger Technology, this is not the issue as they don’t need such kind of consensus achieving mechanism, therefore they are much more scalable and power resilient.
In Distributed Ledger Technology, there is no need to have tokens or any kind of currency on the network. Now, in case of an event of spamming or there is a need for anti-spamming detection, one may feel the need to use tokens.
In the case of a Blockchain network, there is a need to have some sort of token economy, as here anyone can run a node, and many times it becomes much tedious to manage such a network full of nodes. These tokens play an important part in Blockchain technology, as with tokens anyone can run a full node but again solving a new block, takes a lot of resources. One can be a participant in any system by verifying transactions and new blocks.
Every blockchain is a distributed ledger, but not every distributed ledger is a blockchain. Each of these concepts requires decentralization and consensus among nodes. However, the blockchain organizes data in blocks and updates the entries using an append-only structure. Distributed ledgers broadly, and blockchains specifically, are conceptual breakthroughs in managing information and can be expected to find application in every economic sector.
Concluding it all, Blockchain is a type of distributed ledger technology which is designed to record digital transactions in order to drive security, productivity, and transparency to the financial moves within organizations. In order to acknowledge, it can be said that distributed ledger is the super class of blockchain technology or blockchain works as an extension of distributed ledger technology.
Thus, they cannot be differentiated from each other thoroughly and must be exercised parallel in order to meet the security objectives around the transactions, be it of any kind. And just in case, you need some expert assistance to get your existing or upcoming business solution tested with blockchain testing services, feel free to reach our team.
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