Like any new technology, the world of Blockchain is filled with buzz words and technical terminology. There are terms such as 'consensus algorithm,' 'mining,' 'wallet address,' 'block propagation time,' etc. They require a deep understanding of the technology and can seem daunting for beginners. One such concept is the diction between Blockchain and Distributed Ledger Technology, or DLT.
So, is Blockchain the same as DLT? The short answer is no. But comprehending the reason behind can profoundly deepen one's knowledge about the world of Blockchain. This is because this answer touches some of the fundamental concepts underpinning the technology.
Many of us are unaware of the battle in the Blockchain world. The basic building foundations are being questioned, and the market is in the early stages of experimentation. There are no set winners or losers yet. The competition is at the layer one protocol level, which sets the rules for what the protocol can do. Bitcoin and Ethereum are examples of this layer, and this is where the race is taking place.
Right now, companies such as Cardano, Polkadot, Cosmos, Radix, Holo Chain, Algorand, and many others are innovating. They are creating and testing new sets of rules to create different protocols. Only the future will tell which technologies attract mass adoption and which are destined for the history books.
What is Distributed Ledger Technology?
Source: businessblockchainhq.com
A distributed system is on the opposite side to a centralized system, as the graph above shows. In a centralized system, all data exists in a singular location from where all the different computers connected to it can only read information, but not write or change anything in it unless explicitly permitted by the system.
Decentralized systems consist of central nodes connected to clusters of nodes, responsible for maintaining the integrity of information. Smaller nodes can only access information from central nodes. Examples include Google and Netflix, which use large data centers distributed globally to store information.
Distributed systems have equal nodes that can change and request information without a central authority. They store a full history of information, like transactions and asset ownership, and no node is above another. However, the challenge is determining the order of events. Blockchain and Bitcoin solved this problem through a ledger that records the order and ownership, similar to a basic account ledger. In a Distributed Ledger, every node has a copy and agrees on the transaction order.
Technology is a set of techniques or knowledge applied to a field. DLT applies science to create a distributed system. It records asset transactions in multiple locations simultaneously. Blockchain and Bitcoin were the first to solve this problem and the term Blockchain is often used interchangeably with DLT, like Kleenex for disposable tissues.
Why does this matter?
In short, DLT is an umbrella term, and Blockchain is one of the technologies that fall within this category. Okay, that is all well and good, but if Blockchain is the most successful DLT, and the major protocols out there use it, then DLT is Blockchain. Well here is where we get back to our technology war.
Not all of the DLT protocols out there are using Blockchain. A great example is IOTA which is developing a Directed Acyclic Graph (DAG) in its distributed System. Another in Holo Chain, which created the Distributed Hash Table (DHT), and Radix that is deploying its layer one system called Tempo. In short most of the most innovative projects out there are ditching the Blockchain and implementing new data structures that offer greater efficiency and scalability.
Right now Blockchain is the most widely used technology. This article describes the top 10 use cases of blockchain technology.
As we stated before, we are at the very early stages of DLT technology. This is like the internet before the TCP/IP protocol emerged victoriously and became the basic infrastructure for the net. We are in a wild and experimental moment, right now, Blockchain is king, but this could change. In the future, DLT could be running on a different data structure, so it pays right now to understand who is challenging the current common sense.
