As a result of the cryptocurrency boom, many people became familiar with blockchain technology, which also popularized other terms or technologies such as (Distributed Ledger Technology or DLT), which tends to be confused with blockchain technology. It is for this reason that, in this article, we will know the difference between these two terms or technologies.
Distributed Ledger Technology (DLT)
Distributed Ledger Technology, or DLT, is a decentralized database managed by several participants responsible for verifying and approving any information change through the database without a central authority. A distributed registry tends to increase the confidence of its users since it increases the transparency of each operation, which minimizes or hinders any manipulation or fraud, making it a system with a high level of security.
Blockchain technology
Blockchain technology is characterized as a decentralized database that works through a series of interlocking blocks (which refer to its name since they form a “blockchain”); when these blocks are created, they are closed with a cryptographic signature (hash), with which the next block is opened, then, when completing the operation, such information is certified and encrypted, which makes this information very difficult to manipulate.
Category level
One of the main differences to highlight between the DLT system and blockchain system is that DLT technology has a higher category than the Blockchain sort because, according to its class, we can say that all blockchain networks are DLT technologies but, on the contrary, not all DLTs are blockchain technology. For example, in the case of sports, we can say that 100-meter running is a discipline of athletics, but we cannot say that athletics is 100-meter running.
Place where the information is stored
Another significant feature that makes a difference between DLTs and blockchain is the site where the data is recorded or stored. Distributed accounting technology is a database distributed among participants, places, and regions. On the other hand, the blockchain’s operation depends on the constant generation of blocks that store the information, linking these blocks with others (creating the known blockchain), and finally generating a linked and immutable record of the information that these blocks will store.
Consensus
Consensus is another difference between these two technologies; in the case of blockchain, specific consensus algorithms such as Proofs of Work (PoW), Proofs of Stake (PoS), or Proofs of Authority (PoA) are used to validate and aggregate transactions. On the other hand, distributed accounting technologies use a variety of consensus algorithms according to their requirements, allowing for more flexibility in choosing the correct algorithm for each case.
Applicability
The applicability of these two technologies is another notable difference, as depending on the industry or sector, one may be more applicable than the other; for example, a DLT can be adopted or implemented in the banking sector, allowing its operations to be smoother and have fewer commissions, although not necessarily using a DLT requires adopting Blockchain technology as the principal system since we can use other DLT systems for that purpose, such as Tangle, Hashgraph, DAG, Holochain, Radix, among others.
Cryptographic ledgers
As we saw in our previous article, an example of distributed accounting based on blockchain technology can be cryptographic ledgers, which can validate and store all transactions in a system. Thanks to cryptography, each record is kept unchanged and independent within the blockchain, which makes it difficult to modify data in that record. Cryptography encrypts the data, making the information stored and sent intelligible, especially for those users with external or restricted access.
What do you think about this topic? Would you like to learn more about these technologies?
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