Many people have a common confusion in their mind whether there is any difference between Distributed Ledger Technology and Blockchain. It is now time to get rid of all the misconceptions in the crypto world so that you can learn to invest carefully in this high performing market.
Are Blockchain and Distributed Ledger Technology both the same? The direct answer to the question is No; both these technologies are different. In order to collect more details about both, go through the article below.
What is Distributed Ledger Technology?
The widely used acronym for Distributed Ledger Technology is DLT, and the best thing to know for beginners is that this system is quite easy to understand. Note that, the distributed ledger is a special kind of database that exists on multiple locations (devices) and can be used by multiple participants. You might have heard that many companies make use of a centralized database management system, but such systems usually have a single failure point that can lead to huge losses. When a ledger update happens, each node (device) constructs the new transaction, and then the nodes vote by consensus algorithm on which copy is correct. Once a consensus has been determined, all the other nodes update themselves with the new, correct copy of the ledger.
What is blockchain?
Blockchain is considered as a type of distributed ledger technology. Blockchain has gained huge popularity in markets within very short time. Studies reveal that blockchain is a kind of shared database that is loaded with numbers of entries; all of them must be encrypted and confirmed from time to time. The best method to understand blockchain technology is that it is a verified and highly secure document. Each document in this system has a unique entry that depends upon the logical relationship with its predecessors. Note that, the name blockchain here refers to the blocks that are automatically added to the chain after each transaction. These blocks contain records about all the coin transfers happening over the network. In order to make the entire system more safe and secure, the technology makes use of cryptographic signatures that are named as a hash.
The prime difference between both these systems is that blockchain is a type of distributed ledger. Note that, in the case of the blockchain, the system works by forming several blocks that are connected like a chain, but nothing like that happens in case of DLT. Moreover, the ledgers do not require any proof of work, and they have alternative scaling options in the crypto world. DLT provides enhanced control over all the transactions and information on the network to ensure higher transparency. On the other side, the blockchain works with secure and tamper-proof logs that also ensures the immutable audit trail. It becomes more useful for financial audits and anyone can check using a system like block explorer. Such systems are observed to have the least errors.
The future is bright for the space. We have only begun to start enhancing these technologies. Most things have started as centralized where there is a single point of failure and now with decentralized and distributed options, organizations are safer and can scale better.