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Understanding the difference between Blockchain vs. Distributed Ledger

Contents

  1. 1. What is blockchain?
  2. 2. What is distributed ledger technology?
  3. 3. Blockchain vs. distributed ledger
  4. 4. Digital ledger technologies
  5. 5. Why is it important for blockchain to have a distributed ledger?

The term blockchain has become increasingly popular due to cryptocurrencies. The term distributed ledger technology (DST) is often confused with blockchain, although it is not exactly the same. In this article, we want to cover the differences between these two terms and the technology they are based on.

What is blockchain? 

Blockchain is a digitally distributed, decentralized and immutable ledger that stores data. It consists of records called blocks. These blocks record transactions and track assets in the network. A blockchain is a form of distributed ledger technology. The users determine how blockchain is structured and run from its specific application features.

What is distributed ledger technology?

A distributed ledger technology (DLT) is a form of digital database that is updated and stored by each participant independently in a large network space. In this type of ledger, there is no central authority that would transfer records (data) to each participant. Instead, all nodes contain the ledger and compose it independently. The nodes on the network must have access to transaction lists and issue their own conclusion before being added to the distributed ledger.

Blockchain vs. distributed ledger

Blockchain and distributed ledger technology differ in the cryptographic signing and linking groups of chain records. Blockchain can be understood as a type of distributed ledger. However, not every distributed ledger can be categorized as a blockchain.

Let’s compare blockchain and distributed ledger in terms of different aspects:

Sequence
Blockchain requires a particular sequence.
DLs are not spread in a specific sequence.
 
Block structure
Blockchain consists of data blocks, although they do not have a genuine data structure.
DL is a database in various nodes with data being differently represented in each ledger.
 
Proof of Work
Blockchain is a type of distributed ledger; however, it has additional functionality.
DL is more scalable, and it does not need proof of work consensus. 
 
Implementation
Blockchain has already been implemented in various spheres, such as finances, insurance and supply chain.
DLs have not been implemented much in real life as the technology is not well-developed yet. 
 
Blockchain technology enables the creation of new coins.
DLs do not require tokens on their network.
 

Digital ledger technologies

Distributed ledgers include a special dynamic system that can exceed the capabilities of typical paper ledger systems. In short, with different types of distributed ledger technology, you will be able to create new technologies and ensure security throughout the digital world.

Usually, in such typical systems, there is always a question of trust. However, this new distributed ledger introduces a new technology that gets rid of “trust” issues and is based on full transparency.

With the invention of the distributed ledger system, you can now take a revolutionary approach to information gathering and communication beyond traditional ways. You can apply it to both dynamic and static data schemes.

Distributed ledgers give you more power and control. It’s about managing the entire system rather than a simple database.

Why is it important for blockchain to have a distributed ledger?

The usage of distributed ledger technologies has many advantages. We have compiled a list of them:

  • • The absence of a single control center
  • • The impossibility of unauthorized access that increases reliability
  • • Reduction of paperwork
  • • Corruption avoidance

Distributed ledger technology provides a new principle of collecting and transmitting the information. It can transform the management of companies.

DLT is an infrastructure technology that ensures the operation of the basic layer of data storage and exchange, which allows it to be applied in the processes of many spheres.

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