Comparing Blockchain vs. Distributed Ledger

  • 4 min read
  • Jun 17, 2020

blockchain vs distributed ledger

Blockchain vs. Distributed ledger — Many people are confused about the technology of blockchain vs. distributed ledger. Both technologies are not really the same. It is important to understand the differences between blockchain vs. distributed ledger technology. Both technologies are unique. Everything about both technologies will be explained down here. Make sure you don’t miss anything.

What Is Blockchain and Distributed Ledger

So before understanding the differences between distributed ledger vs. blockchain, you must understand the definition and each technology. You have to know how each technology works. Now you’ll start with the blockchain first.

The technology of blockchain is enabling distributed ledgers – which holds the immutable data not only insecure way but also in an encrypted way) – ensuring that transactions cannot be altered. Blockchain technology has been used in the cryptocurrencies and bitcoin. There are many ways to use the distributed ledger technology, like what?

For example, the blockchain distributed ledger system has been used in financial transactions, asset management, real estate, data storage, for biomedical and health care applications, and many more. Let us move on to the definition of both technologies.

Blockchain vs. Distributed Ledger Technology

1. Blockchain Technology

To help you understand the difference between blockchain technology and the distributed ledger technology, think about Kleenex brand and the facial tissues. Facial tissues are more general and Kleenex is one type of the tissues. Yet, Kleenex brand is much more famous and has been ingrained in everyone’s minds as what that product is.

So blockchain is like a type of distributed ledger technology. Since it is more famous, people know blockchain better than distributed ledger technology. Blockchain actually is shared database that’s filled with some entries that should be confirmed and then encrypted. Transaction records have chain of blocks. This technology also has cryptographic signatures that are called hash.

2. Distributed Ledger Technology

Distributed ledger technology is also a database that exists among some multiple participants or across some locations. By contrast, many companies use a centralized database that lives in fixed location. A centralized database usually has one single failure point. Distributed ledger technology is decentralized in order to eliminate central authority needs.

Distributed ledger technology that’s also known as DLT has no intermediary to process, authenticate, or validate transactions. Enterprises use the DLT to process, authenticate, or validate transactions and the other data exchange types. Usually, the records are stored in ledger only when the parties that are involved have reached the consensus.

Distributed ledger technology’s files are all being time-stamped and then given a unique signature of cryptographic. The entire distributed ledger technology’s participants can view the entire question records. This wonderful technology provides an auditable and verifiable history of the entire information that’s stored on the particular dataset.

Blockchain and Distributed Ledger Difference

Now since you’ve got the complete details about definitions of blockchain and DLT, you’re ready to earn the details about differences of both technologies. Below is everything you’ve been questioning for.

1. Blockchain is a type of the distributed ledger technology

Blockchain technology is a sequence of many blocks but distributed ledger technology doesn’t require chain like the blockchain technology. Unlike the blockchain technology, distributed ledger technology doesn’t need work proof or offer better options of scaling.

2. Removing the equation’s intermediary party

Another special thing of the distributed ledger technology is the ability to remove the equation’s intermediary party. Unlike blockchain technology, distributed ledger technology doesn’t need to have data structure inside blocks. Distributed ledger technology is just type-of database that’s spread across many participants, regions, or sites.

3. Block structure

Blockchain technology shows data as the chain of some blocks. Distributed ledger technology has no such data structure. Distributed ledger technology is a simple database that spreads across some different nodes.

4. Sequence

The entire blocks of blockchain technology can be found in a particular sequence. The other distributed ledger technologies have different data sequence kinds depend on their technology.

5. Implementations in real life

Many governmental institutions and enterprises are all using the blockchain technology. Distributed ledger technology usage or projects are under development. It means the technology has less implementation in real life.

That’s all difference between distributed ledger technology and blockchain technology. Now, what are the benefits of each technology? DLT gives total control of the entire information as well as the transactions to entire users. Besides, this technology also promotes transparency. Transaction time can be minimized to minutes. Transactions can also be processed everyday

Benefits of Distributed Ledger and Blockchain Technologies

1. Distributed Ledger Technology

Distributed ledger technology will also facilitate the rising of back-office automation and efficiency. Blockchain and many other distributed ledger technologies are useful especially for the financial transactions. Those technologies will cut down the operational inefficiencies to save your money. Also, the decentralized nature of distributed ledger technology is excellent.

DLT’s decentralized nature provides greater security. Keep in mind that distributed ledger technology is immutable. What about blockchain technology itself? This technology is offering a way that creates sensitive activity with a tamper-proof log efficiently and securely. This is including everything from the international cash transfer to the shareholder records.

Financial processes will be radically upgraded in order to offer secure and digital alternatives that processes run by the clearinghouse to many companies. This will avoid processes that are bureaucratic, paper-heavy, expensive, and time-consuming.

2. Blockchain Technology

About blockchain, once you’re done writing data to the blockchain, it will be etched on network. And when you have transactions series over time, there’ll be audit trail that’s immutable and accurate. This one is a wonderful solution for the financial audits. Saving data in one place where there is no one can own it and control it is really good.

There’ll be no one that’s able to change everything that has been written. This is like getting bookkeeping with double entry. There should be less chance of fraud and errors. Though distributed ledger technology has the initiative, blockchain is the one who has the implementations in real life. Yet, market goes toward distributed ledger technology’s whole concept slowly.

Hope you got clear explanation once you’re done studying about all details of blockchain vs. distributed ledger above. Now you can start considering using the blockchain technology or another distributed ledger technology.