‘Blockchain’ - the technology behind ‘bitcoin’ has become so popular and mainstream in recent years. Though bitcoin took quite a lot of time to gain popularity, people are now familiar with terms such as cryptocurrency, blockchain, bitcoin, etc. Nonetheless, we are still missing on the bigger picture – Distributed Ledger Technology or DLT.
So, let’s learn more about Distributed Ledger Technology in today’s blog post.
Distributed Ledger Technology (DLT)
DLT, the abbreviated form of Distributed Ledger Technology is a term used to refer to those technologies that help in the distribution of information or records.
Technically, DLT is a database that spreads across various computing devices or nodes. Each participant node duplicates an identical copy of the ledger, saves it and update itself independently.
One of the most important features of DLT is the absence of a central authority. Each participant is given the ability to update the ledger with the changes being recorded in each individual node. All the changes made are then put up for a voting session where the participant nodes vote on the updates and a conclusion is reached based on the majority.
This voting process is referred to as consensus and it is conducted automatically by an algorithm named consensus algorithm. After reaching a decision or consensus, the ledger automatically updates itself and the latest version is separately saved on every node.
Blockchain
Now that we have discussed distributed ledger, it’s time we take a look at what blockchain is.
We shall know the difference between blockchain and distributed ledger.
There are many forms of distributed ledger, and blockchain is one of them. Blockchain lay scattered across and are controlled and managed by peer-to-peer networks. Being a distributed ledger, it functions without the requirement of a centralized authority. Moreover, its database replication and computational trust help in maintaining data quality.
Nevertheless, what makes blockchain truly exceptional is its structure. All the data in a blockchain is grouped and organized in the form of blocks. These blocks are then linked to each other using cryptography.
A blockchain is something like a growing list of records to which data can only be added and not altered or deleted. For this reason, blockchain technology is a great option for tracing assets, managing records, processing transactions, and recording events.
Conclusion – Keep in mind, all blockchains are distributed ledger technology but not all distributed ledger technology are blockchains.
