Depending on how or who initiated you into the blockchain space, terms like blockchain and DLT (distributed ledger technology) may be the same thing. While not entirely misled, these two terms have similarities and differences.

What is blockchain and DLT?

To better understand these two terms, we should discuss each term separately.

Blockchain

Blockchain is a decentralized ledger and is one of the decentralized ledger technologies. When Bitcoin graced the surface of the earth over ten years ago, blockchain took center stage due to its critical role in powering the Bitcoin platform.

Blockchain is made of a chain of blocks/transactions

With blockchain, each new record/transaction known as a block is directly connected to the previous transaction hence forming a chain. The technology is distributed, meaning that no one party has control over the network, and a copy of an updated blockchain is available on each node. Nodes are computers that are distributed across the globe and help in verifying transactions and maintaining the platform.

Transactions are encrypted to enhance security and are immutable to safeguard their integrity.

Being a distributed ledger, blockchain differs significantly from traditional databases in the sense that it only supports adding of data and not editing and or deleting. Think of blockchain as a vast MS Excel sheet that is distributed across the world, has no central authority, each computer/node has an updated copy, only supports the addition of new data, and can be read.

Distributed ledger technology

As the name suggests, DLT is a family of distributed databases such as blockchain. Just like with blockchain, computers/nodes maintaining the ledger hold an updated copy of the ledger and are distributed. A key point to note is that the updating is individually conducted at each node.

Consensus algorithm is buried in the code

With DLT, each ledger has its own governing rules buried in the consensus algorithm of that ledger. These rules define, for example, the reward a node gets for verifying a transaction, how the distributed ledger is updated, when and how a consensus is reached between the nodes.

Examples of distributed ledger technology

Although blockchain technology is the most famous example of DLT, there are other DLTs that power other cryptocurrencies or as used in different fields such as the automobile and medicine fields.

Two popular types of DLT include:

Directed Acyclic Graph (DAG) – This type of DLT differs from blockchain in how it stores data. Instead of each block being added to the previous to form a block chain, each transaction on DAG is connected to two previous transactions.

Each transaction is connected to two previous transactions

With a DAG network, for a computer to verify a transaction, it has first to verify two previous transactions. Instead of blocks, a DAG network is made of branches.

A popular platform that uses this approach is IOTA Tangle.

Hashgragh – The hashgraph DLT has some fundamental similarities to blockchain. However, the difference is in the consensus mechanism. Unlike blockchain where miners or those that verify transactions have a field day, hashgraph has some limits. For instance, hashgraph employs Gossip techniques and Virtual voting to reach a consensus. This is different from blockchain, where a single miner can validate a transaction.

Parallel stacks with the same timestamp

Additionally, unlike blockchain’s blocks, hashgraph can store multiple transactions in a parallel stack but sharing the same timestamp referred to as an event.

So,

Is DLT the same as blockchain?

From our above outline, this question can never have a definitive answer because although DLT cannot be used to solely mean blockchain, blockchain is among the various types of DLTs.

Why is blockchain distributed?

The main idea behind the birth of blockchain and distributed ledger technology is to create a secure digital reference of records or transactions. To create a digital signature, blockchain recognizes consent through a combination of both public and private cryptographic keys.

Unfortunately, the combination of these keys is not enough. There must be a way to approve transactions and authorizations.

Blockchains have no single point of failure

To achieve this, blockchain had to set itself apart from traditional ledgers by being distributed without having a single point of failure and no central power.

The same concept on why blockchain is distributed applies to other distributed ledgers that we have discussed above.

What is DLT with a difference?

The birth of blockchain and distributed ledger technology has led to the rise of companies and platforms promising to overhaul our understanding of distributed ledgers.

Corda from R3 meant for business use

One such platform is Corda. Developed by R3, the platform was designed to overcome the adverse effects of public blockchain when applied in an enterprise setting. Significant shortcomings of public blockchains such as Bitcoin and other platforms employing the distributed ledger technology is scalability and privacy.

For instance:

Public blockchains broadcast data of every transaction to all the nodes in the network, which means everyone in the network has access to all data. … Also, it’s not easy to scale because existing blockchains mostly work on a batch processing model, which means they package data

For people to use blockchain or any other distributed ledger technology on the enterprise scene, data has to be hidden from the prying eyes of the public, and the distributed ledger technology employed must accommodate future growth of the enterprise.

Also, enterprises are looking to replace the use of a traditional database to improve security, transparency, and other related problems.

The difference between blockchain platforms such as Bitcoin and other related projects and Corda is that Corda is a private or permissioned distributed database that people can use for business purposes.

Another difference between blockchain platforms such as Ethereum is that participants on the Corda platform are known to each other and have legal identifications.

Also, the parties involved with Corda are financial institutions such as banks.

Corda is not only private and scalable has three more differences form blockchain

Apart from being private, scalable, and made of known players, Corda has other features to make it a DLT with a difference truly.

For example, Ashutosh Meher, developer relations, R3, wrote:

The Corda-network consists of a doorman, a network map, multiple distrusting counterparty nodes, and one or more notary pool. The doorman is responsible for provisioning access to the nodes in the network. The network map is a mapping of node identities to their IP-addresses … the notary pool is how Corda prevents double-spending.

From the above interaction, it’s now easy to spot the difference between blockchain and distributed ledger technology from a mile away.

It’s important to note that although blockchain has been employed to solve problems in medicine, fresh produce, real estate among other sectors, the technology was first used to power the Bitcoin cryptocurrency. Also, DLT and blockchain are heavily finding use-cases in the financial industry.