The technology of blockchain is highly famous because of BTC and other digital currencies. Many traditional centralized authorities like banks and governments are beginning to take an interest in this technology. A new term that has started to revolve around the crypto space is distributed ledger. What is it? And is it related to blockchain? In this article, we are going to have a look at distributed ledger vs blockchain to understand the concepts better.
But before we get into the comparison, it is important for us to have a look at the topic individually. So we will begin by explaining what blockchain and distributed ledger technology are before we get into distributed ledger vs blockchain.
What Is A Distributed Ledger?
A distributed ledger is a database that is available across various locations or among several participants. However, most entities still use a centralized database that has a fixed location. Unlike a centralized database, this database is decentralized, which allows removing the requirement for an intermediary or central authority for validating, processing, or authenticating transactions. This is the difference between distributed ledger vs traditional ledger.
Along with that, these records will only be kept in the ledger after the parties associated have attained a consensus. So we hope by now you have understood what is ledger in blockchain? Also distributed ledger technology examples include the blockchain.
What Is A Blockchain?
A blockchain is a type of distributed ledger that has a prominent technological underpinning. Blockchain formulates an unchangeable ledger of records that is handled by a decentralized network after a consensus grants all the records.
The prominent difference between distributed ledger vs blockchain is the cryptographic signing and bridging of groups of records in the ledger that create a chain. Along with that, there is a chance for the users and the public to evaluate how a blockchain is made and operated based on the specific application of the blockchain.
Distributed Ledger Vs Blockchain: How Are They Different?
Now that you know what these technologies mean individually, it is now time to see what makes them different and distinctive from each other.
Even though both distributed ledger and blockchain sound similar, there are some variations between the two. Blockchain can be segmented as a type of distributed ledger, but you cannot term every distributed ledger as a blockchain.
We have listed some of the unique dimensions of distributed ledgers and blockchain to help you better evaluate the distributed ledger vs blockchain comparison.
The first distinction between distributed ledger in blockchain technology is the structure. A blockchain usually consists of blocks of data. However, this is not the real data structure of distributed ledgers. This is because a distributed ledger is simply a database that is spread across various nodes. But you can portray this data in several ways in every ledger.
All the blocks in the blockchain technology are in a specific sequence. However, a distributed ledger does not require a specific data sequence.
Proof of Work
In most scenarios, blockchains usually use the PoW (proof of work) mechanism. However, there are other systems, but they typically take up power. Distributed ledger, on the contrary, does not require this type of consensus, which makes them more inclined.
Blockchain is just a subgroup of distributed ledgers, and it has added operations apart from the traditional DLTs scope. Proof of work adds a prominent difference between distributed ledger vs blockchain.
Implementation is a crucial point to consider when evaluating the differences between distributed ledger and blockchain. Blockchain has several implementations in real life cases as it is more famous, and many usages are created in due course of time. Since a lot of companies are adopting the nature of blockchain and are slowly including it into their systems, you will also find big giants such as IBM, Amazon, etc., that provide a good blockchain as a service solution.
In comparison, developers in recent times have started to dive deep into the distributed ledger technology core. Even though there are various types of DLTs in the tech space, there are few real-life operations. However, they are still being created, and we will begin to see real-life operations very soon.
There is no requirement for tokens or any currency in a distributed ledger technology. However, you may require tokens to detect and block spam.
Anyone can operate a node in blockchain technology. However, operating a complete node needs a considerable network that may be hard to manage. Along with that, there is usually some token economy, and it takes a basic role in blockchain technology. However, modern blockchain technology is searching for a way to leave the digital currency shadow.
Distributed Ledger Vs Blockchain: Final Takeaway
Blockchain technology is changing the financial space. It is a decentralized database that can keep currency or any other form of data. Because of its transparent and P2P (peer-to-peer) nature, this technology is a lot more secure than centralized or traditional databases. So now the parent technology of blockchain is the distributed ledger technology and the above comparison of distributed ledger vs blockchain aims to clear the difference between them.