Most people understand blockchain and distributed ledger technology as the same thing. In fact, they ‘re not the same, they ‘re a general misconception about both technologies. Here in this article, you will learn about the similarities and differences between the two technologies.
No wonder, the rise in the value of bitcoin and some other cryptocurrencies made blockchain technology one of the most demanding technologies of the hour. However, a lot of fake organizations are making noise by rebranding the false technology in their name to attract more audiences.
As a result, technology has also earned a bad name, and a lot of people are skeptical about technology. It can give them short-term profits, but it is not profitable in the long run.
Anyway, the main concern is that the random use of the two terms “blockchain” and “distributed ledger” in a single sentence has made it more confusing. So many people think the same thing about them, but they’re different. Let’s take a deep dive to understand the differences and similarities between these two technologies.
Blockchain Technology
Blockchain technology is a database that is shared across a network with huge entries of data (generally transaction records) that are verified and stored with cryptography. Each data entered into the network is first verified and stored in a single block and then the blocks join the network. The blockchain uses a unique code “hash” also known as the cryptographic signature.
Distributed Ledger Technology
Distributed ledger technology is different from a centralized network. A centralized network has a central database which has the central authority for authorizing any transactions. Whereas, a distributed ledger uses a database at different locations and distributed with the market participant in the network.
Most of the companies are using the centralized network and they want to adopt the distributed ledger technology for many reasons. A DLT allows the faster transaction, transparency, and incorruptible. On the other hand, centralized requires a central authority for each transaction which makes the process slower and it can be easily manipulated.
Difference Between Distributed Ledger and Blockchain Technology
The main difference between these two technologies is blockchain comes under distributed ledger technology. Blockchain is just a distributed ledger that uses a line of blocks for storing, verifying, and encrypting data in the. Whereas a distributed ledger is a larger concept that blockchain. Moreover, DLT does not require any proof which allows it for better scalability.
The distributed technology is more popular because of the elimination of the intermediary party. Another difference is blockchain requires a particular set of data structures like blocks, but DLT does not require a data structure.
To be more precise, every blockchain technology can be considered as a distributed ledger but the converse is not true. That means all distributed ledger is not a blockchain network. This reveals that blockchain is a subset of the distributed ledger technology.
Benefits of the Two Technologies
The main advantage of a distributed ledger is it allows complete control over all its information to the user. Secondly, it maintains transparency which allows the users to check every transaction history in the network. Due to the absence of a central authority transaction time are very less.
Blockchain technology made it possible for investing cryptocurrencies which is a major attraction for many investors and traders. If you want to trade bitcoin or any other cryptocurrencies, bitcoinfuture provides a great platform.
Conclusion
Hopefully, the information in the article helped you to understand the difference between blockchain and distributed technology. Blockchain is just a distributed ledger, which allows faster, transparent, and secure financial transactions. Now we are clear that both technologies is not the same. So do not get confused next time when you come across these words.
