The term “Blockchain” has become so popular and mainstream just because of the entry of “bitcoin”. When Bitcoin came into existence, it gained popularity not immediately but gradually. People are familiar with the terms like blockchain, bitcoin, and cryptocurrency but are missing from the bigger picture that is Distributed Ledger Technology or DLT.
Let us see the broader picture and find out more about DLT and Blockchain.
Distributed Ledger Technology or DLT is a specific term used to describe technologies that distribute records or information which are used either publicly or privately.
In technical terms, DLT is a database which spread across various nodes or computing devices. Each of the nodes or computing devices replicate and save the identical copy of the ledger. Each participant node in the node updates itself independently.
The feature of DLT is that the ledger is not maintained by any type of central authority. The updates in the ledger are constructed and recorded independently by each node. The nodes then have to vote, so that the majority agrees to the conclusion reached.
The voting and agreement on the copy of ledger is called consensus and is conducted automatically by a consensus algorithm. Once consensus has been reached, the distributed ledger updates itself and the latest, agreed-upon version of the ledger are saved on each node separately.
To all those who do not know, Blockchain is a type of Distributed ledger Technology. Wherein, the data is organized in the “chain of blocks” form. This data is distributed to everyone in the form of chained “blocks”.
Not all DLTs are blockchains but all the blockchains are DLTs. Additionally, not all the distributed ledgers use the chain of blocks to secure and valid distributed consensus.
By peer-to-peer network, blockchain is distributed across and managed. As a blockchain is a distributed ledger, there is no central authority or the server managing it. The data quality can be handled by database replication or computational trust.
The structure of blockchain makes it stand out from other types of distributed ledgers. The data is grouped together and then organized in the form of blocks. The blocks are later linked to each other in a secure form using “Cryptography.”
The blockchain is a structure that is continuously growing in the record list. Its structure only allows the data to be added to the database. Any form of deleting or altering of data on the earlier formed blocks is impossible.
Therefore, blockchain technology is well suited for recording events, managing records, processing transactions, tracing assets, and voting.
The main phrase to keep in mind is “All Blockchains are Distributed Ledger technology, but not every Distributed Ledger Technology is a blockchain”. Both the technologies need decentralization and consensus among nodes. One specific point of difference is that the blockchain stores its data in the form of blocks which are linked in a chain. Distributed ledgers broadly, and blockchains specifically, respectively are conceptual breakthroughs in managing information and can be expected to find application in every economic sector.