What is the main difference between the different distributed technologies?
Each day, more and more use cases for blockchain are being discovered and its name is no longer unfamiliar or confusing. With traditionally centralised institutions such as banks and governments looking to the technology to solve a range of their problems, there is a new term starting to crop up as well. This is Distributed Ledger Technology or DLT and it is already being utilised extensively by a large number of companies and institutions globally.
Even the Bank of England has announced their intention to use DLT and blockchain to improve their Real-Time Gross Settlement system.
What many do not realise however is that blockchain and DLT are not interchangeable terms and that there are important differences between the two.
Distributed Ledger Technology is a database of records that is not controlled or stored by any one single individual or body. Whilst this does sound similar to blockchain, we need to understand that this is not the case.
With a DLT, the implementer has a greater level of control over how it is implemented and theoretically, they are able to dictate the purpose, the structure, and the overall functioning of the network itself. In other words, it works like a blockchain but in a non-decentralised manner.
A DLT can be thought of as the first step towards creating a blockchain but this does not mean that it will create a series of blocks. The ledger in question can instead be stored across multiple servers that all communicate to ensure that the up-to-date nature of all the transactions is maintained.
Many companies such as Google and Volkswagen are choosing DLT over a blockchain.
The blockchain is a distributed ledger with some very specific technological features. It creates a completely immutable ledger of records that are maintained and controlled by a decentralised network where each transaction is approved by consensus.
By using cryptographic signing and linking groups of records in the ledger together, a chain is created and this is one of the main differences with DLT. We must also consider that a blockchain is controlled by members of the public and allows its users to become involved in how it is structured and managed.
Blockchain and DLT are not the same thing!
The most important thing to note is that these two words are not interchangeable and you are in fact, referring to two rather different things. Whilst an institution such as the Bank of England may favour the use of the word DLT over the blockchain, a corporation may use the term blockchain to capitalise on the hype surrounding the technology. But remember, they are not one and the same thing so be sure to dig a little deeper to find out which of the two terms is the correct one to use.