People interchangeably use the terms blockchain and distributed ledger technology unknowingly. Today, blockchain is a very trendy topic among people. However, they do not have full-fledged information regarding blockchain, cryptocurrency, distributed ledger, and other related terms. The lack of knowledge on these topics is creating confusion and complications in the understanding of the technology. Hence this obstructs people to take advantage of these technologies. So I got you the article to understand what is a blockchain & distributed ledger technology and the difference & relation between them.
Here is a detailed guide on what is blockchain technology and distributed ledger system.
Table of Contents
What is blockchain?
Blockchain is a kind of distributed ledger system (DLS). In simple words, DLS is the parent technology of blockchain. Blockchain technology enables users to connect with each other and is distributed across all the nodes. It works on digital signatures and time stamps. The technology does not require any identification of the parties involved in the process.
Blockchain technology is gaining traction among people because of the emerging trend of bitcoin and other cryptocurrencies. Bitcoin is the first cryptocurrency developed by blockchain technology. However, the growing buzz has launched many platforms to buy and sell bitcoin.
Vertex market is the most used peer-to-peer platform to buy and sell cryptocurrency. The major advantage that I admire about this platform is that I can buy crypto in my currency and kingdom. For example, if you want to know how to buy Ethereum in Nigeria, you can buy it without much hassle for currency exchanges.
Moreover, there are several sellers at Vertex Market offering different prices. You can scroll down and find the best price that fits you. It is a highly developed platform. Interchanging currency is not a problem here. You are open to an offer for Bitcoin to Naira without any deposit in the wallet. There are several payment methods to facilitate ease of transactions for the users.
How does it work?
Blockchain has all the information regarding all data transfers. It is known as a ledger system, and the data exchange process is called transactions. After the completion of every transaction and verification, blocks are added to the chain, and hence the chain formed is known as the blockchain. It uses a unique kind of the distributed network to check if every transaction is accurate and on point. Once the blocks are added to the chain no one can alter or modify the chain. It is the most attractive feature of blockchain technology that once data is added no one can alter the chain or information. The popularity of the blockchain can be attributed to the fact that it’s a key technology that is reliable and secure among others.
What is a distributed ledger system (DLS)?
A distributed ledger is a database that is decentralized. Decentralized means the data is distributed across the nodes and systems. Every node has a ledger, and if any modification or change is made to anyone’s data, that specific ledger on every node will automatically get updated. The difference between DLS and other technologies is that every node in DLS holds the database independently. All the nodes possess equal authority. The system does have any central authority to manage the database or the server. Hence it makes the system transparent and boosts the confidence of users in the technology. If any node gets updated every other node checks and verifies it. Once the verification between the nodes is completed and agreed upon, the ledger gets updated on every node and system. The process is quite simple, but the complex understanding of people made the technology complicated.
DLS possesses a special dynamic system that outdoes the traditional paper-based ledger system. With this new technology, people are experiencing a revolution in communications and information gathering.
Not all DLS is blockchain: a myth buster
With the growing popularity of blockchain and DLS, people randomly use these fancy words. But every DLS is not a blockchain. There is a difference between blockchain and distributed ledger systems.
Difference Between Blockchain and Distributed Ledger System
Block structure
The main difference between the blockchain and distributed ledger system is the structure. Blockchain works on blocks of data and consequently forms a chain of blocks. But DSL does not work on blocks, it is just a simple spreadsheet of the database that is distributed on all available nodes. The DLS distributes the data in a spreadsheet very effectively, and hence you can quickly access any information from such a big database.
Sequence
Blockchain works particularly, on the sequence of data. If the sequence of data is mismatched, it will not execute the process. However, on other hand, the DLS does not require any sequential series, and it executes the process even if the sequence is mismatched.
Practical Implementation
Blockchain is being adopted by several governments and organizations across the world. The technology has a real-life implementation, but DLS is still under a development phase. It possesses no practical implementations.
Tokens
DLS does not work on token systems, while blockchain requires some kind of tokens to work on. Token may be in the form of the currency also. Blockchain uses it for spam detection. However, developers are working on technology to remove the use of the token in the process, but it plays a vital role in the innovative blockchain technology.
Many applications are using both DLS and blockchain technology, but it is important to understand that both of them are one. They are in a parent-child relationship. DLS is the parent of blockchain technology. Blockchain technology makes use of DLS to work upon. However, the integration of the technology brings a revolution in the business by establishing stability and transparency. The technology has also boosted the confidence of the people in the organizations and thus helped enterprises to build a strong customer base. I hope the article has concluded my points in your mind and you are now clear with the differences. However, both of the topics are quite huge to give a deep swim, but I tried to put out the main differences and information regarding both to clear your confusion.
