What Is the Difference Between Blockchain and DLT?
What exactly is the difference between a blockchain and distributed ledgers? Here is a full guide on what each technology does and how...
"Blockchain" and "distributed ledger technology." Many of us have been guilty of confusing these two terms and using them interchangeably. But even though their meanings overlap in a number of areas, and even though they've both reached similar levels of public notoriety since the 2017 cryptocurrency bull market, they aren't quite identical.
Yes, they both generally refer to a record of information that's distributed across a network, and yes, they both foster a greater degree of transparency and openness than had been enabled by earlier, centralized databases or digital records. But this is where the analogies end, since blockchains and distributed ledger technology (DLT) each come with their own important distinguishing features.
Openness, decentralization, cryptography
There are two big distinctions, and depending on where you sit on the Bitcoin vs. blockchain spectrum, some qualify Bitcoin-style blockchains as largely superior to and more innovative than their distributed ledger counterparts while others qualify DLT as more useful for everyday commercial purposes.
The illustration below outlines how the two technologies relate to each other, showing that one way to implement DLT is through a blockchain:
Firstly, blockchains are generally public, meaning that anyone can view their transaction histories and that anyone can participate in their operations by becoming a node. They are, as cryptocurrency parlance puts it, “permissionless.” This is the key feature pointed out to Cointelegraph by Marta Piekarska, the director of ecosystem at Hyperledger. According to Piekarska:
“First and foremost: one is permission less, the other is permissioned. This means that in the first case anyone can participate in the network, in the other: only chosen participants have access to it. This also determined the size of the network: Bitcoin wants to grow infinitely, while in a permissioned blockchain space, the number of parties is smaller.”
Put simply, the public aspect of blockchains generally implies three interrelated things: 1) Anyone can use the blockchain, 2) anyone can serve as a validating node of the blockchain, and 3) anyone who becomes a node can, in turn, act as part of that blockchain's governance mechanism. In theory, this makes blockchains decentralized and democratic structures resistant to undue control or influence from any single party.
By contrast, a distributed ledger generally doesn't enable any or most of these public features. It restricts who can use and access it (hence the “permissioned” terminology), and it also restricts who can operate as a node. And in many cases, governance decisions