Blockchain Technology V.S Distributed Ledger

Blockchain Technology V.S Distributed Ledger

Several times business users think of blockchain technology and distributed ledger technology as one and the same. In this blog post, we will discuss about these two terms.

Over the past few years, the terms blockchain technology and distributed ledger have become entwined. As these two terms have different meanings and different applications, it is necessary to distinguish the two from one another.

Distributed Ledger Technology

A distributed ledger consists of a database spread across multiple sites, regions, or participants. A distributed ledger is required to be decentralized, otherwise, it would resemble a centralized database, just like the one most companies use today. Distributed ledger technology is extremely appealing as it removes the intermediary party from the equation. Moreover, enterprises can use distributed ledger technology for processing, validating, or authenticating transactions efficiently. Transactional records are stored in the ledger once consensus is achieved by majority of the parties. Every recorded transaction is time stamped and has its own cryptographic signature. Moreover, all of the participants in the distributed ledger can view all of the records that are available. This technology helps in providing a verifiable and auditable history of all data that is stored. Let's take a look at two of the primary advantages of distributed ledger.

Transparency

A distributed ledger gives control of all its information and transactions to the users. Thus, distributed ledger systems are transparent. Moreover, use of a single public ledger to record transactions helps in reducing the clutter and complications of multiple ledgers.Faster Transactions

Physical markets that are working with digital documentation take a longer time to execute transactions. Distributed ledgers can minimize this transaction time to minutes and are processed 24/7. Distributed ledgers can be used in transportation and energy, potentially saving billions, and also facilitating increased back-office efficiency and automation.

Blockchain Technology

Blockchain technology is just one particular type of distributed ledger. Most people know it as the technology powering bitcoin and other popular crypto-currencies. As the name indicates, it adds blocks to the network chain, which contains transaction records. For enabling chaining of blocks, the blockchain uses a cryptographic signature, known as a hash. These blocks are available for every participant in the network. What differentiates blockchain is that it is much more than just a simple data structure. You can use a blockchain for determining rules for a transaction or even to create a smart contract. Distributed ledger does not involve a sequence chain like Blockchain.

Take a look at the two of the primary advantages of a blockchain.

Accurate Audit Trail

When you write data to a blockchain, it gets etched on the network. This could be used for education credentials or land registries. When you have a series of transactions over time, you gain an accurate and immutable audit trail, which is useful for financial audits.

Easy Asset Exchanges

Once you have a data stored in a place where no single entity owns or controls it, and no one can change what’s already written, this gives you benefits similar to double-entry book-keeping, which means that there are fewer chances of errors. Distributed ledgers and blockchain technology are those technologies that aim at creating trust by providing visibility and transparency. Moreover, they enable you to more effectively manage risk. In coming few years, these technologies can become niche solutions that allow flexible trust models and consensus processes to provide higher performance.

Karthi Gopal

Microsoft certified POWER BI Data expert with Clinical experience in AI/ML, Datawarehousing and Business Intelligence

7y

*helpfull

Like
Reply
Karthi Gopal

Microsoft certified POWER BI Data expert with Clinical experience in AI/ML, Datawarehousing and Business Intelligence

7y

was really healpfull

Like
Reply

Thanks Naveen

Like
Reply

I am glad that more and more people are now understanding the technology and the framework for #Blockchain and #Hyperledger rather than focusing on the cryptocurrencies. Thanks for the great and understandable write-up!

To view or add a comment, sign in

Insights from the community

Others also viewed

Explore topics