What is distributed ledger technology? What is the difference between blockchain and distributed ledger? Blockchain is used by the whole computer distributed on the blockchain. However, in traditional distributed databases, system administrators usually perform the key functional ledgers necessary to maintain the consistency between multiple replicas. The simplest way is to have the system administrator maintain the master copy of the ledger, which will be updated regularly and shared with all network participants.

In contrast, new systems based on distributed ledger technology, the most famous of which are Bitcoin and Ethereum, are designed to operate without trusted authority. Bitcoin maintains distributed databases in a decentralized manner through the use of consensus-based verification procedures and encrypted signatures. In such a system, transactions are carried out in a point-to-point manner and broadcast to all participants participating in the verification. These participants are called "blocks". Since active ledgers are organized into independent but interrelated blocks, this type of DLT is often referred to as "blockchain technology".

The blockchain version of DLT has successfully supported Bitcoin for several years. However, the system is not without its disadvantages: high operating costs (to prevent double expenditure without using trusted institutions requires transaction verifiers (miners) to use a large number of calculations to complete the calculation of "proof of work"); The icon has only the final settlement probability; All transactions are public. These features are not applicable to many financial market applications. Therefore, the current wholesale DLT payment application has abandoned the standard blockchain technology and adopted the protocol to modify the consensus process to enhance confidentiality and scalability. Examples of protocols currently being tested by the Central Bank include Corda and Hyperledger Fabric. Corda replaced the blockchain with a "notary" architecture. The notary designed to use trusted authority and allow consensus to be reached on the basis of a single transaction rather than limited information sharing.

What is the difference between blockchain and distributed ledger?

Generally speaking, blockchain and distributed ledger technology are considered to be the same, but there are some differences between the two technologies. Blockchain can be classified as a distributed ledger technology. It can be said that blockchain is a kind of DLT, but not every distributed ledger can be called blockchain.

Blockchain is the parent technology of distributed ledger technology. But the idea behind them is the same. Blockchain technology is likely to solve many problems in the banking and financial industry. Here, blockchain is an advanced version of distributed ledger technology, with many useful functions. Developers have many other DLT variants in the technical field. However, they do not have many real-life implementations and applications that blockchain can achieve.

Advantages of using distributed ledger technology in blockchain

Security: All records of each transaction are securely encrypted. Once the transaction is verified, it is completely secure, and no one can update or change it. This is a permanent process.

Decentralization: All network members or nodes have a copy of the ledger to achieve complete transparency. The decentralized private distributed network improves the reliability of the system and ensures uninterrupted continuous operation. It can control the information and data in the hands of users.

Anonymity: Each participant's identity is anonymous, and it is impossible to reveal their identity.

Immutable: any verified transaction cannot be changed because they are irreversible.

Transparency: Distributed technology provides a high level of transparency. This is necessary for finance, medicine, banking and other industries.

Speed: Distributed ledger technology can process large transactions faster than traditional methods.

Disadvantages of distributed ledger technology

51% attacks: 51% attacks are related to part of this distributed ledger technology and need to be checked regularly.

Transaction cost: It is expected that the connected nodes will validate the transactions given the distributed ledger technology, which will generate high transaction costs, because other nodes will be rewarded to validate the transactions.

Slow transaction speed: The main disadvantage of this DLT is that the transaction speed is slow because multiple nodes are connected to the network and need time to verify the transactions of all other nodes.

Scalability problem: Due to low speed and high transaction cost, DLT is difficult to scale on a large scale.

Having said that, I believe you have a certain understanding of what is distributed ledger technology and how blockchain is different from distributed ledger. In general, distributed ledger technology (DLT) refers to the protocol and supporting infrastructure that allows computers in different locations to propose and validate transactions and update records synchronously through the network. Moreover, blockchain can be classified as a distributed ledger technology. It can be said that blockchain is a kind of DLT, but not every distributed ledger.