People sometimes use the terms 'Blockchain' and 'Distributed Ledgers' interchangeably. This post aims to analyze each other's features.
Distributed Ledger Technology
Distributed ledgers are databases that are spread across multiple nodes or computing devices. Each node replicates and stores an identical copy of the ledger. Each participant node from the network updates itself independently.
A breakthrough feature of distributed ledger technology is that ledgers are not managed by the central authority. Updates to the ledger are independently built and recorded by each node. The node then votes on this update to ensure that the majority agrees with the conclusions reached. Voting and agreement on one copy of the ledger is called consensus, and is done automatically by the consensus algorithm. After consensus has been reached, the distributed ledger will update itself and the latest version of the ledger is stored in each node separately.
The general ledger technology that was distributed dramatically reduced the cost of trust. The architecture and structure of the distributed ledgers can help us reduce our dependence on banks, governments, lawyers, notaries, and regulatory compliance officials. R3 Corda is an example of a distributed ledger.
The big book that is distributed presents a new paradigm of how information is collected and communicated, and is ready to revolutionize the way individuals, companies and governments transact.
Blockchains are a form of distributed ledger technology. Not all ledgers distributed use block chains to provide secure and valid distributed consensus.
Blockchain is distributed throughout and managed by peer-to-peer networks. Because this is a distributed ledger, it can exist without centralized authority or the server that governs it, and the quality of its data can be maintained by database replication and computational trust.
However, the blockchain structure makes it different from other types of distributed ledgers. Data on the blockchain is grouped together and organized into blocks. The blocks are then connected to each other and secured using cryptography.
Blockchain is basically a growing list of records. The append-only structure only allows data to be added to the database: changing or deleting data entered previously in the previous block is not possible. Because of this, Blockchain technology is perfect for recording events, managing records, processing transactions, tracking assets, and voting.
Cryptocurrency, like Bitcoin, pioneered blockchain technology. The massive Bitcoin rally at the end of 2017, and the media frenzy that ensued, brought cryptocurrency into the mainstream public imagination. Governments, businesses, economists and enthusiasts are now considering ways to implement blockchain technology for other uses.
Every blockchain is a distributed ledger, but not every big book distributed is a blockchain. Each of these concepts requires decentralization and consensus between nodes. However, the blockchain organizes data in blocks, and updates entries using an append-only structure. Large books that are widely distributed, and blockchain in particular, are conceptual breakthroughs in managing information and can be expected to find applications in every sector of the economy.
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