What Is Distributed Ledger Technology In Blockchain?
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- Blockchain, cryptocurrencies, cryptography, distributed ledger technology (DLT), hpyerledger Fabric, Hyperledger, Hyperledger Caliper, Hyperledger Ursa, Indy, Sawtooth
- April 24, 2020
What Is Distributed Ledger Technology In Blockchain?
Distributed Ledger Technology In Blockchain?
It has only been over a decade since Bitcoin was first launched. In that short amount of time, it has inspired the establishment of an entire industry. Terms like blockchain, distributed ledger technology (DLT), cryptocurrencies, Hyperledger, cryptography, and more have become popular now. These terms were simply unheard of before 2008. Such has been the effects of bitcoin and blockchain development.
The internet era brought a digital revolution to the world. Blockchains are going to bring a financial revolution among other things. The world is set to transform in major ways from here on. The way we transact, store data, conduct business, conduct contracts, share value, etc are all going to change. Leading all this transformation will be blockchain and distributed ledger technology. Enterprise blockchain will especially be prominent.
But what are these two technologies? People often use them interchangeably However, that’s not correct. They share the same concepts but are not one and the same. In fact, blockchain is a subset of DLT technology. It is important to understand the differences. These differences are what make each unique with their own applications.
What Is DLT?
A DLT is exactly as it sounds. It is a distributed ledger that is spread across multiple geographical locations. It is a consensus-based system where no central authority is in charge. As such, the participants in the network replicate, share, and synchronize the digital data. This ensures that everyone is on the same page about the transactions happening on the network. This also ensures that no fraudulent transactions can pass through.
A DLT is a peer-to-peer network that requires a consensus algorithm to function. Only then can each participant (node) maintain the network. The nodes have to record, replicate, and update digital data independently. The consensus algorithm determines which nodes’ copy is the correct one. After that happens, all the nodes update their copy of the ledger.
There are different types of distributed ledger databases. They can be permissioned as well as permissionless. Just because they are decentralized doesn’t mean a central authority can’t make one for their own use. That is why DLT technology is so flexible and vast. Teams and corporations all over the world can adapt the technology for their unique uses.
How Is It Different From Blockchain
There is a lot of confusion about this part. Mainly people use the term blockchain and DLT interchangeably. But blockchain is just a part or a subset of DLT. In other words, blockchain is just one way to implement a distributed ledger. Enterprises can choose to either go with a DLT that is not a blockchain or with a real blockchain.
In a blockchain, the transactions are stored in a series of blocks. These blocks are then secured with cryptography using a hash. The next block then begins with the same has and records more transactions. That is how a blockchain stays immutable. This is also why it is called a “blockchain”. The whole network exists as a chain of blocks. Blockchain really became popular because it powers the most popular crypto Bitcoin.
In an enterprise setting, you can see that they might prefer blockchain. This is especially the case when there are specialized use cases. Therefore, developers of these enterprises develop blockchain accordingly. In fact, there are a lot of blockchain development companies that are solely focused on solving these problems for enterprises. Even newcomers are learning how to build a blockchain.
Enterprise Blockchain
The concept of blockchain became popular only due to cryptocurrencies. However, they are not the only application of a blockchain. In fact, blockchains and DLT is used far and wide in the enterprise space. There are many blockchain development companies and groups that have made it easier for enterprises. They can simply adapt their solutions to their requirements.
One of the most popular projects in this space is Hyperledger. It is basically an open-source community effort that works to develop blockchain solutions. More precisely, it develops frameworks, tools, and libraries for enterprises. It also serves as an umbrella project for many blockchain developments. There are Hpyerledger Fabric, Sawtooth, Indy, Hyperledger Ursa, Hyperledger Caliper, and many more. The list is a long one and quite impressive.
One of the most popular projects in this space is Hyperledger. It is basically an open-source community effort that works to develop blockchain solutions. More precisely, it develops frameworks, tools, and libraries for enterprises. It also serves as an umbrella project for many blockchain developments. There are Hpyerledger Fabric, Sawtooth, Indy, Hyperledger Ursa, Hyperledger Caliper, and many more. The list is a long one and quite impressive.
Hyperledger Fabric
Out of the list, this one is perhaps the most important for enterprises. If they adopt it, they don’t even need to learn how to build a blockchain. Fabric provides a foundation for applications or solutions with a modular architecture. That means several important components of a DLT or a blockchain can become modular. Things like consensus, membership services, permissions, etc can, therefore, become plug-and-play.
This is perfect for companies. Different corporations have different needs. They need something flexible that can address a broad range of industry use cases. Fabric provides the perfect fundamental to do exactly that. Therefore, an enterprise can choose a purely distributed ledger framework that is not a blockchain. Or they can choose a blockchain framework.
Within each decision, they can choose the network to be permission-ed or permission-less. They can also deploy smart contracts so that the network can become permission-less if certain criteria are met. The sky is the limit with Hyperledger Fabric.
Conclusion
DLT and blockchain development is only getting started. Experts say that we are the early stages. This is similar to how the internet was at the early stage during the 90s. Once things get more developed, blockchains and DLTs will truly transform human civilization.
Cryptocurrencies have already become the most popular use case of blockchains. They are also beginning to take shape in corporations. Even banks and other payment networks have begun deploying DLT. The banking sector is one that most needs it. It still uses outdated technology that simply doesn’t work in the modern-day world. DLT will bring banks to the present times. Similarly, tons of other industries will get transformed as well.
What Is Distributed Ledger Technology In Blockchain?
