Blockchain is a type of distributed ledger technology (DLT) known for its chain-like structure and immutable nature. While DLT and blockchain are often used interchangeably, there are key differences. DLT is a broader set of technologies, including blockchain, with flexible structures and protocols that allow for greater scalability and transaction throughput.
Blockchain and DLT The key differences
- Blockchain: chain structure, data cannot be tampered with, highly secure and transparent, but slower accounting speed
- DLT: more Broad concept, including blockchain, but with more flexible structure and protocol, faster accounting speed
Explain the difference
1. Structure:
- Blockchain: Data is stored in chronological order in digital blocks called blocks, which are connected in a chain and are irreversible.
- DLT: Has a wider range of structures including blockchains, directed acyclic graphs (DAGs) and other ledger models. The structure of DLT allows for more flexible data organization and updates.
2. Data integrity:
- Blockchain: highly secure and cannot be tampered with. Once data is added to the block, it cannot be deleted or changed, ensuring data integrity.
- DLT: The level of data integrity varies based on its underlying protocol. Some DLTs may be less secure than blockchain, allowing data to be updated or deleted under certain conditions.
3. Transparency:
- Blockchain: naturally transparent. All transactions and data are visible to all participants on the network, improving auditability.
- DLT: Transparency varies from network to network. Some DLTs are public, allowing anyone to view transactions, while others are private, granting access only to specific participants.
4. Scalability:
- Blockchain: Due to its chain structure, scalability is limited. As transactions increase on the network, transaction confirmation speeds will slow down.
- DLT: By adopting different architectures, such as DAG, DLT can achieve higher scalability. These architectures allow transactions to be processed in parallel, thereby increasing throughput.
5. Cost:
- Blockchain: Transaction fees can be high, especially during periods of network congestion.
- DLT: Transaction fees vary by DLT protocol. Some DLTs may have lower transaction fees than blockchains, especially for low-value transactions.
6. Use cases:
- Blockchain: Best suited for decentralized systems that require high security, transparency and immutability.
- DLT: Has a wider range of use cases including supply chain management, digital identity, Internet of Things (IoT) and voting systems.
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