What are the differences between blockchain and distributed ledger technology, also known as DLT?
First, it is necessary to specify that DLT refers to a category that includes several similar technologies, of which the blockchain is part.
Paradoxically, however, the blockchain was born first, thanks to Bitcoin, on January 3rd, 2009, followed by other similar technologies, such as Tangle, which together are defined as Distributed Ledger Technologies, or DLT.
The first blockchain, that of Bitcoin, featured some precise properties that not all DLTs have.
Despite the fact that there were already ledgers consisting of chains of blocks, Bitcoin’s blockchain was the first decentralised blockchain, which was a distributed ledger without a manager and without a single-point-of-failure.
In addition to being made up of a chain of blocks connected in sequence to each other by special cryptographic codes, called hashes, the other salient features of the Bitcoin blockchain are decentralisation and the fact that it is public and open.
By contrast, the other DLTs may differ from the Bitcoin blockchain both in terms of the structure and in the other peculiar features mentioned above.
The only thing that all DLTs, including the blockchain, have in common is the fact that they are distributed ledgers, which means that they do not exist in a single copy, but are distributed across many identical copies, all accessible online.
In fact, even Bitcoin’s blockchain is equipped with this feature, only it also has others that do not necessarily make it look like all the other distributed registers.
For one thing, not all distributed ledgers are made up of a chain of blocks: there are also some based on very different architectures, such as Tangle which is based on acyclic graphs. However, it seems that the majority of DLTs are actually based on blockchains.
Moreover, not all of them are public, open and decentralised. Quite the contrary, there aren’t many DLTs that have these characteristics, since an increasing number of closed, permissioned or centralised distributed ledgers are emerging.
The reality is that the real and profound extraordinary thing about the blockchain is that it is decentralised, public and open, i.e. permissionless and trustless. In fact, this is where the real blockchain is truly revolutionary, given that nothing similar existed before Bitcoin.
However, the two terms, blockchain and DLT, are often mistakenly used as synonyms, which unfortunately is now spreading the bad habit of using the term blockchain to refer to non-decentralised distributed ledgers.
This habit is now so widespread that it could even impose itself as a new linguistic standard, causing even technical experts to use the term blockchain improperly according to the common language.
To tell the truth, the very definition of the term blockchain is not unanimous either.
In fact, analysing for example the code of the first Bitcoin version, the 0.1.0, there’s an explicit reference by Satoshi Nakamoto to the block chain (written detached), meant only as a chain of concatenated blocks.
So, on the one hand, there are those who support this first definition of the term, although it was written detached and referred only to a trivial concatenation of blocks, while on the other, there are many who define blockchain as having the same characteristics as the Bitcoin chain, i.e. a public, open and decentralised chain of concatenated blocks.
By choosing the latter as a more accurate definition of the meaning of the term blockchain, it should be added that a blockchain, precisely because it is decentralised, public and open, should also have some other characteristics in order to be defined as such:
- be completely trustless,
- be censorship-resistant,
- be virtually unchangeable,
- be Byzantine Fault Tolerance (BFT), i.e. able to continue to operate even if some nodes fail or act dishonestly.
So, to summarise, the real blockchain is that of Bitcoin and the like, such as Ethereum.
Some systems are based on distributed and decentralised ledgers that are not based on blockchains, such as IOTA which is based on Tangle.
Others are based on non-decentralised distributed ledgers, such as IBM’s Hyperledger.
Only the blockchains belonging to the first group should be defined as such, while all the others fall into the broader category of DLT alongside blockchains.
