The difference between DLT and Blockchain. How to use the term DLT?!
Whilst reading about blockchain or Distributed Ledger Technologies (DLT's) the words are sometimes used interchangeably which irritates the reader and creates confusion. Are they the same or is there a difference? What is the correct term or how do I know when to call it a blockchain or a Distributed Ledger?
A common sentence to come across is "All Blockchains are DLT's, however, not all DLT's are Blockchains." To stop the confusion right there, let's go back to the core of both and find out what they are made of.
“A distributed ledger is a database that is spread across several nodes or computing devices. Each node replicates and saves an identical copy of the ledger. Each participant node of the network updates itself independently.“
Imagine a company shares an Excel-spreadsheet across all its sites across the world and each site replicates and saves identical copies everytime someone updates it, therefore every person in the company is in the possession of an up-to-date copy.
“A blockchain is a distributed computing architecture where every network node executes and records the same transactions, which are grouped into blocks.”
Now the core of a blockchain is similar but follows certain ‘rules’. A Blockchain also stores data and spreads it across several nodes or computing devices etc. However, in the Blockchain protocol, it is set that the data is organized in blocks which are then linked together and secured using cryptographic signatures (Hash-keys). Every node in the network will process the data stored in the next block coming to its own conclusion of the correct cryptographic signature. Each node will then vote for the signature they believe is correct with the outcome of a majority agreeing to one conclusion/signature for the next block. After this consensus is reached the ledger will be updated and all nodes will have their own identical copy which has been agreed by the whole network.
Thus, saying that blockchain is a DLT since it is a database shared between nodes. But a DLT is not always a Blockchain since it doesn’t have to be organized in blocks or secured through the cryptography consensus mechanism explained above. Furthermore, became Blockchain an overall term (generic trademark) for similar types of DLT’s, even though Blockchain is the DLT of Bitcoin. This phenomenon is popular in our day-to-day lives such as Kleenex, even though it is a tissue or Scotch tape which is originally just sticky tape.
Conclusion
To use the terms in the correct manner, it is suggested to investigate the core (Protocol) of questioned DLT and work out similarities to Blockchain such as organizing and storing data in blocks or using a consensus mechanism to ensure higher security throughout the network.