DLT in Blockchain Development
DLT (Distributed ledger technology) and blockchain notions are relatively similar; therefore, they are often misinterpreted or used as synonyms. However, it is a mistake since the difference between blockchain and DLT is significant. This article will explain each notion, study their connection, and see how DLT is implemented in blockchain development.
A consensus mechanism is a set of protocols that allow nodes to agree upon which information to add to the register in a decentralized way. For example, if 51% of nodes approve data, it will be added to the database. There are countless DLT consensus mechanisms, and developers create even more, so there is no point in describing them.
Still, let’s highlight the DLT technology features:
Blockchain is a distributed register that employs cryptography and exceptional architecture for data to create a secure and autonomous database that is a truth source; therefore, blockchain operations don’t require intermediaries to approve its integrity.
The architecture feature is that blockchain data are recorded in layers (blocks), and all layers are stored in a system and overlap. Each layer is a set of transactions during a particular period that are grouped and verified with the consensus algorithm and then added to the system.
As a result, there is a chain of blocks of data sets about transactions in the blockchain’s network; the information cannot be edited or deleted, which is another blockchain feature. Here is how it’s implemented in the scheme:
Businesses and individuals can benefit from blockchain solutions development, and integrations.
Increased transparency. Almost all blockchains are decentralized distributed registers with a public transaction history. Anyone can view the transactions of any account within the network that allows any participant to see the interaction (in the case of Bitcoin, see who to who sent funds). Hence, blockchain is transparent in terms of publicity and transaction verification and confidential in terms of counteragents since blockchain doesn’t store personal data of accounts but for the public and private keys.
Our article ‘’Three types of smart contracts. How to develop a smart contract?’’ will tell you in detail what smart contracts are and how they function.
Furthermore, a distributed register can help to track intellectual property rights and copyright for art, products, film, music, and others. NFTs already employ it.
Reducing expenses. Reducing unnecessary costs on intermediaries and warrants and replacing manual work with automatic computer algorithms will increase income and growth. Furthermore, blockchain provides enhanced trust, accuracy, and speed for your business.
There are numerous blockchain types. Blockchains are divided into groups on various grounds: centralization/decentralization, kind of consensus, the openness of access, transparency, availability of certain functions, etc. Therefore, we will not mention all blockchain types, just the main variations and those called blockchains, which are actually not (for instance, IOTA and Corda DLT solutions).
Now, as we know what DLT and blockchain are, let’s see the connection between them before describing key moments in implementing DLT in the blockchain.
‘’ Each blockchain is a distributed register, yet not every distributed register is a blockchain’’.Or:
‘’ A distributed register is about storing data (on different, frequently far from each other computers), while a blockchain is about the WAY data is reserved (in chains of blocks)’’.
A single responsible participant. These DLTs have a centralized organ that is responsible for introducing data to register and verifying it. This is the most straightforward distributed register option, a centralized system managed by one individual or company.
Several responsible participants. In this DLT approach to blockchain development, the ecosystem is managed by a group of people or companies who vote on all key issues. Such solutions are commonly referred to as consortium blockchain and are typically used to create corporate solutions in finance, logistics, industry, medicine, etc.
Everyone can become a responsible participant. This is the most common implementation of DLT in the development of blockchain projects. In such registries, anyone can become a network member and contribute/validate data to the registry, but only if they meet pre-specified requirements. These requirements are usually related to the configuration of the user's computer (typical for PoW networks) or the number of tokens in the wallet (typical for PoS networks).
No responsible participants. The most complex implementation of DLT/blockchain involves creating a system that does not need humans to enter and validate data. Humans should be replaced either by sophisticated automized algorithms or artificial intelligence.
The next step is to decide how your blockchain community will come to an agreement - which consensus mechanism you will use. There are quite a few, and they all have advantages and disadvantages. For example, Proof of work (PoW) is considered more reliable and secure, while Proof of Stake (POS) is more cost-effective and scalable.
Here is a comparison of the most popular consensus mechanisms: