Distributed Ledger vs Blockchain: What Are the Differences?
Cryptocurrency is one of the most unique forms of investment you can make today. After all, most of us are familiar that a substantial return could be made under the right circumstances. In order to better understand crypto, however, you’ll need to know the difference between distributed ledger vs blockchain.
Let’s dive into what you should keep in mind.
So, What Are They?
Distributed ledger technology (DLT) is a system in which data is shared among a network of computers. This technology is used to create and track digital assets, such as cryptocurrencies.
Blockchain technology is a type of DLT that was first implemented in Bitcoin. More specifically, it’s a digital ledger of all cryptocurrency transactions.
Blockchain is decentralized, meaning that it’s not controlled by any one entity. Transactions are verified by miners, who are rewarded with cryptocurrency for their efforts.
The “mining” process involves solving complex algorithms in order to contribute to the development of the blockchain. This requires a substantial amount of time and computing power.
What Are the Key Differences I Should Know About?
One of the most important differences to note is that distributed ledgers are public, while blockchains are private. Distributed ledger information (such as cryptocurrency) can be viewed by anyone on the network. Blockchain transactions between two parties remain anonymous.
Because they’re decentralized, distributed ledgers tend to be more transparent than blockchains. Transactions on a blockchain are only verified by the miners who approve them, so there’s a potential for fraud.
Another key difference is that distributed ledgers can be used to track any type of asset, while blockchains are limited to tracking cryptocurrency transactions.
Are There Any Risks?
There are certain risks associated with DLTs. First of all, hackers can exploit the system to steal cryptocurrency or information stored on the ledger. Distributed ledgers also lack regulatory oversight and transparency compared to traditional financial systems.
Blockchains have their own security concerns, as well.
51% attacks could potentially corrupt transactions on a blockchain. This is a scenario where a hacker takes control of over 50% of the blockchain.
As you might guess, this would then result in decreased overall value for the blockchain.
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So, Which One Should I Invest In?
That’s up to you. As of today, distributed ledgers are used more often than blockchains. However, blockchain adoption is on the rise. This means that blockchain could potentially be a lucrative future investment.
If you’re looking to make the most of both, diversify your investment between the two.
Understanding Distributed Ledger Vs Blockchain Might Seem Difficult
However, it’s not nearly as complicated as many people believe it to be. The above information has everything you need to know about distributed ledger vs blockchain so you can make the decision best for you.
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