The origin of Blockchain technology has a close relationship with Distributed Accounting Technology, also known as DLT and this is precisely what gives rise to use them as if they were the same term. Although in some cases this use could apply, there are certain differences that indicate that it is best to separate them.

What is Distributed Accounting Technology or DLT?

The distributed accounting also called shared accounting, it is a consensus of the digital information that is synchronized, shared and replicated, among the users of the network, which can contain from institutions to countries. In this type of accounting there is not the figure of the central administrator, nor less, some specific place where all the data is stored, but they are distributed and replicated between the nodes of the same.

That is why there are very complex mathematical algorithms that solve the members by way of consensus, to approve replicating the information. Thus, the main function of the DLT is to connect computers located anywhere around the world, thus forming a network in which it will share data, validate and register them as they are presented, without the need for that a third party has to manage it.

This is why it is said that it is decentralized. A very notable feature of this technology is that its implementer has the power to impose the conditions under which it will be operational in this way, in the DLT, there is a figure that implements in a subtle way that dictates the structure of said technology, its operation and its purpose, what it gives to think, about the decentralized character mentioned above.

Blockchain Technology

It is an old technology, it was developed in 1991, which did not attract attention, until 2009, when Satoshi Nakamoto, published the article called “Bitcoin: a user-to-user electronic cash system” in which The P2P protocol for this type of known digital currency is explained. Its operation is based on the blockchain that operates as a means of recording the transactions made. If we define the Blockchain as an accounting book, that is, it is a structure in which all the transactions in which the Cryptocurrency operates can be registered.

It is a type of technology that allows and gives the facility to make the transfers of funds from one person to another without the need for an intermediary, to give their approval and instead, is verified by each of the users who they integrate the network in which it is made. The Blockchain is a type of distributed accounting technology that is based on consensus, although in this case, the decentralized nature is quite radical, if there is any change in the network, it must be approved by the members of the network.

Differences between DLT and Blockchain

In spite of the similarity, the truth is that there are not so notable differences, slight rather, that can be emphasized, for example, the terminology. The DLT originates the Blockchain, and it is in the latter, that Bitcoin is based, when we talk about Cryptocurrency, we automatically refer to the blockchain that is a DLT. And when we mention DLT, we don’t necessarily refer to the Blockchain and to a lesser extent Bitcoin.

Decentralization and Structure

DLT is considered pseudo-decentralized. It means that the development of its activities is independent, although this does not apply in its organizational structure. The Blockchain, on the other hand, is a blockchain of transactions made and approved by members of the same network. As for its structure, the blockchain, being an accounting record book, works strictly by grouping operations into a single chain, which is not a requirement in the DLT.

Similarities between DLT and Blockchain

This pair of technologies share their conceptual origin, since both are books of digitalized records and are also decentralized, which causes the terms to generate some confusion, however, as we have seen previously, they are very different technologies both in form of application, its structure and the terminologies used.

Essentially, although Distributed Accounting is not completely decentralized, this characteristic is also shared with the blockchain, becoming technologies that handle their transactions in a very similar way, without the need to involve third parties to make important decisions.

What do you think about this topic? Did you know these differences?

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