Blockchain Technologies

Blockchain Technology Explained
Definitions and Explanations to Understand Blockchain Technologies

Blockchain technology can be a confusing concept to understand.

Luckily, we are here to simplify things. Blockchain technology is a relatively new concept and rapidly growing industry. Similar data structures have existed long before the popular bitcoin cryptocurrency was conceived, however, principal theories of blockchain architectures used today were first outlined and defined in the original bitcoin white paper written and published by Satoshi Nakamoto in 2008.

As this nascent technology is ripe with ongoing innovations, it is best to keep an open mind and expect new related-technologies to continue to emerge. Below we explore key defintions and concepts to understand of this basic pillars behind this revolutionary technology. Alternatively, visit our blockchain glossary to view more definitions.

Blockchain Technology Explained

Distributed Ledger Definition What is Distributed Ledger Technology (DLT)?

Distributed Ledger Technology

A distributed ledger is a consensus of replicated, shared, and synchronized digital data geographically spread across multiple sites, countries, and/or institutions.

Users of Distributed Ledger Technology (DLT) significantly benefit from the efficienies and economics by creating a more robust environment for real-time and secure data sharing. Contrary to common belief, the Bitcoin blockchain is not the only distributed ledger, in fact, many other users of Distributed Ledger Technology use different methodologies to achieve the same consensus (e.g. Ripple, MultiChain, HyperLedger Project).

Blockchain Definition What is Blockchain Technology?

Blockchain Ledger Technology

A blockchain is a type of distributed ledger, comprised of unchangable, digitally recorded data in packages called blocks.

These digitally recorded "blocks" of data is stored in a linear chain. Each block in the chain contains data (e.g. bitcoin transaction), is cryptographically hashed. The blocks of hashed data draw upon the previous-block (which came before it) in the chain, ensuring all data in the overall "blockchain" has not been tampered with and remains unchanged.

Blockchain vs. Distributed Ledger What is the difference between the two?

Blockchain Consensus

A blockchain is just one type of distributed ledger, not all distributed ledgers necessarily employ blocks or chain transactions.

Although the term ‘blockchain’ is used more frequently than ‘distributed ledger’ in discussions, a blockchain is only one of the many types of data structures that provide secure and valid achievement of distributed consensus. The bitcoin blockchain, which uses ‘Proof-of-Work Mining’, is the most publicly proven method used to achieve distributed consensus. However, other forms of distributed ledger consensus exist such as Ethereum, Ripple, Hyperledger, MultiChain, Eris, and other private enterprise solutions.

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Public vs. Private Ledgers
What is the future of Distributed Ledgers?

While many crypto-technologies, such as Bitcoin, are permissionless, much of the legacy infrastructure is permissioned. Ongoing discussion regarding integration of distributed ledgers into legacy systems has brought attention to a growing divide:

Permissionless Ledgers (Public Blockchains) vs. Permissioned Ledgers (Private Blockchains)

Permissionless Ledgers

Also called unpermissioned ledgers, allow anyone to contribute data to the ledger with all participants possessing an identical copy of the ledger. Since there is no single owner of the ledger, this methodology is more suitable for censorship resistant applications (e.g. Bitcoin).

Permissioned Ledgers

Sometimes called private blockchains, allow for distributed identical copies of a ledger, but only to a limited amount of trusted participants only. As the network may have an owner(s), this methodology is better suited for applications requiring simplicty, speed, and greater transparency.

Open Source Standards
Blockchain technology open standards and consortiums

The future of mainstream blockchain technology will likely not result in one blockchain to rule them all. There will likely be many implementations of distributed ledger technology and it is to everyones benefit that they all be interoperable with eachother. The result of this is emerging open source, neutral protocols and standards for various implementations.

The most well known blockchain consortiums and collaborative projects are included below: