There have been several debates on how to differentiate blockchains from Distributed Ledger Technology (DLT) and distributed databases. Based on some of the user- and application-level features and heuristics, we can observe the following differences:
|
Feature |
Blockchain |
DLT |
Distributed Database |
|
Immutability |
The information persisted in blockchains cannot be removed or updated without a new identifier to the target data. |
Although most DLTs are pro-immutability, there are a few exceptions where immutability is not a design constraint. |
Most distributed databases are not immutable due to design limitations. |
|
Logical execution |
Smart contracts can be used to enforce business logic on data from a blockchain. |
DLTs offer the execution of logic on the data within them, as well as on user inputs. |
User-defined functions and stored procedures are normal approaches that are used here. |
|
Accessibility |
Data in a public blockchain is stored in the form of a transaction or account states in a block and is visible and accessible with middleware. |
Data is private in a DLT and may, in some cases, be encrypted in the DLT entry. Data can only be accessed by participating stakeholders. |
Data is persisted within the distributed data clusters spread across the globe for faster access, using traditional client-server techniques. |
|
Verifiability |
All the transactions are verified before a change is made to the state of an account. |
Most DLTs do not offer verification algorithms or modules as a design restriction to applications. |
The verifiability of data is not offered as the state of accounts is not persisted in a specific structure. |
|
Incentivization |
Most blockchains use several economic models to incentivize their stakeholders. |
Stakeholders in a DLT group host the nodes and are self-incentivized to run their business more confidently. |
The company manages the data for sustainability and so no extra incentivization can be observed. |
Let's now compare these technologies with an example use case discussed in the following section.
Comparing the technologies with examples
The following scenario is provided to aid your understanding of the core differences between the preceding three implementations.
Imagine that you plan to create a new digital platform for stock photography. If you want to invite photographers all over the world to use the platform and allow them to upload their work and be incentivized with their royalties automatically paid off by the consumers, you'd want to use blockchain to offer public access and incentivization and to transfer the royalties directly from the consumer to the photographer, thereby eliminating the need for a third party performing the duty payment collection, guaranteeing the return of royalties but with a service fee.
However, if you want your platform to form a private consortium of photographers, with their art exclusively available to a limited audience, and to handle royalties in conjunction with other means, you would use a DLT.
Finally, if you intend to use your platform to exhibit art by an eligible set of photographers that are accessible across the globe, with or without royalties (which is handled offline), you'd form a cluster of nodes that host this data and logic to handle access and payments. So, you would use distributed databases.
Let's now further discuss the types of blockchains available for different use cases.