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Distributed ledger technology

Blockchain Vs. Distributed Ledger Technology

Blockchain Vs. Distributed Ledger Technology

Blockchain is a distributed ledger technology and the first decentralized peer-to-peer payment network. Blockchain’s decentralized, open, and public design means that it can’t be altered or manipulated by any single person or company.

Both Blockchain and DLT are examples of distributed ledger technologies. Both Blockchain and DLT are blocked with different records updated in a deterministic manner (the same way). Blockchain has much more characteristics, as mentioned in the previous sentence. Blockchain was created to provide digital currency, while DLT has evolved over the past few years to provide other purposes such as record management, process automation, etc.

A distributed ledger is a type of database that keeps multiple copies of information in different locations, which it can update consistently. This allows anyone who has access to the copy of the shared ledger to verify the same data (information). An important requirement for this type of database is maintaining integrity and availability. The three basic requirements are:

  •  Consistency
  •  Availability
  •  Partition tolerance

What is a Blockchain?

Blockchain is a single decentralized ledger shared by all parties participating in an established, distributed network of computers. The ledger tracks the ownership and transfer of assets through the network. Each computer on the network has its copy of the Blockchain, allowing users to verify transactions quickly and prevent fraud.

In Blockchain, data is stored in transactions (called blocks). Every BlockBlock has a timestamp and a link to the BlockBlock that came before it. Each BlockBlock also includes mathematical proof verifying that a given transaction is valid (i.e., the sender has the right to send that amount of currency).

What is a Distributed Ledger?

A distributed ledger is a blockchain database that all the participants of a network share. Because all participants have a copy of the database, they can verify the transaction details and ensure no outsiders tamper with the database. As discussed here, a distributed ledger is not necessarily a blockchain database. Here, we are talking about other databases like Blockchain or smart contract databases (e.g., Ethereum).

How Are Blockchain And Distributed Ledger Different?

Distributed ledger technology (DLT) is an umbrella term that describes any system that relies on a shared database to process, record and verify transactions in an open network. Think of it as a form of record-keeping where several parties add records to a database, and everybody’s copies are kept in sync. 

Blockchain is a specific type of distributed ledger that uses cryptography to control new units. The system, therefore, needs a “trusted” third party – an administrator – who keeps track of all the transactions in the network and prevents duplicate payments. In this case, Blockchain is best viewed as a database with pseudonymous (pseudonymous means the owner is not anonymous) users.

Another feature that sets Blockchain apart from other DLTs is its ability to counter any attempt to modify or delete data in its transactions. Since each BlockBlock contains information about every previous BlockBlock, it’s essentially impossible to alter records without changing each subsequent BlockBlock as well.

In simple words, it can be said that Blockchain is a decentralized distributed ledger. The difference between Blockchain and distributed ledger is one degree because the two are similar in many respects. A distributed ledger is a distributed database that can track anything of value.

  • Block Structure

Each Block in the Blockchain consists of multiple Transactions. A Transaction is an action of transferring money or tokens between one or more users. These transactions are stored in the BlockBlock, and for every transaction, a new block is generated with a “redundant” proof-of-work (PoW) algorithm. For example, such a proof-of-work algorithm must be extremely difficult to verify and find the proper solution within a certain amount of time. If the target proves to be difficult to find, then it will take longer than an assumed interval and increase exponentially in size until it is found.

Each Block has a number, and it is this number that forms the sequential order of the blocks in the Blockchain. When we talk about Blocks, we talk about one or more Transactions that form a block. Each BlockBlock has a unique number/ID that ensures that no two or more blocks can have the same number, as it will cause a conflict and be rejected by other nodes.

  • Real-Life Implementations

In 2008, the first Blockchain was conceptualized by Satoshi Nakamoto and introduced as a core component of Bitcoin. It can be understood as a distributed consensus ledger in a peer-to-peer network. In short, the Blockchain is a public ledger of the entire cryptocurrency system that is continuously updated after every transaction or record insertion and synchronized across all the nodes of the system.

A blockchain is essentially a decentralized database. It has one common ledger, which everyone holds on to, and no single person controls it. Security for each user, in this case, is maintained through cryptography, where every user holds a private key for them to access their funds or make transactions on their account without even having to tell anyone else about it.

  • Proof of Work

In Blockchain, Proof of Work (PoW) is used to validate transactions. It is a system that requires some computationally heavy tasks to validate the BlockBlock and add it to the chain. This ensures that the data added to a blockchain is not false or manipulated in any way.

In Bitcoin, miners must solve complex mathematical problems before adding data blocks on the Blockchain. The person who solves this problem gets rewarded with new bitcoins exchanged for money. Solving these mathematical problems before adding a block onto the Blockchain is known as proof of work.

Tokens are a type of cryptocurrency. Blockchain is a platform on which new cryptocurrencies can be launched. A token introduction is usually not a big event. The creator will copy the code from an existing cryptocurrency, change the coins’ name and number, and release it to the public. Token creation is an important aspect of the blockchain ecosystem, and it provides a way for developers to issue a new asset without requiring (from) third-party funding. With tokens, developers can set their own rules and establish a revenue model that works for them.

The Benefits Of Blockchain And Distributed Ledger Technology:

Benefits of Blockchain:

  • Transparency

The Blockchain can provide data in real-time and is completely transparent. All records stored in a blockchain are updated to the network at all times, and hence, there is no room for tampering with any of the data stored on the network. Any changes or alterations will be visible to every part of the network, making it extremely transparent.

  • Decentralization

A blockchain is decentralized because all records of transactions are available for viewing by every participant participating in the network at that time. This makes it safer than being controlled by a central authority who can decide what should be included in the database or not.

  • Immutability

There is a high level of security with a blockchain since all its data can be verified, and any change to it can be seen immediately by everyone. Even if an individual manages to add a new block, the data in the Blockchain will surely be kept intact as all other records have to follow the same procedure for the blockchain to be verified.

In addition to using blockchain technology for storing records, it can also serve as a full notary service. A blockchain notary is designed to keep track of all digital transactions made to date in real-time. It produces verifiable proof stating the transfer of assets and contents made on a distributed ledger network such as bitcoin or Ethereum.

  • Transactions

The Blockchain can help with the speed of transactions since there is no requirement to wait for anything to process before adding it to the chain. This helps with saving time when making transactions and also in communication. Since all notifications are sent immediately, there would not be a delay compared to other payment methods like Visa or Mastercard, where you have to wait for days before you get your money back. The transaction itself does not require any fees or commission, which means it remains completely free for both parties involved.

Benefits of Distributed Ledger Technology

Although a distributed ledger is decentralized and the records are public, exposing all blocks to the public does not mean it is insecure. Authorized users can only access blockchain networks through private keys. This helps mitigate any security risks associated with hacking since, as mentioned above, hacking is a very difficult task in a decentralized network. Even if someone manages to hack into the system, they would still need to access your private key to access your account and make any transactions on it.

  • Consistency

The distributed ledger technology (DLT) works like a database where every record is updated when a new record is added. This eliminates inconsistencies or errors due to several copies of data being stored on multiple computers.

  • Decentralized by nature

The decentralized nature of distributed ledgers offers another degree of protection. It really is difficult to challenge the database since it is distributed worldwide.

  • Exceptionally transparent

Transparency is a key feature of distributed ledgers. They make it possible to see all of the information that has been saved in a free and easy manner. It offers several sectors with a great level of openness.

  • There is no requirement for a third party

Although it is not always required to manage distributed ledgers without the help of a third party, in certain circumstances it may save a lot of money and time. Sensors may immediately write findings to the blockchain in the supply chain industry, eliminating the need for a third party. It helps you save a lot of money, time, and effort.

Final Takeaway:

Blockchain technology is revolutionizing the financial world. It is a decentralized database that can store currency or any other form of data. Due to its transparent and peer-to-peer nature, Blockchain is a lot more secure than traditional or centralized databases. The technology has now begun to be used in various fields, ranging from banking and finance to music and digital media. Its ability to handle large amounts of data efficiently makes it ideal for future use as an alternative to other payment systems such as Bitcoin and Ethereum.

Suppose you want a quick and easy way to exchange your fiat currency into cryptocurrencies or want the most accessible, transparent, and secure platform available. In that case, Bitcoin (BTC) will be all you need. This is probably the most widely accepted cryptocurrency, and it’s very easy to set up an account with a wallet using BTC or ETH. It has high liquidity due to its popularity, so it can be transferred easily without being too expensive. It has also been around for quite some time compared to other cryptos, making it stable.

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Blockchain & Database: Difference disclosed

Blockchain & Database Difference disclosed

The current era is the era of digitization. Everything is getting into digital form. Even the currency has become digital and the transactions too. Recent times are witnessing a constant rise in the use of cryptocurrency. Bitcoin is no longer unknown. And those familiar with Bitcoin, are also familiar with Blockchain technology. It has surfaced significant developments in the digital transaction era despite being in a budding state. 

If we talk about blockchain, it is a technique used for storing information in a way that making amendments, hacking, or evading the system seems nearly impossible. It is a type of digital ledger of transactions distributed and replicated across the entire network architecture of systems on the blockchain.

Because of its varied applications, exponentially surge in popularity, and the salient similarities they share, many beginners wonder about the differences between a blockchain and a database. The similarity traits that a blockchain and a database share, often confuse the novices to believe blockchain is another kind of database. Even so, several aspects make blockchain more than just a database. 

Understanding Blockchain

As mentioned earlier, Blockchain is a digital ledger technology that stores records of crypto transactions. The information is stored in the form of a chain of uniform size blocks, hence the name blockchain. This makes the stored information almost impossible to be hacked, amended, or swindled.  

Blockchain deploys a decentralized network, that is the data and information stored on the network are shared amongst all the users on the network and are verified by them. Precisely, blockchain uses a peer-to-peer (P2P) based network architecture. The information stored in the data structure known as blocks is distributed across a mass of computers not owned by a sole entity. Blocks carry a series of valid transactions that are hashed and enciphered into a Merkle tree. The hashed information from the previous blocks links the blocks to each other. Hash is a unique code that helps to identify blocks. A one-way hash function, SHA 256 hashing algorithm is used by blockchain hashing. The blocks are usually digitally signed to assure the integrity of the block and the information stored in it. 

Benefits of using blockchain

Here are some advantages of using blockchain technology:

  • Decentralized: Decentralized means that there is no bossing around by a sole entity. The network has a set of protocols on how to exchange information and everyone enjoys an equal status in the network.
  • Economic: Deploying decentralized networks allows the organizations to cut expenses on IT staffing, maintenance, security, infrastructure, and more
  • Secure: Since all the blocks in the blockchain are hashed to each other, tampering with the information is not easy. To make sure that the information is properly sealed inside the blocks, blockchain uses advanced cryptography. And the distributed ledger technology provides every peer on the network with the original copy of the information so that in the case of multiple nodes failure, the system remains active. 
  • Flexible: There are three categories of blockchain- private, public, and hybrid. The organization can choose the blockchain that suits the best to accomplish its set goals.  
  • Transparent: As the information stored is shared amongst all the users on the network, this maintains transparency and trust in the system.
  • Time reduction: Transferring money using traditional banking methods can be a lengthy and time-consuming process. But with the use of blockchain technology, instant transfer of money is possible from anywhere in the world. 
  • Unalterable transactions: The information stored in blocks in the blockchain network is unchangeable. The information can only be stored in the blocks. Furthermore, it neither can be altered, nor deleted. 

Understanding a Database

A database is a systematic collection of data that is stored and retrieved using a computer system. It is a data structure that allows us to store and work with data. A database works on a centralized network that is operated by an administrator who has the permissions to read, write, update and delete stored data in the database. Any modification at the server system automatically gets updated in the entire network. 

As the current data have become much more complex, a typical database deploys a client-server architecture. The server acts as the host in the database and the client as the user. The client requests access to the data. The client can also make modifications to the stored data only if it is authorized by the server to do so. 

Financial records of an institution, ledgers in the banks, can be considered as examples of a database controlled by an administrative authority. 

Benefits of using a database

Check the list of advantages of using blockchain technology:

  • Multi-user interface: Database offers different types of user interfaces like APIs (Application Program Interface) and GUIs (Graphical User Interface)
  • Flexibility: Database is more flexible towards customization. Since the conventional databases are administered and controlled midway, authorizations, advantages, and set-up requirements can be advanced. Besides, the information can be easily repositioned, on account of backup exercises and relational architecture.  
  • Backup and Recovery: The database recovery subsystems create an automatic backup of the stored information so that in the case of software failure, errors, or any other mishap, the data remains secure and easily accessible. 
  • Stability: The database structure is based on centralized network architecture and the administrator is the central authority to access and modify data, it is capable of handling a large capacity of transactions per second. The client-server architecture discards the requirement for hubs and replaces them with a standalone base.  
  • Speed delivery: The conventional databases used to be very sluggish. However, there has been a significant improvement in the database delivery speed and high-tech operations over the years. 

Blockchain vs Database

There is no doubt that blockchain and database share significant similarities, but the aspects that make blockchain different from a database cannot be ignored. Following are the paramount differences between the two:

Architecture: 

One of the important difference between blockchain and a database is the type of architecture used by the two. Blockchain uses distributed ledger technology that is DTL. Precisely, it is a peer-to-peer network where all the nodes share equal permissions and responsibilities. Each node has a copy of the original data, and thus each node can act as a server. Each node can verify the transactions over the network and perform data mining operations also. Cryptographic protocols are used to enhance security.

On the other hand, a database structure is based on a client-server architecture where a particular system acts as the server and the remaining systems as the client. Such type of architecture has proven to be beneficial for both small-scale and large-scale organizations. In such a network the server is controlled by an administrator that can read, write, alter or delete the data, and the client act as the user that requests for information.

Control:

One of the significant aspects of blockchain vs database is the type of control that these technologies have on the network. Blockchain is designed in such a way that the control over the data in the database remains decentralized. In other words, every system in the network has equal control over the data without the need for central control. To add any information in the blocks, the majority of nodes must concord with each other. This guarantees the security of the system.

On the other hand, a database is based on centralized control where a single entity controls the data and information stored in the database. Traditional databases are physically controlled on one server by an administrator. The administrator controls the information on the network. Apart from this, the administrator can control the activities of the client systems and cannot download the database until authorized to do so. Hence, the authority to run, manage and control the database is either entitled to a single person or a few people. 

Permissions:

In a traditional database, permissions are required to access the data. The types of permission granted over a database are read, write, update and delete. The administrator of the database authorizes the clients or the users with the permissions to be used by them. The clients must validate their credentials with the administrator to get access to the database. This way the access to the database is limited and controlled.

In contrast, blockchain is a permissionless network and there are no set rules for accessing the information. In Blockchain, every node has an original copy of the data, and information can be accessed by any node instantly. However, altering the information on the blockchain is not easily possible. 

Design structure:

Blockchain is designed in a way that hampering data on the network is not possible. Since, the blockchain stores information in the form of a chain of blocks where each block is linked to another block, data can be easily added into the chain but cannot be altered, or deleted. The past information and the relevant present information exist together. The information in blockchain is in real-time which makes it helpful in tracking the records and authenticity of a product. 

On the other hand, databases are structured to add, modify and delete information. The information that is up to date at a particular moment is available for access. It gives a snapshot of the present data.

Security:

Another important aspect to be considered is the blockchain vs database argument. Blockchain is comparatively much more secure than a database. Blockchain functions by providing the original copy of the information to all the nodes for certifying the blocks, instead of relying on the primary server. In case of any unreliable information, the technology automatically identifies the abnormalities and rectifies them.

However, the information stored on a database cannot be guaranteed security. A single loophole in the information system can leverage hackers and pryers and result in false modification and loss of information.

Tolerance:

The architecture of blockchain makes it a fault-tolerant technology. Since the information is shared amongst all the nodes, any type of software failure or error cannot disrupt the working of the entire system. 

Whereas, in a database, if the server suffers from a failure, the entire system gets disturbed. Even the unavailability of the control authority can lead to operational failures. 

Conclusion

To sum up, blockchain technology offers many benefits over database technology. There are a lot of similarities between the two which makes novices consider blockchain as another type of database, but the significant differences prove that blockchain and a database are different technologies. The organization is free to choose from either of the technologies according to its set goals.

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A Comprehensive Guide on Ripple

A Comprehensive Guide on Ripple new

With a real-time gross settlement system plus currency exchange, Ripple is best known for its ability to provide an efficient global payment platform to everyone. It is built on the distributed open-source protocol enabling developers and executives to build real-time payments. Ripple is an XRP is a native token of Ripple producing great economic opportunity and a better payment experience. It resolves the low speed and transparency issue occurring in traditional international payments systems. Ripple blockchain is highly contributing to the financial sector and benefiting business executives and blockchain professional. 

This article provides a comprehensive guide on Ripple protocol, explaining how it works and its uses. 

Table of Contents 

  • Introduction to Ripple
  • Detailing the Ripple Protocol 
  • What is Ripple Used for?
  • Concluding Lines

Introduction to Ripple

Founded in 2012, Ripple Labs is the software company developing the distributed ledger technology and XRP cryptocurrency, which is the sixth-ranked crypto by market capitalization. In other words, we can say that it is a decentralized payment system for streamlined cross-border settlement for financial institutions. In Ripple protocol, nodes can take three roles: users (who make/receive payments), market makers (also known as trade enablers), and validating servers that execute Ripple’s consensus protocol to check and validate all transactions. Unlike traditional transactions, Ripple users are provided with a public/private key pair. So, whenever a user sends a payment to the other user, it cryptographically signs the transfer of fee denominated in XRP or using any other cryptocurrency.

Detailing the Ripple Protocol 

As we have gained a basic understanding of what Ripple is all about, let’s dig deeper and explore how this technology works. 

Ripple’s Ledger

Ripple is based on Blockchain technology that maintains a distributed ledger, which helps keep track of all the previous transactions that have ever taken place. These distributed ledgers are generated and updated every few seconds and include a list of transactions on which most validating servers have agreed. Consensus protocol governed by Ripple achieves this mechanism.

A distributed ledger is responsible for maintaining information such as a set of transactions, account-related information, a timestamp, a ledger number, and a status bit, which indicates if the ledger is validated or not. If in case the ledger is not validated, the ledger is assumed to be open.

Consensus and Validating Servers

Unlike other cryptocurrencies, Ripple doesn’t have a blockchain. Instead, it has its own patented technology known as the Ripple protocol consensus algorithm (RPCA).

There are validating servers and each server verifies the suggested changes to the last ledger. Changes settled by at least 50% of servers are bundled into a new request and are submitted to all servers. This process is repeated with the vote requirements increasing to higher percentages. After this, the server validates the modifications and alerts the network of the last ledger’s closure. Any transaction performed but did not appear in the ledger is dropped and can be considered invalid.

A list of trusted servers called ‘Unique Node List,’ also known as UNL, is maintained by each validating server, and servers trust only the votes provided by other servers stored in their UNL.

List of Ripple’s Transactions 

  • AccountSet: For setting options on an account.
  • AccountDelete: For deleting an account 
  • CheckCancel: Cancel a check.
  • CheckCash: Redeem a check.
  • CheckCreate: Create a check.
  • DepositPreauth: Preauthorizes an account to send payments to this one.
  • EscrowCancel: Reclaim escrowed XRP.
  • EscrowCreate: Create an escrowed XRP payment.
  • EscrowFinish: Deliver escrowed XRP to a receiver.
  • OfferCancel: Withdraw a currency-exchange order.
  • OfferCreate: Submit an order to exchange currency.
  • Payment: Send funds 
  • PaymentChannelClaim: Claim money from a payment channel.
  • PaymentChannelCreate: Open a new payment channel.
  • PaymentChannelFund: Add more XRP to a payment channel.
  • SetRegularKey: Add, remove, or modify an account’s regular key pair: 
  • SignerListSet: Add, remove, or modify an account’s multi-signing list.
  • TrustSet: Add or modify a trust line.

What is Ripple Used for?

When compared to other blockchain-based technologies, Ripple offers various other benefits in terms of low commission currency exchange, Fast and cheaper international transactions. 

For instance, there are several currencies that can’t be converted to each other directly, and banks have to use the US dollar as a medium. But unlike USD, Ripple is a much cheaper mediator. Apart from this, Ripple facilitates faster international transactions, like just 4 seconds, compared to regular banking systems. It was initially designed as a day-to-day payment system, and therefore it is much faster, cheaper, and safer than Bitcoin. Another benefit of using Ripple is exchanging it for any currency or valuable with a minimal unified commission.

One of the best-used cases of ripple is to transfer money. Ripple has partnered with different financial institutions and provided its services across the border for achieving the best results. It is used for making foreign money transfer. Many banks and other financial institutions use RippleNet to achieve faster transactions at a low cost. 

What is RippleNet?

RippleNet is a decentralized network that offers connectivity of different financial institutions worldwide using a single API. It makes the transaction fast, inexpensive, and reliable for the customers. 

RippleNet offers: 

  • Decentralized Infrastructure
  • Modernized Messaging 
  • Liquidity Solutions

Concluding Lines

Several banks, including American Express, Bank of America Santander, Axis Bank, Yes Bank, Westpac, Union Credit, and many others, support Ripple. But most of them are in the testing stage, and the few who transact money do not use the token but the platform. This indicates that banks are not that into Ripple. Also, when it comes to investment, there are top reasons that suggest why we should consider Ripple for investment purposes. For instance, the Ripple protocol uses consensus ledgers to perform transactions, which leads to less work for processors, lesser restrictions with the design, and a steady transaction time. Another reason in favor of Ripple is that, unlike Proof-of-Consensus (PoW), Ripple’s validation system XRPL uses an anti-robustness system that improves security and authenticity.

To get instant updates about Blockchain Technology and learn more about online Blockchain Certification, check out Blockchain Council.

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