Tag: DLT

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Distributed Ledger Technology (DLT) – The Back-end Of Decentralized Systems

Introduction

Introduction

Introduction

A distributed ledger or DLT is simply a database that exists across several locations or among various participants. But, in the case of centralized databases, it lives in a fixed location. A distributed ledger eliminates the need for a central authority or intermediary to validate or authenticate transactions. This property makes DLT a trending technology.

Technically speaking, DLT is a digital system for keeping track of transactions in which the transactions and its details are recorded in multiple places at the same time. Here, there is neither a central data storage system nor an administrating functionality. Each node in the distributed ledger processes and verifies each item and creates consensus on each item’s veracity. Also, transaction information is securely stored using cryptography that can be accessed using keys and cryptographic signatures.

Blockchain and DLT: Are they the same?

The most popular application of the distributed ledger is the Blockchain. However, blockchain and distributed ledgers are not the same. Blockchain is just a type of distributed ledger. Blockchain is basically a sequence of blocks, which is in a chain. But, distributed ledgers don’t really require a chain. Therefore, Blockchain is a bit different from the typically distributed ledger. So, note that all blockchains are distributed ledgers, but all distributed ledgers are not blockchains.

Benefits of Distributed ledger

  • The primary feature of DLT is itself a great advantage. A distributed ledger gives full control to the information and transaction to the users. This promotes absolute transparency.
  • Distributed ledgers such as Blockchain find great applications in financial transactions. They cut down operational inefficiencies, which ultimately reduces cost on transactions. Moreover, it provides greater security due to its decentralized nature.
  • DLT offers means to securely and efficiently create a tamper-proof log of activities. Be it international fund transfer or shareholders records, its security and efficiency are unmatchable.

Types of Distributed ledgers

Blockchain hit the headlines when Bitcoin, the first cryptocurrency, surged in the market. Several interesting developments were made in the past decade. However, due to systematic inefficiencies and scaling issues, developers were in search of new solutions outside the blockchain. This search led to the development of Holochain, Hashgraph, and Directed Acyclic Graph.

With the arrival of these solutions, which significantly differ from the blockchain technology, has brought discussions regarding which is the best. Below is a brief comparison of these different types of DLTs.

The use cases of DLT are tremendous. Here, we shall take into account the use cases across the industrial, financial, and consumer sectors.

  • Using Smart Contracts to streamline Industrial processes
  • Immutable ledgers enable more secure financial transactions
  • Blockchain Authentication for identity theft prevention

While the distributed ledger has great advantages, which can considerably affect the present technology, it is in a growing stage and is still being explored to bring the best out of it. However, the decentralized future has at least begun for real.

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Crypto Daily Topic

Will DAG Replace Blockchain as the Future of Crypto?

Blockchain has been a breakthrough technology, but would you believe it if I told you a new kind of DLT that promises to render it useless is almost ready for

Blockchain has been a breakthrough technology, but would you believe it if I told you a new kind of DLT that promises to render it useless is almost ready for

Blockchain has been a breakthrough technology, but would you believe it if I told you a new kind of DLT that promises to render it useless is almost ready for production?

Blockchain has been great thus far. It brought us cryptocurrency and was the technology that set the pace for a myriad of industry-disrupting innovations. If you know what blockchain is, you probably also know that it is a kind of distributed ledger.

And if you heard this for the first time, a  distributed ledger is a database that is shared and synchronized in real-time across many different users, sites, institutions, and physical locations. A distributed ledger is said to be decentralized because it is not ‘owned’ or ‘controlled’ by one entity. Decisions on a decentralized system are essentially made as a contribution by all the members who share it. Because of this, every transaction on the database has public ‘witnesses,’ making the whole system transparent and trustworthy. 

Blockchain is not the only technology that makes use of distributed ledgers. Another newer and less recognized technology is Directed Acyclic Graphs or simply DAG. This new kid on the distributed ledger bloc is dubbed the ‘third-generation blockchain’ because it is developed to cover the shortcomings of blockchain, which limits its adaptive scalability.

Blockchain vs. DAG 

How do blockchain and DAG relate? Well, if blockchain were a staircase, DAG would be a tree. While the former is a list of blocks, the latter branches out from one transaction to another.

Distributed ledger technology (DLT) does not refer to just blockchain technologies. DAG is another type of DLT that works differently from the blockchain. Most industry experts agree that DAG is a rival technology to the blockchain that offers solutions to some of the major shortcomings of the latter, while others view it as an enabler that only works better in different applications.

While both blockchain and DAG are ledgers that stores records on a distributed ledger, they are very different in structure, and uses contrasting consensus techniques.

A blockchain is an ever-growing chain of blocks of transactions ordered in a linear and chronological manner in such a way that each of them contains a timestamp as well as a link to a previous block. DAG, on the other hand, is a newer kind of distributed ledger that offers all the benefits blockchain offers but with better performance and greater scalability.

In mathematics, DAG refers to a graph that flows in one direction and with no cycles that connect other edges. There is no way to move to every point of the graph, starting from only one end because its edges go only one way.

Picture a collection of transactions where every transaction is linked to one or more transactions. The image below compares blockchain’s ‘chain of blocks’ to DAG’s graph of transactions:

Difference between blockchain and DAG

You should see that in the second formation, transactions are:

  1. Directed: This means that the links all point in the same direction. Earlier transactions are linked to later transactions.
  2. Acyclic: There are no loops in the formation of the transaction. This means that a transaction cannot loop back to link to itself after linking to a later transaction.
  3. Graphical: The mesh formed by the connection of transactions are essentially nodes in a graphical network. The nodes connect to each other via links.

In summation, DAG is a ledger of records of individual transactions that link to multiple newer transactions, whereas blockchain is a linear formation of blocks of validated transactions.

Since there are no blocks transactions in a DAG network, it is ideal for use in data processing, scheduling,  data compression, and finding routing navigations.

Shortcomings in blockchain consensus

In our analogy, we equated the blockchain network to a staircase where a DAG network is a tree. Most cryptocurrencies today use the blockchain network. Therefore, when one block of verified transactions is added to the chain, it extends the network in one direction. This means that transactions have to be synchronized one at a time, much like stacking a staircase. 

This is how blockchain maintains consensus, ensures security and trustworthiness of the blocks of transactions without a central authority. It not only guarantees that all the blocks of transactions are the same across all the nodes in the network but also ensures that no block can be easily altered or manipulated by a single node.

While this way of enabling and maintaining consensus has been an ingenious innovation, it has its shortcomings.

To guarantee a consistently good quality chain of blocks, to verify them and to add them to the network takes time and effort. There must be quality checks just to be sure that every transaction meets pre-set rules.

Creating blocks that meet set criteria such as size also takes time, and chances of fake transactions slipping through are significantly reduced when nodes are accorded more time to process transactions and verify blocks. The Bitcoin network takes 10 minutes to process transactions and verify 1Mb blocks while Ethereum takes 16 seconds to complete blocks of varying sizes.

Consensus in DAG Networks

DAG, as a tree, uses a different technique to maintain consensus and security of the records in its network. The network is much like a collection of interlocking branches that grow outwards in different directions. Each transaction in this tree is only required to verify the preceding transaction to be valid itself. A standalone transaction without a valid preceding transaction would be easily singled out by the nodes in the network and removed from the records.

The best part about DAG consensus is that one transaction can confirm multiple transactions in succession. In the process, the transaction output grows much like the fractal’s outward growth of branches on a tree. The higher the number of transactions processed in the network, the higher the number of transactions the network will be able to process.

Benefits of DAG over blockchain

Blockchain technology was a hit and continues to be the greatest DLT technology because it brings transparency, immutability, and trustworthiness to public transactions. DAG has the same benefits and more. While the storage, network bandwidth, and ‘proof of work’ requirements of blockchain increase with the growth of volumes of transactions, with DAG, scaling is not only efficient in power requirements but also in reducing transaction fees.

DAG, as a decentralized ledger, is not limited by lengthy block verification periods and block sizes. A DAG DLT is much faster than a blockchain one, and while it is still relatively new, it has been tested to provide as many as 300,000 transactions in a second according to figures by  Korean DAG startup Fantom.

By completely doing away with blocks, DAG addresses bitcoin’s major disadvantages: scalability, speed, and efficiency. Being a new technology, this DLT remains untested outside development labs, but most industry experts who have had a say about it laud the innovation for its unprecedented speed potential, scalability, and promise to catch up with established blockchain networks.

At present, there are numerous DAG-based projects in development. One of the most famous is a smart contract platform being developed by Fantom that promises to rival Ethereum in just a few months. Only time will tell whether cryptocurrencies and projects running on the DAG will indeed be the ‘blockchain 3.0’ when it matures.

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Crypto Daily Topic

Radix: Why Blockchain could be on its deathbed

Many tech experts believe that blockchain may have been the best thing to happen to humanity since the internet. Considering how revolutionary this technology is, and how disruptive it has

Many tech experts believe that blockchain may have been the best thing to happen to humanity since the internet. Considering how revolutionary this technology is, and how disruptive it has

Many tech experts believe that blockchain may have been the best thing to happen to humanity since the internet. Considering how revolutionary this technology is, and how disruptive it has been on almost every industry, you wouldn’t be mistaken to agree with them.

However, blockchain has some serious limitations that are not easy to overcome and it was only a matter of time before something better came along. That better thing is already here, and its name is Radix.

What is Radix?

Radix is not a better version of blockchain. It is a new kind of technology that makes trustless and decentralized digital ledgers (DLT) that will ultimately use smart contracts, but without the scaling limitations of blockchain. The Radix platform will be powered by the super fast and highly scalable Radix Engine, which is designed and built to make the creation of on-ledger solutions easier and safer with certain constraints. This is what makes Radix much more superior to blockchain and a safer bet for the future of crypto.

What makes Radix special is that it is a high-throughput platform to develop and distribute decentralized applications, faster and more efficiently than existing platforms.

The network on which it runs, called the Radix Public Network (RPN) is modular and general purpose. This means that the technology the network uses has multiple layer ‘constraints’ that allow for validation of state transitions rather than compute them. It opens up the possibilities of the network to facilitate the development and deployment of all kinds of smart contracts and high-level APIs.

It is designed to be a global computer on which decentralized applications can run efficiently and inexpensively and the company ran a test to prove it.

The Radix Tempo

Think of a blockchain platform, but without blocks. This new platform uses a new kind of consensus protocol known as logical time. It is completely different from those of blockchain and has given birth to its own kind of data structure dubbed ‘Tempo’. 

The Tempo Ledger is made up of three core components:

  1. A connected cluster of nodes
  2. A global ledger database. This is distributed across the nodes.
  3. An algorithm that generates secure cryptographic records of temporal ordered events.

An instance of Tempo is referred to as a Universe. Any event such as a transaction or a message within a Universe is represented by an object referred to as an Atom. All atoms on the network have at least one endpoint destination that is represented by an endpoint address. Such an address is used to route events throughout the network and is derived from a key identity, such as a user’s public key.

The power of Radix

In a live online test, the startup behind Radix simulated the entire 10-year transactions on the Bitcoin network in just 15 minutes. This was about 400 million transactions between 460 million addresses including full signatures and transaction validations across 1,187 nodes in 17 cities around the world. RPN crossed the one million transactions mark in just one minute and recorded a peak speed of 1.4M TPS (transactions per second)!

Radix has been in development since 2011. The developers tout its protocol as the first consistent distributed database with infinite scalability capability – with relative ordering of related events as well as n-1 fault detection. Radix is designed and built to be easy to use and to use minimal resources. Since it can run efficiently even on devices with limited processing and storage resources, it is expected that it will be massively adopted for use with IoT (Internet of Things) networks and devices.

Shortcomings that spell the demise of blockchain

For a long time, the dominant technology the world relied upon to build and deploy distributed ledgers was blockchain. Since the launch of Bitcoin, everyone saw this technology as the savior of mankind – the tech that finally made it possible for everyone on the planet to be on the same page at the same time on almost everything.

However, with the rapid adoption of blockchain, its two main limitations quickly came to light, and proved almost impossible to solve without coming up with a completely different kind of platform. They are:

☑️High risks of centralization: Consensus protocols are the basis of trustless DLT. Blockchain uses very dangerous consensus protocols that place the platform at a very high risk of centralization. If you have heard of the 51% attack, that is just one example. While each consensus protocol carries a certain level of centralization risk, the most secure and most viable are those with the lowest risk.

PoW used in early blockchain networks are not only very inefficient, they are also only as safe as the amount of computing power dedicated to them. This means that the security of a blockchain network is highly dependent on the cumulative power of the nodes on the network and a more powerful adversary would pose a serious threat.

☑️Scalability: While blockchain is a powerful concept with few weak points from which a threat would attack or disrupt its network, it has a serious scalability problem. This technology was a hit largely because it is decentralized and certainly provides data integrity and transactional trust, but it does not scale very well. 

Blockchain 1.0’s scalability problem is what led to the rise of blockchain 2.0 that powers such platforms as Ethereum. However, they too still have scalability problems that holds the platforms back.

In an attempt to overcome blockchain’s PoW risks, industry experts developed the PoS (proof of stake) and DPoS (delegated proof of stake) consensus protocols. While these protocols mitigated the risks and reduced the processing requirements and power intensity of blockchain networks, they are not fool-proof. To date, it is clear that it is not possible to make a blockchain network 100% decentralized.

Technological solutions presented by Radix

Decentralization is the key attribute that adds value to the creation and distribution of data and assets in DLT systems. This is so since it eliminates the need for a trusted third-party and prevents the abuse of power by a central authority. It was only through a distributed ledger that for the first time, people were able to peg value on created digital objects. Cryptocurrencies are so far the most notable products of distributed ledgers and everyone is keen to see how well they will fare in a Radix system.

Radix has three core guiding principles:

  1. True decentralization
  2. Linear scalability
  3. Developer gratification

True decentralization

Radix is a truly decentralized platform with no staking, no masternodes, no coordinator, and no central council. All the current blockchain platforms have some kind of masternodes, stakes, platform coordinators and even governing councils that to some extent ‘own’ the platform. With Radix, there is just a company to administer the platform.

One special way in which Radix eliminates risk of centralization is by use of permissionless consensus system that scales well in both small and large networks. The system is secured by the passage of logical time. This is a property that cannot be faked or bought within the Radix platform. This consensus mechanism is not only incredibly efficient and reliable, but also very power efficient because it does not use more power unless there is a conflict to resolve.

Additionally, Radix does not apply consensus to all events, only those that are in conflict. This feature makes the entire system highly efficient and scalable even at a global scale.

Linear scalability

A truly global decentralized system must have the capability to scale to every single device and be used by every person simultaneously all over the world with no performance bottlenecks. Blockchain cannot offer such scalability.

Radix’s structure makes it easy to fragment and index the data on the platform such that when there is an increase in network demand, more devices can be added to the platform to boost its throughput.

The data on the Radix network is not cut up ad-hocly; the developers of the platform had the foresight to strategize the fragmentation such that devices would have an easy time finding where any piece of data lives in the overall network structure. This eliminates the need of re-indexing every time data is cut up or added to the network and significantly speeds up the performance of the network.

The data structure on the Radix network is pre-cut to 18.4 quintillion shards and key fields are referenced to find where a particular piece of data is on the structure. This ingenious data structure makes the platform highly scalable with no overhead. Both tiny and humongous data sets will find a snugly place to live on the network, meaning that large businesses will find it just as easy to use as an individual does.

Developer gratification

The core mission of the Radix startup is to develop a platform on which developers can build and deploy their decentralized applications (DApps). Much like the Internet has been an enabling technology, Radix aims to offer the very best tools that anyone can use to develop and distribute anything they can think of.

The Radix platform is still under development but this far, it has proven that it can deliver what it promises. The geniuses behind it are imagining a reality where every device with connectivity – smartphones, security cameras, microwave ovens, televisions, smart cars – can join the network and be a part of the consensus mechanism. In all these, the developers should be the biggest winners to spur even greater innovation and to nurture a community in which everyone can believe in.

Blockchain may have ushered in the age of decentralized ledgers, which birthed cryptocurrency, but it has run its course. A blockchain platform cannot be truly decentralized, and there is nothing that can be done to make it scalable enough to be as powerful as a Radix system. It is justifiable, therefore, to conclude that blockchain was the past and will eventually be replaced by Radix, the future of true decentralized digital ledgers.

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Blockchain and DLT

How Is Distributed ledger Technology Different From Blockchain?

https://youtu.be/xFVjQv3cuYw

What is Distributed Ledger Technology, and how is it different from Blockchain?

Blockchain is becoming more and more accepted as a concept in the world of finance nowadays.

https://youtu.be/xFVjQv3cuYw

What is Distributed Ledger Technology, and how is it different from Blockchain?

Blockchain is becoming more and more accepted as a concept in the world of finance nowadays.

What is Distributed Ledger Technology, and how is it different from Blockchain?

Blockchain is becoming more and more accepted as a concept in the world of finance nowadays. The idea of blockchain has been explored by a greater audience every day, with even traditional centralized financial institutions are taking an interest in what blockchain can offer.
However, most of the traditional financial institutions have started to use another term alongside blockchain: the distributed ledger technology. Articles, as well as corporate statements, seem to use terms “blockchain” and “distributed ledger technology” interchangeably. This article will try to explain that there is a difference between the two terms as well as what the difference is exactly.

Distributed ledger technology
Distributed ledger technology, or DLT, as some people may call it, is a database of records that aren’t stored or confirmed by a central body. This database is then spread across several nodes. Each node saves an identical copy of the ledger, therefor making it decentralized. Each participant node of the network works independently from one another.

 

The distributed ledger technology ensures that each node updates independently. The nodes vote on each update to ensure that the majority of the nodes agree with the conclusion reached. This voting process is called consensus. Distributed ledger technology dramatically reduces the cost of trust.
With that being said, distributed ledger technology may sound just like blockchain, but it is not.

Distributed ledger technology offers the implementer to have more control over how it is, in fact, implemented. While distributed ledger technology is technologically decentralized and relies on similar consensus guidelines as blockchain, it offers its owner to dictate its structure, purpose, and function.
This technology can be considered the first step towards a blockchain, but they won’t necessarily make a chain of blocks. A distributed ledger can be stored across many servers, which then communicate to ensure the most accurate and up to date record of transactions is maintained, without the need to create blocks.
Blockchain
Blockchain is, in fact, a form of distributed ledger technology. However, blockchain has very specific technological features.

Blockchain ensures cryptographic signing and linking groups of records of transactions in the ledger.

This way, blockchain forms a chain, which is where it got the name from. Depending on the specifics of a certain blockchain, the public is given the opportunity to give their opinions on how it is structured and where it is headed.
Bitcoin can be considered a true example of a blockchain user. It shows how a blockchain should run. Bitcoin is completely open, and anyone can contribute to its code and give their opinion on how to improve it. Meanwhile, distributed ledger technology only has part of it decentralized. The governing portion of the ledger is completely centralized.
Distributed ledger technology and blockchain are not interchangeable
Even though every blockchain is a form of a distributed ledger, not every distributed ledger can be considered blockchain. The two terms cannot be used interchangeably as they represent similar, but not the same things.

With that said, some organizations, corporations, and institutions may prefer distributed ledger technology over blockchain. The Bank of England is considering distancing themselves from the volatility associated with blockchain by supporting distributed ledger technology. Many corporations also might prefer the idea of a decentralized ledger so they could keep matters in their hands while using the word blockchain to capitalize on the public’s interest.