In the world of digital innovation, terms like blockchain and distributed ledger technology (DLT) are often used interchangeably. But despite their similarities, they are not the same. Even seasoned professionals in the tech space sometimes struggle to distinguish between the two. Understanding the difference is crucial—especially as banks, governments, and enterprises increasingly adopt these technologies for secure, transparent systems.
This article breaks down the core distinctions between blockchain and DLT, explores real-world applications, and clarifies why the confusion persists—even among experts.
What Is Distributed Ledger Technology (DLT)?
Distributed ledger technology refers to a decentralized database managed by multiple participants across different locations. Unlike traditional databases controlled by a central authority, DLT allows all participants to maintain an identical copy of the ledger. Updates are synchronized through consensus mechanisms, ensuring data consistency and integrity.
While this sounds similar to blockchain, the key difference lies in structure and design philosophy.
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DLT offers organizations greater control over network governance. For example, a company or consortium can determine who joins the network, what data is shared, and how transactions are validated. This makes DLT highly attractive to institutions like banks and government agencies that require regulatory compliance and operational oversight.
A major benefit of DLT is its flexibility. It doesn’t mandate a specific data structure—meaning it doesn’t have to use blocks linked via cryptographic hashes (the hallmark of blockchain). Instead, records can be stored across multiple servers and synchronized using secure communication protocols.
Notable adopters include Google, which partnered with Digital Asset to integrate DLT tools into its cloud platform, and Volkswagen, which has experimented with IOTA’s distributed ledger for secure vehicle data exchange.
Despite being technically decentralized, many DLT implementations remain organizationally centralized—controlled by a single entity or a closed group. From an ideological standpoint, this contrasts sharply with the original vision of decentralization championed by cryptocurrencies like Bitcoin.
Blockchain: A Specific Type of DLT
Think of blockchain as a subset of distributed ledger technology—like squares and rectangles. All blockchains are DLTs, but not all DLTs are blockchains.
A blockchain is defined by its unique architecture: transactions are grouped into blocks, which are then cryptographically linked in chronological order to form a chain. This structure ensures immutability—once data is written, it cannot be altered without changing every subsequent block, which would require consensus from the entire network.
Key features of blockchain include:
- Cryptographic hashing: Each block contains a hash of the previous block, creating a tamper-evident chain.
- Decentralized consensus: Public blockchains (like Bitcoin or Ethereum) rely on mechanisms such as Proof of Work or Proof of Stake to validate transactions without a central authority.
- Transparency and permissionless access: In public blockchains, anyone can view the ledger and participate in validation.
Bitcoin remains the most successful example of a fully decentralized blockchain. Its network is not only technologically decentralized but also governed organically by its user community. Changes to the protocol require broad agreement among developers, miners, and users—a true embodiment of decentralized decision-making.
In contrast, most enterprise DLT systems lack this level of openness. They may use distributed nodes for redundancy and security, but governance remains tightly controlled.
Why the Confusion Between Blockchain and DLT Persists
One reason for the ongoing mix-up is marketing. Many companies leverage the buzz around blockchain to promote solutions built on private or semi-private DLT platforms. By associating their products with blockchain, they tap into the hype surrounding decentralization, transparency, and innovation—even when their systems operate more like traditional databases with limited access.
On the other hand, institutions like the Bank of England deliberately distinguish between the two. In a recent announcement, they stated plans to upgrade their Real-Time Gross Settlement (RTGS) system using both blockchain and distributed ledger technology—mentioned as separate tools serving distinct purposes.
This highlights an important point: blockchain and DLT are complementary in some cases, not interchangeable.
Enterprises often prefer DLT because it allows them to maintain control while gaining benefits like improved auditability, reduced fraud risk, and faster reconciliation. But calling such systems “blockchain” blurs public understanding and dilutes the meaning of true decentralization.
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Key Differences at a Glance
While both technologies share foundational principles—decentralization, consensus, and data integrity—they diverge in critical ways:
- Structure: Blockchain uses chained blocks; DLT can use any data structure.
- Access Control: Public blockchains are permissionless; most DLTs are permissioned.
- Governance: Blockchain networks often feature community-driven governance; DLTs are typically governed by a single organization or consortium.
- Transparency: In public blockchains, all transactions are visible; in private DLTs, visibility is restricted.
- Use Cases: Blockchain excels in open ecosystems (e.g., cryptocurrencies); DLT suits regulated industries (e.g., banking, supply chain).
Frequently Asked Questions (FAQ)
Q: Is every distributed ledger a blockchain?
A: No. While blockchain is a type of distributed ledger, not all distributed ledgers use blockchain’s block-and-chain structure. Some use alternative data models better suited for enterprise needs.
Q: Can DLT be used for cryptocurrency?
A: Yes—but only if designed with open access and decentralized consensus. Most private DLTs do not support native cryptocurrencies or public participation.
Q: Which is more secure: blockchain or DLT?
A: Security depends on implementation. Public blockchains achieve high security through decentralization and cryptographic rigor. Private DLTs offer strong security within trusted networks but are vulnerable if central authorities are compromised.
Q: Why do banks prefer DLT over blockchain?
A: Banks need regulatory compliance, privacy, and control—qualities better supported by permissioned DLTs than by open blockchains.
Q: Can blockchain and DLT work together?
A: Absolutely. Hybrid systems can combine public blockchains for transparency with private DLTs for internal operations—offering both accountability and efficiency.
The Future of Decentralized Ledgers
As adoption grows, clarity around terminology becomes more important. True blockchain represents a radical shift toward open, trustless systems. DLT, while innovative, often serves as a bridge for traditional institutions entering the digital age without fully relinquishing control.
Understanding this distinction empowers businesses and developers to choose the right tool for their goals—whether building a global cryptocurrency or streamlining internal accounting processes.
Core Keywords: blockchain, distributed ledger technology (DLT), decentralization, consensus mechanism, cryptographic hashing, permissioned ledger, public blockchain, enterprise blockchain