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Different Types of DLTs and How They Work

1. Blockchain

It’s one of the most popular types of DLTs out there. The blockchain is a type of DLT where transaction records are kept in the ledger as a chain of blocks. Think of it as a long list of records. But not literal blocks, here when we are saying the chain of blocks we mean any kind of digital information that is stored in the database.

Here, digital information makes up the blocks. Usually, they have three different kinds of parts –

Let’s say someone made a transaction. The transaction block will contain the time, date and the amount the sender sent.

The block will also have the sender’s information in it. But to maintain the anonymity the technology will not be using your real name, but rather it will contain your unique “digital signature.”

To differentiate or synchronize the transactions every block will contain a special ID known as the hash. This hash function helps to distinguish between all the transaction blocks on the ledger. Mainly the function includes characters which are alphanumeric and every hash function is a unique and random selection.

Which means, no one can just predict it or have any way to hack their way to alter it.


How Does Blockchain Work?

In blockchain there are multiple blocks that get added to the ledger system, but how does this process happen exactly?

There are four stages of how the “block” gets added to the blockchain. Let’s see what they are:

Firstly, someone on the network has to make a transaction. Let’s say; you sent some money to your friend Mike.

Once you’ve made the transaction it needs to get verified. There are also different ways how the blockchain verifies a transaction. It mostly depends on the nodes on that network. The nodes would have to come to an agreement that the transaction indeed took place.

For that, they check out whether the transaction did occur as you declared it did. The consensus on that network allows most of the members to come in agreement, and if the majority thinks it’s true, your transaction will get stored in a block.

After your transaction gets the green signal, all information regarding your transaction such as time, amount, your digital signature, mike’s digital signature gets stored in the block. You will see the amount gets deducted from your wallet and Mike will see the amount being added to his.

However, before it gets a spot on the ledger, the block gets a unique ID. It’s an identifying code for that specific transaction. The block will also contain the recent block’s hash to maintain the chain of blocks structure.

After your transaction is added to the ledger, you will be able to see it and based on the characteristics of the network, others may or may not see it as well. If these types of DLTs are public, then everybody on the network would be able to see it, and if they are private or federated, it will depend on that distributed ledger system rules.


2. Hashgraph

In Hashgraph there can be multiple transactions stored on the ledger on the same timestamp. All transactions are stored in a parallel structure. Here every record on the ledger is called an “Event.”

This distributed ledger without blockchain is absolutely fair as no node on the network will be able to manipulate the information or transactions. It means no one on the DLT system can actually alter or postpone all the instructions that are going to happen or control the process of the transaction.

If we compare it to the blockchain, you’ll see how a miner can choose which transaction to include in the “block.” For example, you and mike both made transactions, and now they are waiting to be verified. Other nodes on the network can selectively choose Mike’s transaction to verify first rather than you’re, even though you may have transacted a bit earlier than Mike.

For Hashgraph, the verifier nodes have to include both your and Mike’s transaction in the manner you guys transacted, so no one will be left behind.

So, in this distributed ledger without blockchain, the faster connection you have, the better. That way, you’ll be able to transact faster and would be in the first line to get verified.


Smaller Storage Units

In this type of distributed ledger implementation, all the transaction in the network is provable. How? Well, as any transactions occur on the network, within a few minutes everyone on the network will know where the transaction would be placed in the ledger.

On top of that, everyone on the network will know that the whole network knows about the existence of the transaction and thus, make the changes accordingly. It means the nodes will do the changes and then discard the transaction.

You won’t have to keep this information in your ledger for eternity. That’s why it only needs a few gigabytes of a storage unit to store all the information of the Hashgraph distributed ledger database platform.


Byzantine and ACID Nature of the Network

This is one of the essential features of Hashgraph distributed ledger implementation. A system is Byzantine means that no small group or entity can influence the pathway to reach consensus. Also, after the consensus has been reached, no one can do anything to stop it. Every member will know that the consensus has been reached and it will remain like that.

In this distributed ledger without blockchain, every node on the network will agree on how the transaction occurred and list it out accordingly.

The whole community in this DLT will have a distributed yet single database system sharing similar properties. If we compare the blockchain DLT, you’ll notice how nodes on the network are never certain if a consensus has been reached.

However, in Hashgraph, it’s possible. So, it’s also ACID compliant.


How Does It Work?

How Hashgraph works is quite interesting actually. This distributed ledger system uses a Gossip protocol to relay all kinds of information mainly about transactions across the network. Each node on the network can send out information (known as “event” and they are pre-signed) on a new transaction.

Every node will randomly choose the neighboring node to relay this information. A node will then aggregate the event with other received information and then relay it out to other neighboring nodes.

So, in simple terms, once a transaction takes place, the neighboring nodes share that information with other nodes, and after some time all the nodes would know about the transaction. The process is quite rapid, so it would only take a few minutes for everyone on the network to know about the event.

With the help of “Virtual Voting” protocol, every node validates the transaction and then it gets added to the ledger.


3. DAG

Another ambitious addition to the distributed ledger without the blockchain family is the DAG (Directed Acyclic Graph). DAG was invented as an alternative approach to Blockchain DLT. That’s why this distributed ledger without blockchain does offer all the features of blockchain but with greater improvement.

Even though it’s an alternative, the structure of this ledger is really different. One of the major advantages of DAG distributed ledger implementation is the ability to offer fee-less Nano-transactions. It’s because the scalability improves as the network grows.

In simple terms, the more transaction occurs on the network, the faster it will be able to settle them. To clear things up, let’s see how DAG really works.


How Does It Work?

DAG happens to go on a different route regarding reaching consensus. The distributed ledger system stores transaction processes on the nodes. Here, every member on the network is called a “node” just like blockchain.

All the nodes on the network validate transactions on the ledger and also is represented by validated transactions. Any node can initiate transactions, however, to validate them they have to verify at least two of the previous transactions on the ledger.

After he/she validates them, his/her transaction will get confirmed. The more a person validates, the more his/her transactions become a valid transaction on the distributed ledger database.

So, if a transaction has a longer branch of previously validated transactions, it will carry the most weight in the ledger. However, an algorithm will randomly select the previous two transactions for each member to validate.

Because if it doesn’t the members will only validate their transactions and leave another behind.

This is actually a wonderful new form of consensus to achieve greater scalability. Due to this nature of the distributed ledger implementation, companies that require a greater volume of transactions every second should use this.


4. Holochain

It’s one of the recently distributed ledgers without blockchain – Holochian DLT is said to be one of the most advanced levels of ledgers out there. The company Holochain that created this new form of DLT is giving the tech developers a new way to create decentralized apps.

One major change from other distributed ledger without blockchain is that this one is agent-centric instead of data-centric structure. This network avoids using any global consensus protocol by providing every agent with their very own forking system. Just this change solves all issues with scalability and keeps the network intact even after network growth.


How Is This Distributed Ledger technology Different?

In traditional ways, all the other nodes on the network are forced to have a global consensus and verify the whole network. However, Holochain changes that nature. The process is similar to its name. The name of this distributed ledger database came from the concept behind this architecture, and that is a hologram.

In the hologram, if you want to create a 3D pattern, you’ll need specific light beams and interact them in a way to create the image. Holochain is similar. It uses individual modules to create the whole ledger system.

Here, every node keeps their very own distributed ledger and communicates with it through its own unique signature. For example, think of the whole network as a river following in a direction. Here, every node is feeding into the river of ledgers through their small streams and creating the river as a whole. If one of the streams gets offline, the distributed ledger database won’t be affected by it.


How Does It Work?

It’s simple, every node will have their very own ledger, but that ledger will revolve around a specific set of values called the “DNA.” According to the developers, this DNA ensures that any node on the network trying to add new information on the public ledger will get validated.

A node will be sent out information to other nodes to get them validated on the network. If other nodes on the network can verify his/her information with the DNA, then they relay this message to other nodes on the network.

However, if someone tries to hack into the network and would try to store false data on the network, they will have different DNA. So, if someone wants to falsify a transaction, it will hard code itself off the chain and operate from a different change chain with different rules. Other nodes on the network will now verify it with the DNA before accepting the information.

And once they find dissimilarities, they will reject it and broadcast it across the network and warn others of this malicious node.

The process is pretty neat and foolproof. And this is why it’s gaining so much popularity.


5. Tempo (Radix)

Like other distributed ledger without blockchain, Tempo is said to be a relatively new contribution to the system. Like any other platform, it will preserve the sequence of the information on the ledger. However, it also offers to timestamp along with other functionalities as well.

Radix DLT is the company that came up with this brilliant new tech. You can use this distributed ledger without blockchain for private and public modules as it doesn’t require any modification at all. One of the plus points is that you won’t be needing any heavy hardware component either. It’s extremely light and can even work on your mobile devices.

With Tempo you will be able to create your own decentralized applications, token, coins, transact extremely fast and many more.

The distributed ledger database runs on three major principles:

  • Have a cluster of networked nodes
  • Global ledger distributed among the cluster of nodes
  • Special algorithms for timestamping events on the ledger

Every instance on this distributed ledger database is known as the Universe. Within the Universe, every event is called an “Atom.”


How Does Tempo DLT Work?

It’s a bit different than other distributed ledger database on the market. Any node can choose to carry a subset of the full global ledger with him/her. The subset of the ledger is called shards, and every node carrying a shard will get a unique ID for their subset of the ledger. So, the nodes aren’t required to carry the burden of the global ledger on the network.

This ensures that the network can carry a larger amount of load, thus increasing scalability.

When a node wants to validate transactions, it uses Logical Clocks do that. The usual timestamping of the distributed ledger database isn’t capable of reaching consensus on its own. It’s because the perspective of time changes from person to person.

So, instead of matching when it occurred, it sees what occurred before it. If a previous transaction was A and now a new transaction B happened, the nodes will see whether there was transaction A before B.

So, here, nodes will record the event sequence rather than the actual time of that event. The properties of distributed ledger technology are really evolved for its time and slowly gaining popularity.

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