The first time in the year 2008, a concept blockchain-based digital currency was introduced in the world with the launch of Bitcoin. This Technology introduces the distributed leading system into an entirely new monetary network. All types of DLT’s i-e DAG, Hashgraph and Holochain start emerging as blockchain alternatives with additional features of speed, security and stability. The first ten years of Blockchain Technology have discovered some interesting ways of investment along with some devotees, who fall into billionaires rich list instantly. Here in this article, we are discussing the types of DLT’s and the difference between Blockchain, DAG, Holochain and Hashgraph.
What is Distributed Ledger Technology (DLT)?
Before we start discussing the types of DLT, we need to understand the true definition and working structure of DLT. Basically, distributed ledger technology is a sophisticated form of database. The widely used type of distributed ledger is Blockchain. The two most essential aspects of DLT are distributed management and cryptography ensuring the ledger’s integrity, that’s critical for all types of financial assets.
The Distributed Ledger can be public or private. Basically, private ledgers are stored on the servers and are restricted to only a few parties who can update the ledger state. Whereas, public ledgers are open and anyone can join and participate in its consensus. Another essential addition to DLT is smart contracts technology. Basically, these contracts are self-executing bits of code, allowing users to automate specific processes, meant to save time and money.
Through a peer-to-peer network, a distributed ledger is shared across different devices, where each copy of the ledger is stored, updated and transmitted. Here we can say that lack of central authority is beneficial. Whenever the ledger is updated, every device will provide an entirely new transaction, and then the voting will be done by the nodes to analyze the correct copy by using a shared ledger. After finalizing the agreement, the nodes will automatically get updated. And through encryption keys and signatures, it will achieve the required security.
What is Blockchain Technology?
Blockchain technology is a distributed data system, allowing you to build a digital ledger of transactions and sharing it via a network of computers. Cryptography is used to enable all the network participants in manipulating the header without using any type of central authority.
Blockchains are encrypted, secure and network-distributable data structures, enabling the transfers of digital assets and data, that includes cryptocurrencies just like Bitcoins. The Blockchains, created by Bitcoin, achieve harmony among distributed nodes, permitting the transmission of digital goods without any need of centralized transaction approval.
Now the question arises here, What is Blockchain DLT? Blockchain, as a distributed ledger technology, makes the transactions safe, secure and dependable with proper tracking and authentication. Miners can easily control all the transactions, making it permanent and secured from being hacked. Blockchain technology will eliminate the need of any central authority for its peer-to-peer transactions.
These cryptocurrencies create the need for various solutions surrounding blockchain. This really marked the foundation of new DLT’s like DAG, Hasgraph and Holochain discussed below;
What is Hashgraph DLT?
The first type of distributed ledger technology is Hashgraph with its foundation in consensus building. The DLT actually relies on consensus timestamping to ensure the agreement of every single node of transactions on the network. This wonderful consensus algorithm is meant to bring out the actual strength and power of the distributed ledger technology network.
Just like the typical distributed ledger technology network, hashgraph reaches transaction success via consensus. That means it doesn’t require any nodes to validate the transactions taking place on the network. Besides, this user don’t have to present the proof of work (PoW) for their transactions.
What is Directed Acyclic Graphs (DAG)?
To improvise the limitations of blockchain Hashgraph is not the only effort. Infect, developers are focusing on the entire data structure of DLT networks, affecting its efficiency. In the same way, Directed Acyclic Graphs (DAG) employs a diverse data structure that helps it to bring more consensus.
The DAG is a type of distributed ledger technology that completely relies on consensus algorithms. Basically, consensus algorithms support the transactions with provision inside the network. This type of network promotes more teamwork, cooperation and nodes with equal rights.
What is Holochain Technology?
Holochain is the type of distributed ledger technology that boost up the overall blockchain technology. Basically, Holochain has a mission to completely revolutionize the present structure of internet. The Holochain team really has some solid propositions as compared to its rival platforms.
Currently, the internet is being structured on a server-client basis, showing that decentralization is not the best possible solution. Further, the Holochain provides a little democracy and freedom to users regarding the overall utilization of the resource. So yes, we can say that Holochain is a unification of blockchain, GitHub and BitTorrent. This type of DLT is distributed among different nodes to evade any example of centralized control of the data flow.
Comparison of Different Types of DLTs
Distributed ledger technology is not a new technology, as we discussed earlier, it has already been modified a lot. Furthermore, we also know that blockchain is the first DLT that was launched, in the public space. But now with the advancement of technology there comes various types of DLT’s with the aim to revolutionize the technology and make it more secure. So, here we are comparing the different types of distributed ledger technologies to analyze which option is better.
Blockchain vs Hashgraph
Yes, it’s true that Blockchain and Hasgraph have numerous similarities, as they both are serving the same purpose. Basically, they both are the type of distributed ledger technology that introduces a fresh monetary system. Specifically, these technologies support peer-to-peer transactions as they don’t require any type of central authority for regulating them.
Both these types of DLT’s operate on a system based on consensus, where transactions are required to satisfy the participants present within the network. That’s the most important reason why these types of networks are known as transparent and flexible. Furthermore, the cryptographic nature of these networks guarantees high data security.
But, blockchain technology differs from Hashgraph in various fundamental ways. We can say that Hashgraph is a major response to the limitations of blockchain like transaction rates and scalability. These limitations are actually responsible for the restricted applications of the DLT.
When it comes to consensus mechanisms, Hashgraph is different from the blockchain. On the other hand, blockchain relies on miner’s activities within the network simply by facilitating the overall process of transactions. It means that miners can significantly affect the overall success of a transaction.
Blockchain vs DAG
Just like Blockchain, DAG simplifies transactions and makes it irreversible to the previous step. Particularly, the word acyclic graph infers to operations that are one directional. Similarly, immutability is considered to be another aspect that makes the blockchain more popular as compared to existing means of data storage.
Both Blockchain and DAG operate via consensus-based systems, in which a node will decide the next step. They also resemble democracy as compared to other types of platforms based on central command.
Just like Hashgraph, DAG is different from blockchain, especially when it comes to its data structure. As we discussed earlier, the blockchain places transactions in the form of blocks so that every bit of information relating to a particular transaction joins up to make a single block. Therefore, all the succeeding transactions will result in making a new block.
On the other hand, DAG is entirely based on a block system. Under DAG, every previous transaction will have a much stronger relationship to the next transaction. For example, if there are three transactions, X, Y and Z, then it requires the transaction X for Y to go further. Similarly, the transaction Y has to validate the transaction Z.
Blockchain vs Holochain
As compared to the DLT, there are so many differences between the fundamental structure of Blockchain and Holochain. Both of these technologies differ based on their structure, but they possess almost the same purpose. Remarkably, the Holochain is an innovative technology that pursues to turn around everything on its head.
Just like blockchain, Holochain also seeks to provide secure and transparent transactions among various players present on the network. On both platforms, the information is cryptographically secure and unchangeable. Furthermore, both platforms are allowing users to interact with each other on a peer-to-peer basis without any need for central authority. Just like Saint Vincent Capital, helps you in the removal of intermediaries from the entire lending system by enabling the direct transaction among the lender and the borrower.
This comparison of DLT in Blockchain with Hashgraph, DAG and Holochain actually brings out some interesting aspects of this platform. There are so many similarities, differences and Challenges With Distributed Ledger Technology.
From this comparison, we came to know that Blockchain was present even before bitcoin. However, the DLT gets popular as the outcome of bitcoin’s fame. This popularity came up with various unexpected problems, just like TPS and scalability. This makes the blockchain technology strive to improve its limitations, but instead, other projects are creating new and advanced types of DLT that are more safe and secure.