“My company uses distributed ledger tech.”
“Nonsense, blockchain is better for you.”
If you think that a conversation like this only occurs between tech gurus, you’re mistaken. Business owners have to make regular choices about the kind of technology they need. But terms like blockchain and distributed ledger can be pretty confusing for less tech-savvy people.
Which one do you need? Do you need one at all?
Distributed Ledger Technology
A distributed ledger is a directory or database that’s stored across various computers (aka nodes). All nodes possess an exact copy of the ledger. When new information is added, the nodes conduct an automatic vote to verify the authenticity of the update.
When the majority of nodes agree (aka gain consensus), the system updates itself accordingly (ie. adopting the new information into all copies of the ledger, or rejecting it). Distributed ledgers run without a central authority, revolutionizing the way we think of democracy.
Distributed ledgers run without a central authority, revolutionizing the way we think of democracy.
The technology is able to reduce the “cost of trust” (aka the amount of money you need to pay for various services that authenticate transactions). Because transactions are transparent, the ledgers are distributed across several computers and encrypted to ensure protection, tampering with data is almost impossible without detection.
This means that distributed ledgers can optimize various business tasks while saving you money you’d otherwise spend on fees for your lawyers.
Remember biology class? That’s where you’ve probably heard the phrase “All bugs are insects, but not all insects are bugs”.
Blockchains and distributed ledgers have a very similar relationship to each other. Blockchains are a type of distributed ledger technology where data is structured into blocks. When new data is added, new blocks are created, forming a chain of blocks (hence the name). As with distributed ledgers in general, cryptography provides security for the system.
This is the only significant difference between the two phenomena. Because of the specific structuring of data, blockchains are sometime considered more advanced and more expensive, hence their use in financial transactions.
Which One Do You Need?
Whichever you choose, your small business can greatly benefit from adopting the technology. Since each user case is different, it’s impossible to tell in general which service would suit your needs best.
There are some blockchain-based services you can decide to employ right now. Since the technology was invented to allow the trading of crypto-currencies
As a rule of thumb, we can say that distributed ledger technology is best for simpler data processing and coordination requirements, while blockchain is needed for more advanced applications that make use of the unique structure of information in blockchains.
Before selecting a solution for your small business, ask an independent expert for advice.
However, there are some blockchain-based services you can decide to employ right now. Since the technology was invented to allow the trading of crypto-currencies, there’s a business task that’s perfect for blockchain applications: payments.
Veem allows you to send and request international payments with just a click. Due to a unique multi-rail technology (that includes blockchain), your transaction is safer and faster than a regular bank transfer.
You can track all your transactions, seamlessly integrate the service with your accounting software, and thus enjoy personalized payment solutions that’s just right for your small business.