January 24, 2021

Simple guide to understand the difference between believers of 'blockchain' and DLT | Innovation

Simple guide to understand the difference between believers of 'blockchain' and DLT | Innovation


Many of us hope that the technology blockchain and the DLT (distributed ledger technology) change everyone's life for the better. Both the defenders of blockchain like those of the distributed ledger technology They enthusiastically defend how these technologies are creating the next great wave of technological change.

If the reader of this article is new in this field he may be confused about the exact differences between blockchain and DLT. The information you may have read may seem divided, and sometimes as polarized as the left and right political positions. The exact definition of each of these technologies is outside the intentions of this article and the objective is, above all, to convey the basic beliefs that seem to separate both positions.

The creation of a productive and collaborative dialogue between the two extremes of believers in blockchain and DLTs will only be possible when the ideological differences between the two are understood. I hope that this guide can be a bridge between both and overcome unnecessary differences, generating, hopefully, a productive dialogue. The best of the decentralized economy will only be possible when we leave aside labels and ideologies, which in many cases no longer help, in favor of a better understanding.

We need to look beyond labels and concentrate on how decentralization can be useful to apply in different solutions and use cases

One of the key differentiating factors, among many others, among the believers of blockchain and DLT is the level of confidence that each group has in centralized institutions.

Believers in blockchain, many times close to the ciferpunk movement (Cypherpunk in English), do not trust centralized institutions and think that in the long term centralized institutions mean centralized power that will be used against the weakest – people – and that the chain of blocks is a tool to protect people against the domination of centralized institutions.

For ciferpunks, the key to creating a healthy system lies in the decentralization of power, which in the current information age means access to data. This is a summary of some of the ideas that motivated many of the first Ciferpunks, although that label may encompass other motivations that are not necessarily shared by all, especially because blockchain It has created an economic incentive – for a much larger group – for this model to work.

On the other hand, DLT believers tend to rely on centralized institutions and therefore understand technology as an opportunity to optimize their processes and be more efficient. DLT believers tend to see "completely" decentralized solutions (blockchain) as a social threat that will be used by "criminal organizations" to sabotage the social order.

For believers in DLT's, centralized institutions work and sometimes expect to increase their transparency to reduce costs, remain competitive and create new business models.

These are the two extremes of believers, but there is a wide range of grays between the two. From a computer point of view, Satoshi Nakamoto created a possible solution to the "double spending problem" with its algorithm of work test (proof-of-work) and to problem of the Byzantine generals (byzantine generals problem) that was being researched by scientists around the world for decades. Now everyone wants to appropriate the term, but many times people do not understand each other because their views of the world and their beliefs are different.

  • Aspects that characterize each of these groups

If we look at this line between High Confidence vs. Low trust we will see that there will be no consensus and there will be people who value some solutions as decentralized while others will value them as more centralized. Finding a common space is the goal and exploring some concepts can help in that regard.

  • Network / Governance and Decentralization

DLT: The DLT government is usually centralized in one or a few validator nodes which are identified. Other participating nodes may have read permission prior approval of the validating nodes. The government of the network is closed and the network of nodes is permissive. Only new nodes can be joined with permission from the validator nodes.

Blockchains Hybrid: The government of a network blockchain Semi-public or permissive public is governed by its identified validating nodes, usually public agencies, government agencies, universities or corporations. But the read access to the network is open to all, which differentiates it from a DLT in whose network you have to get an invitation to be able to have read access.

Blockchain: The government of a global network of nodes (like bitcoin) is decentralized to the global being, having all the nodes the same information of its blockchain. Free software allows anyone to participate in bitcoin and the relative decentralization of mining (which has been centralized over time) manages to reach a consensus on the truth of the blockchain. In bitcoin and blockchains similar all the effort is concentrated on maximizing decentralization.

Trust in institutions

DLT: The trust of the participating nodes in the institutions in this model is high and makes sense when, for example, a large corporation wants to organize its own internal network or when a group of corporations, governments or industries want to create a consortium in which all participants trust the rest of the participants. The resistance to censorship in this model is low and neither relevant to be centralized and "private" systems.

Hybrid blockchains: Confidence in hybrid block chains, lower than in a pure DLT, is delegated to the identified nodes. The resistance to censorship in this model depends on the quality of the nodes and their geographic distribution and the risk of organized attacks against those identified nodes.

Blockchain: The resistance to censorship in bitcoin was designed to be very high with a vote by computer in its origins. But the progressive concentration of mining over time has led to fewer actors controlling a greater part of the Hashing power, such as ASICBoost. This situation has raised doubts about the real resistance to censorship of public blockchains for some people.

DLT: Only invited and identified nodes can validate transactions, for that reason a DLT usually does not need tokens unless it is as a mechanism against spam.

Hybrid Blockchains: Participation in blockchains hybrid is normally open to all nodes, but they have to meet a number of requirements that imply a management cost for that node, in addition to identifying themselves as a body or person participating in the network. Some blockchain hybrids have tokens as an economic incentive for the management of the network and others not.

Blockchain: Participation with a node in a chain of blocks is open to all in principle, but the bitcoin example has shown over time that having a complete node has been made increasingly difficult by the increase in the size of the blockchain of bitcoin. The token, or unit of account, is a fundamental aspect of the game theory model that supports a public blockchain. For a node managed by a person who does not participate in a pool of professional mining, is unlikely to solve a new block, but can participate in maintaining the decentralized network running a node that verifies and retransmits transactions and verifies new blocks.

  • Characteristics of believers in Blockchain and DLT

Believers in blockchain tend to:

· Trust the code

· They see the need to protect people from institutions

· They do not trust institutions

· They do not trust the regulators

· Want to create disruption

Believers in DLTs tend to:

· They fear the possibilities of abuse of "total" decentralization

· They do not see the need to protect people from institutions

· They trust institutions

· They trust regulators

· They want to improve the current economic model

  • Why do we speak of believers?

Many people recognize that the Cyberpunk movement is often libertarian in its orientation, inspired by schools of economic thought such as the Austrian School of Economics and Hacktivism.

That is easy to recognize, because the Ciferpunks are a minority ideological movement. What is more difficult to recognize is that believers in DLT also have an ideology that revolves around the fact that institutions can be trusted and should be part of decentralized solutions.

  • What is important beyond ideology?

There are many different ways to achieve decentralization. Blockchain and the DLT are just two forms among many others. The most beneficial thing for all is when we can learn from each other to find the best technologies that can improve our lives.

The Blockchain speculative cycle of 2017 – beyond the previous cycle of 2013 – has motivated many people around the world to use the keywords of a decentralized discourse such as marketing to raise money (and in some cases disappear later). The abuse of speech has made it lose meaning.

My personal conviction is that we need to look beyond labels and concentrate on how decentralization can be useful to apply in different solutions and use cases. We should also recognize that not everything is subject to decentralization and that in some cases the centralized solutions will be good enough and functional.

For the most fundamentalists at both ends this will not be satisfactory, but I hope that for those people who rely on decentralization as a positive force, this is a productive way to explore.

The dream ciferpunk The original assumes that these technologies will create a better utopian world, but there is also the possibility that we deepen into a more dystopian world with this new world of blockchain. The more we understand how it works, the easier it will be to build bridges to meet our philosophical views and better we can assess how we can use these technologies by evaluating their opportunities and risks.

Alex Preukschat, "convinced that decentralization is a possible way to improve the world with P2P technologies such as Blockchain ", is the coordinator node of Blockchain Españay and SSIMeetup.org. Author coordinator of the best seller Blockchain: the industrial revolution of the Internet, coordinator of Book of Satoshi and author of the world's first graphic novel about Bitcoin (Bitcoin: Satoshi Nakamoto's hunt); in addition to global head strategic Blockchain Projects with Evernym.

My thanks to Iñigo Molero, Drummond Reed, José Antonio Bravo, James Monaghan and Misty Bledsoe for reviewing this text and its editions.

Original version in English, here.

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