Crypto Distributed Ledger Technologies Overview
This is a small overview of the different DLT’s, for a deep dive into these technologies I can recommend reading whitepapers of the coins mentioned.
Transaction information is collected in ‘blocks’ and other blocks are building onto that creating a chain, blockchain. Each block has a hash that identifies the transaction which will change in a different transaction if someone tries to alter it. Blockchain is transparent due to its public ledger which every node (or viewer) on the network has access to.
Visual representation of how blockchain works:
– Participants get new tokens due to different consensus mechanisms; Staking or Mining for instance.
– Known for scalability issues although this has become less of a problem due to new developments and L2 solutions.
Most famous coins: Bitcoin, Ethereum, Cardano.
Sharding: ”Sharding splits a blockchain company’s entire network into smaller partitions, known as “shards.” Each shard is comprised of its own data, making it distinctive and independent when compared to other shards.” This will solve common congestion issues blockchain is known for.
Most famous coins: Harmony, Elrond, Zilliqa, Ethereum soon™.
Directed Acyclic Graphs (DAG)
DAG is a way of trying to fix the limitations of blockchain. This type of DLT relies on consensus algorithms. This simply said means that transactions are valid when the majority of the network supports it. Nodes are all equal, which requires teamwork (nodes all need to be updated and about the same strenght). The previous transaction validates the new transaction to achieve consensus.
Visual representation of how a DAG works:
– Thanks to this structure DAG-based coins are better at scaling, cheap and TPS is extremely high.
– The success of a transactions depends on its ability to validate two previous transactions.
Most famous coins: IOTA, Nano, Avalanche, Dagcoin.
Hashgraph is an decentralized consensus mechanism using the blockchain concepts of “gossip,” “gossip about gossip” and virtual voting’. When only nodes have to achieve consensus using this these protocols it makes the process of completing a transaction way faster. I can recommend the site of Hedera Hashgraph if you’re interested in how all these protocols work; link here
Blockhain VS Hashgraph:
– extremely scalable & high TPS due to the unique consensus mechanism.
– Validation of transactions depends on consensus.
Most famous coins: Hedera Hashgraph
Holochain’s goal is to change the structure of the internet as we know it, moving away from a server-client basis. You can see Holo as a combination of Bittorrent (p2p), blockchain and Github. This means that each node will run a chain of its own, operating autonomously from the network. So there will be no ‘middle man’ as data storage is locally on your device.
Centralised data storage vs Holochain:
– Unlimited TPS and scalability because each node runs its own ledger.
– No network congestion, data is distributed amongst different nodes.
Most famous coins: Holochain