Distributed Ledger Technology

They’re not all called Blockchain…

First off, this article is for beginners so if you’re a well seasoned pro, you’ll probably read the following post and roll your eyes, or you might find the following rant relatable.

Blockchain this, blockchain that. Let’s put everything on a blockchain. Let’s build a blockchain and call it something else. Too many people have the wrong idea about this groundbreaking technology. I’d say about 80% of people who have an opinion about crypto are wrong. 40% are wrong because they believe in crypto for the wrong reason, and 40% because they don’t believe in crypto. I could write a whole article on why the latter should reconsider their frivolous standpoint, but I’m not ready to expose myself online. Stay smart, practice safe internet surfing.

The first thing most people need to understand is not the only one of its kind. The blockchain is one of many Distributed ledger technologies (DLTs)that have recently come up in popularity. Allow me to rephrase:

NOT EVERY CRYPTOCURRENCY IS BUILT ON A BLOCKCHAIN

Way too many people seem to think there’s no difference between Bitcoin and Bitcoin cash or even Bitcoin and Ethereum. Comparing Ethereum to Bitcoin is, as the expression goes, as meaningless as comparing apples to oranges (Although comparing Bitcoin to Bitcoin Cash is more like comparing Oranges to Tangerines). Still, people need to understand the differences before cryptocurrency becomes widely accepted, else we risk creating another bubble based on nothing but speculation.

Allow me to first list a couple DLTs worth noting:

1. Blockchain (Bitcoin, Ethereum, Litecoin, etc.)
2. Directed Acyclic Graph aka. DAGs (IOTA, Dagcoin, etc.)
3. Hyperledger Fabric (IBM, Corda, Intel, etc.)
4. Hashgraphs (Hedera)

To make this a little more comprehensive, Let’s draw some pictures.

This is a blockchain

This is a DAG

This is a Hashgraph

You are now smarter than 37% of people in the crypto world. (Yes, I made that statistic up.)

“Ok so there are different DLTs. What else is different?”. Every DLT needs a consensus algorithm, essentially a way to agree on the validity of each incoming transaction. The one you’ve probably heard the most is Proof-of-Work. But as you can surmise now, there are more than just one.

Here are a few more:

1. Proof-of-Stake
2. Proof-of-Authority
3. Proof-of-Weight
4. Proof-of-Burn
5. Proof-of-elapsed time
6. Ripple’s consensus
7. IOTA’s Tangle
8. Hedera’s permissioned Hashgraph

The differences in each of these is like comparing apples… no, not to oranges… more like comparing apples to a spork.

The only thing most of these consensus algorithms have in common is that they mostly start with Proof-of, and they all have some sort of flaw. While IOTA’s Tangle (DAG) may be derived from Blockchain, Proof-of-Work has nothing to do with Proof-of-Burn.

Probably my biggest issue right now is how the entire cryptocurrency market moves in the same direction, regardless of its differences to other cryptocurrencies. If tomorrow, news comes out that blockchain has a fatal security flaw, I would expect for Bitcoin, Ethereum and other blockchain cryptos to fall. But for some reason, IOTA, which is based on an entirely different technology, is often dragged down as well. This only goes to show how homogenous the market is right now, and only further accentuates the fact that cryptos are still infants compared to the aging stock market.

The result of misunderstanding has always been conflict and chaos, and it’s because of misunderstanding that we allow this @#$% to happen. It’s not all bad news though, because apart from the hilariousness of

the fact of the matter is,

People are much more predictable when they misunderstand and base decisions on their emotions.

If tomorrow, a condom company changes their name to ______ Blockchain, I’ll know it’s an excellent time to invest (only joking). If tomorrow, the market hits unprecedented highs and everybody starts partying like the 20s I’ll know it’s time to start digging a bunker.

I hope you leave learning this…

It’s not all the same thing.

Thanks for reading.

Next week I’ll be writing about the difference between circles and squares.