Overview
This series of articles will provide the fundamental knowledge required to understand Distributed Ledger Technology. We will first cover the distributed systems which form the basis of DLT's.
Distributed System
Definition of Distributed System
A distributed system is a collection of independent computers that appears to its users as a single coherent system [1].
This definition clearly states the definition of a distributed system. The first being that it consists of a collection of components, (i.e computers) which are independent and autonomous. The second aspect is that end users think that they are dealing with a single system [1]. This definition pretty much forms the basis of what we now know as Distributed Ledger Technology.
In practical terms, the collection of components are referred to as nodes in the system. They interact which each other through a set of protocols that govern how the system works (through message passing).
Distributed Ledger Technology (DLT)
Definition of Ledger
A ledger can be considered as database. It records all events (e.g. assets transformation or agreed contract) as transactions and can be read by a defined set of people.
Therefore, according to that definition, we can clearly define DLT as a distributed system of ledgers that records all events such as transactions. According to the World Bank [2], DLT's are a fast-evolving tech that can record and share data across multiple data stores (or ledgers). It allows multitudes of transactions and data to be shared, recorded and synchronized across a distributed peer to peer network.
It's pretty clear according to that diagram that DLT's allow us to create a completely decentralized system that doesn't require a central authority governing the system. Instead, they used a standard set of protocols that all nodes holders must comply with to participate in the network.
DLT's critical innovation in the context of digital currencies is that it provides a cryptographic solution for providing security and protecting system integrity in a decentralized ledger that is maintained by a network of anonymous participants without any need for trust across one or more institutions [2].
Blockchain
It's a pretty big misconception that Blockchain = DLT's. However, I would like to point out that blockchain itself is just a particular type of data structure used in the distributed ledger which records and stores all the data (or transactions) in 'blocks' that are connected through a digital chain. The power of blockchain lies in the cryptographic primitives built in the system which allows the ability of data to be transmitted across a network in an immutable manner [2].
Note that blockchain is not the only type of data structure we will talk about in this series, we will also take a look at other structures like Tangle (IOTA), DAG (Nano), etc.
Permissionless
Permissionless blockchain refers to blockchains that allow anyone to participate, in other words, a 'public' blockchain. Therefore, permissionless blockchain allows anyone to create and send a transaction in a P2P fashion by interacting with a node. Bitcoin is an example of the permissionless blockchain (the first permissionless blockchain).
Permissioned
Permissioned blockchain refers to blockchains that have a set of rules that govern the access right to communicate with the blockchain, in other words, a 'private' blockchain. Therefore, only authorized users of the system can create and send transactions in the system. Note that it's possible to create a hybrid permissioned-permissionless system like Ripple as well.
References
[1] A. S. Tanenbaum and M. Van Steen, Distributed System: Principles and Paradigm, 2nd ed. Amsterdam: Pearson Prentice Hall, 2007.
[2] H. Natarajan, S. Krause and H. Gradstein, Distributed Ledger Technology (DLT) and Blockchain, 1st ed. Washington: World Bank Publications, 2017.