Intro Topic: Distributed Ledgers vs. Blockchains

What's the difference between distributed ledgers and blockchains?  "Bits on Blocks" published a brief introduction on this topic earlier this year.  The key takeaways from that article are pretty high level but still helpful when thinking about this.  For example, this:

If you want to include all the initiatives going on, use the term “distributed ledgers”.
If you mean blockchains, where unrelated transactions are bundled into blocks, which are chained together using hashes and (in most cases) broadcast to all participating entities for batch processing, use “blockchains”.
If you like acronyms, use “DLT”: Distributed Ledger Technology

Colin Pratt also provided some very interesting detail on this concept along with a discussion on taxonomy in general in his blog post "Thoughts on the Taxonomy of Blockchains & Distributed Ledger Technologies."

Colin highlights that Bitcoin's blockchain has some key features that really illustrate what makes it different from a standard distributed ledger:

Universal data diffusion, in many implementations gives perfect transparency, and allows Bitcoin to operate without a central validator. A by-product of this perfect transparency is that it becomes extremely resilient, if nodes and miners are sufficiently decentralised AND properly incentivised, it becomes infeasible to shut down the network or make unauthorized changes.

One of the features of the Bitcoin blockchain is that everyone can see everything.  When thinking about how the blockchain can be applied to the energy industry, this feature is actually a potential problem.  Depending on the data or metric, there are strict regulations in the energy industry that prevent data from being shared without proper authorization, permissions, and paperwork.

Thankfully, there are variations of blockchain or distributed ledgers that provide features that help to solve some of the concerns related to how the traditional Bitcoin blockchain could be applied to markets like the energy industry.  Colin discusses a blockchain/distributed ledger hybrid that he is involved with in his article.  Corda, his solution, incorporates features that restrict who can access the network, see transactions, and process transactions.  There are other non-Bitcoin blockchains that also do this.  How data is shared or distributed ("universal data diffusion") is another key aspect to be aware of.  The goal is to offer some level of privacy while still allowing approved participants to have access to everything they need access to. Another way to deal with the privacy issue is to mask the data being exposed to the network by encrypting transactions. However, the features that restrict visibility and access impact scalability because the transactions are more complex.

The tradeoffs between speed, confidentiality, immutability, and processing power are critical decisions that need to made thoughtfully to determine the best type of distributed ledger technology for the application.