Defining and understanding what is blockchain is a difficult task in itself. Michel Rauchs published a white paper entitled “Distributed Ledger Technology Systems – A Conceptual Framework” whilst he was at the Cambridge Centre for Alternative Finance. to help clarify all the concepts in DLT systems and to provide a framework in understanding those systems.

About Michel Rauchs Michel got interested in Bitcoin, cryptocurrencies, blockchain technologies about 5 years ago and then decided to write a master thesis about the evolution of the Bitcoin business ecosystem. For his thesis he monitored the evolution of this ecosystem by taking a data set of 500 different companies, projects and organisations over a 5 year period.

Joined the Cambridge Centre for Alternative Finance to work full time as a researcher of the blockchain and cryptocurrency ecosystem. He has now recently left the Cambridge Centre to set himself up as an independent consultant at Paradigma.

What is blockchain? Michel concedes that answering this question could take a whole day. But for him a blockchain, or a DLT system as he prefers to call it, is essentially just a shared record keeping system that is collectively maintained and updated by multiple participants that may not necessarily trust each other. Participants are able to reach an agreement over shared set of data and its validity without the need for a central coordinator or central administrator.

With regards to differentiating the differences between DLT and blockchain it is very difficult as the terminology is very unclear, messy and fuzzy. At the moment they’re both used as umbrella terms for a wide array of different concepts and technologies.

Publishing the white paper “Distributed Ledger Technology Systems – A Conceptual Framework” Michel had two objectives in publishing the white paper: “Distributed Ledger Technology Systems – A Conceptual Framework”:

Clarify all the concepts that have been conflated together Provide a framework to divide the system into different parts, components and processes. To compare different systems together by analysing how different design configurations and decisions essentially impact the characteristics and properties of the systems

Public vs private blockchains and distributed systems. The difference between DLT systems and other distributed systems, are that in traditional distributed systems you have distributed storage, processing power across multiple connected devices but connected by one entity to achieve fault tolerance. So, if one of these components or devices goes down, that the system as a whole still continues to function.

In DLT systems, it's really about what is called Byzantine fault tolerance. So not only being able to cope with hardware failures but also with tolerating with the presence of potentially malicious actors that want to actively try to undermine or disrupt the network.

In public blockchains you have dynamic membership systems where anyone can join a network and leave the network at any point of time. It essentially means that we do not know at any point in time, how many actors on the system, and actually who they are.

Now, in private blockchains, it's a bit different, because we have restricted access to a limited number of participants. A fixed membership system. It's closed and restricted to certain type of participants. And as such the number of adversities you can have is a lot more limited.

Public blockchains are really complex socio-economic systems. Because anyone can join, anyone can leave, you don't actually know how many people there are. So, the only way to essentially regulate that system, is via self-regulation through a combination of economic incentives and Game Theory.

Whereas in private blockchains, you have a more traditional business environment as all participants are known and vetted. In comparison to public blockchains,