Today we are going to take a look at what DAG technology is and discuss its advantages and disadvantages compared to blockchain technology. DAG technology, directed acyclic graph or directed acyclic graph, is defined as a distributed accounting technology different from conventional blockchains. He is responsible for updating synchronous accounting to asynchronous. Many people think that this could solve the problem of strong competition between traditional blockchains, i.e. speed. A DAG is actually a data structure like arrays, permutations, and blockchains.
What is DAG technology?
DAG is a kind of graph that allows you to represent a set of data that are interconnected with each other. Circles are also called nodes connected by lines that simulate the flow of data between different points in the graph. Each point, in turn, represents a subset of the data in one group. While blockchain technology is a database structure, where each block is like an iron chain intertwined with each other.
Thus, we can assume that DAG, also known as directed acyclic graph, is a very open technology in the blockchain space. However, this is not really a blockchain. Rather, it is a data structure like arrays, blockchains, and permutations. But unlike blockchain, it switches the longest chain consensus to the heavier chain consensus. Thus, the more requests, the higher its efficiency.
Features of DAG technology
Compared to today’s publicly available blockchain technology, DAG is actually the difference between graphics and on-chain. That is, the chain cannot process only one part, because it has only one degree of entry and one degree of exit, and the nodes in it cannot be divided into several for processing, while graphs, due to the fact that they can have several external degrees, can handle several connected nodes at the same time. Therefore, its characteristics are as follows:
- The faster transaction speed, local processing, and parallel computing performed by the DAG can dramatically increase transaction speed.
- High scalability, since each node can compute independently, the metering node can respond faster, which is ideal for IoT projects.
- Increased security, a large number of input and output degrees prevents malicious manipulation of nodes, because changing one node means changing all.
DAGs have certain properties that govern how they work:
- They have a starting point and a destination, this ensures that our path always goes from the starting point to the ending point, and we cannot go back along that path. That is, it is impossible to start from one vertex of the graph, go through the rest of its vertices and end at the same vertex where the journey began.
- This prevents a node from being changed without changing all nodes, i.e. changing the relationship between vertices overwrites the entire DAG, because its structure and weight would also change.
- They can be parallel, the DAG can have parallel generation and different value paths between different nodes. This allows you to optimally check the relationship between the vertices.
- They are reducible, the unique property of DAGs is that their structure can be reduced to an optimal point where its path fulfills all the relationships specified in them without any loss.
Benefits of using DAG technology
- Speed is arguably its biggest advantage, unlike blockchain, the more transactions it has to process, the faster its response rate will be.
- A higher level of scalability, no restrictions on the time of block creation, allows you to process more transactions than those processed by blockchain networks. This is especially interesting in the application of the Internet of Things.
- It does not require mining, its carbon footprint is a tiny fraction of what is left by cryptocurrencies that need mining to create their blockchain. This is because DAGs don’t need PoW consensus algorithms.
- It does not generate any commissions or transaction fees as it does not require mining and does not generate transaction transfer costs. Although there may be times when you have to pay a small fee for some special types of nodes.
Disadvantages of using DAG technology
Among the possible disadvantages of DAG technology, it can be said that they are not completely decentralized. Most DAG-based protocols retain certain elements that tie them to centralization. While many believe this may be a short-term solution to launch the network, it remains to be seen if DAGs can truly scale independently. Failure to do so can lead to attacks that can disable your networks.
Another significant disadvantage of DAGs is that they have not yet been tested on a large scale, so their performance is not guaranteed. Although DAG-based cryptocurrencies have been around for several years, they still have a long way to go before they can be widely used. This creates some uncertainty about their possible development and incentives for their further use by users.
Comparison with blockchain
If we make a comparison between DAG technology and Blockchain technology, the first thing we see is that their main difference lies in their efficiency and speed of response. Because we know that the effectiveness of blockchain technology will decrease as the number of applications increases, while DAG is the opposite. As the number of applications grows, its effectiveness increases, which is why many believe that DAG is intended to solve the problems of competition with the blockchain.
Also, while DAG and blockchain record transactions in a distributed ledger, they do it in different ways. If we think of blockchain as some kind of related blockchain, the DAG will be more like a tree with many branches connecting one transaction to another. Unlike blockchain, DAG does not require miners or blocks. In fact, users have to confirm the transactions of others through a process that confirms previous transactions with new transactions.