Comprehensive Guide To DAGs: How Is It Different To Blockchains?


Despite having been introduced by the enigmatic creator of Bitcoin Satoshi Nakamoto in 2018, Blockchain only hit the mainstream after 2015 when Bitcoin’s hype exploded to prominence. The interest surrounding Bitcoin is what experts consider now as “Blockchain 1.0.” Later on, “Blockchain 2.0” was coined when Ethereum, was developed by Vitalik Buterin and his peers. Now, some believe that the world is at the precipice of the “Blockchain 3.0.” This is because the market has supposedly found the innovative technology that best suits the name in DAG protocols or DAGs.

What are DAGs?

DAG, or Directed Acyclic Graph, is a common framework in mathematics and computer science but has since found its way to the world of Blockchains and cryptocurrencies. It is a data structure framework that utilizes topological ordering mostly used for scheduling, data compression, data processing, and optimal route navigation searches. Despite still definitively in its early stages DAG is already being touted by many as the more scalable replacement for the now arguably getting-stale Blockchain tech.

To the informed, the name DAG itself already tells a lot. The acronym alone already indicates that it is a graph with no cycles but a definite direction. Simply put, many think of DAG as an intermediate in the Blockchain creation process as some of its blocks are interconnected in an orderly manner represented by edges. However, what most think of as DAG’s greatest trait is that it only involves transactions and could ultimately facilitate without the mining process. This particular trait has earned DAG the moniker of a Blockless data ledger that only stores transactions, thus, eliminating the necessity for miners and its treacherous and costly process.

With that being said, DAG successfully reduces the transaction time by a large margin, all the while improving Blockchain tech’s bottlenecked scalability. That is precisely why many now consider DAGs as the future of Blockchain.

How does it work?

While the conventional Blockchain system resembles a chain, DAG’s integrated system looks more like a graph, making data storage more efficient while also taking less transaction processing times. Some even see its structure as tree-like, with several interconnected nodes on each side acting as its branches. This means that each node can have more than a single root, thus, allowing for more transaction validation processes to occur at the same given time. Simply put, DAG can process new transactions even with the previous ones still ongoing, unlike today’s Blockchain tech. That may be, it is still worth pointing out that DAG’s transactions also need to reference the transactions before it before they get officially accepted by the network – much like Blockchains.

As mentioned briefly above, DAGs do not possess blocks. It is independent of mining processes as each vertex represents one transaction. In a DAG, transactions are built on top of one another – not sorted together like blocks. This makes it so that DAGs can reference multiple transactions at one instead of just one after the other.

Is it better than Blockchain?

In a perfect world, DAGs are ultimately better than Blockchains. The DAG model is designed specifically to address Blockchain technology’s most glaring weaknesses, namely its poor scalability, usability, security, and decentralization. DAG’s transaction speeds are way faster than Blockchain due to its elimination of the mining process and block creation. This translates to lesser fees as there would be no miners while also consuming much lesser energy, making it a definite hit to environmentalists. Notably, the crypto and Blockchain scene has seen significant downs brought by several environmental concerns primarily due to its overwhelming energy consumption – DAGs could potentially be the answer to that.

With all that in mind, it needs to be pointed out that DAGs in the crypto industry are still well-within their early stages. Unlike the more established Blockchain technology we have today, DAGs aren’t fully decentralized yet and undoubtedly still need further testing and implementation. As such, as promising as it may sound, they are only primarily used for network upstarts still. It is not yet a system that can be freely used to establish a stable network.

Will it replace Blockchain?

Say that experts could make DAGs stable and more decentralized. Then we could see them replace today’s Blockchain tech sooner rather than later. Not only do DAGs solve most of Blockchain’s issues, but they could also provide several more benefits unique for themselves.

Nevertheless, the ultimate goal here is to create a thriving ecosystem in which users can freely use Distributed Ledger Technologies, much like DAG protocols, which suit their business needs while remaining interconnected at the same time. Users should have the freedom to choose whether they want DAG or Blockchain, private or public, centralized or decentralized, so long as they achieve their business’s set goals. As appealing as DAGs appear to be, it should just be another option for people to choose from and not the mandatory tech everyone should adhere to.


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