DAGs or DAG technology are structures that have been known in the mathematical and computer world for many years. They are even much older than blockchain technology. But they have recently come back into the limelight due to the technical possibility of building distributed systems identical to those created using blockchains. These chains, while still of high quality, face the problem that as more and more people use blockchain such as Bitcoin and Ethereum, their inefficiency is becoming greater and greater.
DAGs present a new option for digital transactions that promises to speed up processes for responding to user requests. For many it represents the next link in the chain of blockchain evolution, for others it offers no guarantees whatsoever. The truth is that it is attracting attention and generating many doubts and expectations. In this post we will try to clarify these doubts and try to shed some light on this topic.
What is DAG technology?
DAG technology, Directed Acyclic Graphis, defined as a distributed accounting technology, different from conventional blockchains. It is responsible for updating synchronous accounting to asynchronous accounting. Many people think it can solve the high concurrency problem of traditional blockchains, i.e. speed. DAG is a data structure such as arrays, permutations and blockchains.
DAG is a kind of graph that allows the graphical representation of a set of data interconnected with each other. In the form of circles also called nodes, connected by lines that simulate the flow of data between the different points within the graph. Points that in turn represent a subset of data within the same group, each one. While blockchain technology is a blockchain database structure, where each block is like an iron chain, intertwined.
In summary, we can assume that DAG, also known as directed acyclic graph, is a highly exposed technology in the blockchain field. However, it is not actually a blockchain. It is rather a data structure such as arrays, blockchains and permutations. But which, unlike blockchain, switches the consensus of the longer chain to the consensus of the heavier chain. Thus, the more requests there are the higher its efficiency.
Characteristics of this technology
Compared to current public blockchain technology, DAG is the difference between a graph and a chain. That is, the chain cannot handle only one part, because it has only one input and one output degree, and the nodes in it cannot be divided into several to process, while graphs, thanks to the fact that they can have several external degrees, can process several connected nodes at the same time. Therefore, its features are:
- Higher transaction speed, local processing and parallel settlement performed by DAG can significantly increase the speed of transactions.
- High scalability, because each node can calculate independently, the accounting node can respond faster, ideal for Internet of Things projects.
- Increased security, the large number of degrees of inputs and outputs prevents malicious manipulation of the nodes, since modifying one node means modifying all of them.
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Properties of DAGs
DAGs have certain specific properties that govern their operation:
- They have an origin and destination, this ensures that our route always goes from an origin point to an end point, and we cannot return to this route. That is, it is impossible to start from a vertex of the graph, go through the rest of its vertices and end at the same vertex where the trip started.
- It does not allow changing a node without having to change all the nodes, i.e., changing a relation between vertices rewrites the whole DAG, because its structure and weight would change as well.
- They can be parallel; a DAG can have parallel generation and different value paths between different vertices. This allows you to optimally verify the interrelationship between vertices.
- They are reducible, a unique property of DAGs is that their structure can be reduced to an optimal point where its path satisfies all the relationships specified in it without any loss.
Advantages of using DAG technology
Its advantages are the following:
- Speed, perhaps its greatest advantage, unlike the blockchain the more transactions it must process its response speed will be faster.
- Higher level of scalability, by not being subject to limitations on block creation times, a greater number of transactions can be processed than those processed by blockchain networks. This is particularly attractive in the application of the Internet of Things.
- It does not require mining; its carbon footprint is a tiny fraction of that left by cryptocurrencies that require mining to generate their blockchain. This is thanks to the fact that DAGs do not need PoW consensus algorithms.
- It does not generate commissions or transaction fees since it does not require mining work and does not generate costs for the transmission of transactions. Although there may be some cases where it is necessary to pay a small fee for certain special types of nodes.
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Disadvantages of this technology
Among the possible disadvantages of DAG technology are that, although it is said otherwise, they are not totally decentralized. Most protocols based on DAGs maintain certain elements that relate them to centralization. And while many believe that it may be a short-term solution to jump-start the network, it remains to be seen whether DAGs can really evolve independently. Failure to do so could lead to attacks that could cripple your networks.
Another important disadvantage of DAGs is that they have not yet been tested on a large macro scale, so their performance is not guaranteed. Although cryptocurrencies based on DAGs have been in existence 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 the incentives for their future exploitation by users.
Comparison with Blockchain
If we make a comparison between DAG technology and Blockchain technology, the first thing we will find is that their main difference is in their efficiency and speed of response. We know that the efficiency of blockchain technology will decrease as the number of applications increases, while DAG is the opposite. As the number of applications increases, its efficiency increases, hence many thinks that DAG is the one called to solve the concurrency problems of Blockchain.
Additionally, although DAG and blockchain record transactions in a distributed ledger, they do so in different ways. If we think of blockchain as a kind of linked blockchain, DAG would be more like a tree, with numerous branches connecting one transaction to another. Unlike blockchain, DAG does not need miners or blocks. In fact, users must confirm each other’s transactions through a process that confirms previous transactions with new transactions.
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