DAGs or DAG technology are known structures in the mathematical and computer world for many years. They are even much older than blockchain technology. But recently they have come back to the fore due to the technical possibility of building distributed systems identical to those created using blockchains. These chains, although still of great quality, face the problem that as more and more people use blockchains like Bitcoin and Ethereum , their inefficiency becomes more and more.
DAGs present a new option for digital transactions that promises to speed up the processes of responding to user requests. For many it represents the next link in the chain of blockchain evolution , for others it does not offer any type of guarantees. The truth is that it is drawing attention and generating many doubts and expectations. In this post we will try to clarify these doubts a bit and try to shed light on this issue.
What is DAG technology?
DAG technology, Directed Acyclic Graph or Directed Acyclic Graph, is defined as a distributed ledger technology, different from conventional blockchains . It is responsible for updating synchronous accounting to asynchronous accounting. Many people think that it can solve the problem of high concurrency of traditional blockchains, that is, speed. DAG is actually a data structure like arrays, permutations, and blockchains.
The DAG is a kind of graph that allows the graphical representation of a set of interconnected data. In the form of circles also called nodes, joined 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. While blockchain technology is a chain database structure, where each block is like an iron chain, intertwined.
In summary, we can assume that the DAG, also known as directed acyclic chart , is a very exposed technology in the blockchain field. However, it is not actually a blockchain. It’s more of a data structure like arrays, blockchains, and permutations. But that, unlike the blockchain, changes the consensus of the longest chain to the consensus of the heavier chain. In this way, the more requests there are, the greater your efficiency.
Characteristics of this technology
Compared to current public chain technology, DAG is actually the difference between a chart 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 the graphics, thanks to the fact that they can have several degrees external, can process multiple connected nodes at the same time . Therefore, its characteristics are:
- Increased transaction speed,local processing and parallel settlement performed by DAG can greatly increase the speed of transactions.
- Great scalability, thanks to the fact that each node can calculate independently, it makes it easier for the accounting node to respond more quickly, ideal for Internet of Things projects.
- Greater security, the large number of degrees of inputs and outputs prevent malicious manipulation of the nodes, because when modifying one you have to modify all of them.
DAGs have certain specific properties that govern their operation:
- They have an origin and destination,this ensures that our route always goes from a point of origin to an end point, and we cannot return to this route. 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.
- It does not allow changing a node without having to change all the nodes,that is, changing a relationship between vertices rewrites the entire 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 the vertices.
- They are reducible,a unique property of DAGs is that their structure can be reduced to an optimal point where their path meets all the relationships specified in it without any loss.
Advantages of using DAG technology
Its advantages are as follows:
- Speed,perhaps its greatest advantage, unlike the blockchain, the more transactions it has to process, its response speed will be faster.
- Higher level of scalability,as they are not subject to limitations in block creation times, a greater number of transactions can be processed than those processed by blockchain networks. What is especially attractive in the application of the internet of things.
- It does not need mining work, its carbon footprint is a minimum fraction of that left by thecryptocurrenciesthat require mining to generate their blockchain. This is due 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, no costs are generated 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.
Disadvantages of this technology
Among the possible disadvantages of DAG technology, we can say that, even if the opposite is said, they are not fully decentralized . Most DAG-based protocols maintain certain elements that relate them to centralization. And while many think that it may be a short-term solution to get the network started on the right foot, it remains to be seen whether or not DAGs can really evolve independently. Failure to do so may be the target of attacks that could paralyze your networks.
Another important disadvantage that DAGs present is that they have not yet been tested on a large scale in the macro, therefore, their performance is not guaranteed , because, although cryptocurrencies based on DAGs have already been in existence for several years, they still have a long journey ahead to see its use in a generalized way. This creates some uncertainty about its possible development and the incentives for its 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. Well, we know that the efficiency of blockchain technology will decrease as applications increase, while DAG is the opposite. With a greater number of requests, its efficiency increases, hence, many think that DAG is the call to solve the concurrency problems of Blockchain.
Additionally we have that, 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 chain of linked blocks, DAG would be more similar to 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.