DAG technology vs. Blockchain

Blockchain has grown to become a technology that is empowering the transfer of digital assets without needing any centralized authority. Today, technology experts and entrepreneurs are leveraging blockchain to build a host of services in various industries, including banking and finance, supply chains, real state and more. However, a new technology called DAG is making rounds that promise to overcome all the shortcomings of blockchain.

Since DAG is new in the market, not everybody has a clear idea about the technology. Here is a brief comparison of both the technologies and how do they differ from each other.

Let’s brush up our knowledge about both technologies before moving to the difference between blockchain and DAG

What is blockchain?

Blockchain is a distributed ledger technology that can be used to record transactions or anything that has value. In simpler terms, it is a continuously growing immutable record of data which is managed by multiple participating nodes in the network. Each node maintains an updated copy of the ledger. Some key attributes of blockchain are provided below:

· No central authority or middlemen is involved in controlling it; participants make transactions directly in a peer-to-peer fashion.

· Blockchain is immutable as a transaction once added cannot be deleted or altered.

· Blockchain is consensus-based as a transaction can only be executed if participants in the network unanimously approve it.

· Consensus between parties is achieved through various methods such as Proof-of-Work (PoW) or Proof-of-Stake (PoS).

What is Directed Acyclic Graph (DAG)?

DAG stands for Directed Acyclic Graph. It is a directed graph data structure that uses a topological ordering. The technology is often placed together with blockchain, however, DAG is not technically similar to it. It is considered to be another form of Distributed Ledger Technology (DLT). DAG is a network of individual transactions linked to multiple other transactions that completely do away with blocks.

Read more about DAG here.

Difference between blockchain and DAG

Structure

Blockchain forms a linear chain of blocks in chronological order. Transactions are validated and bundled into blocks and added to a chain of previously validated blocks. However, in the case of DAG, there are no blocks of transactions. Each transaction is processed in a network of individual transactions linked with other transactions.

Consensus

In blockchain, a consensus is achieved when all participants unanimously validate transactions block by block. Numerous consensus algorithms exist to validate transactions on blockchain; one of them is PoW where miners (users) race to solve a complicated mathematical problem. The first one to solve the problem gets a fee. In DAG, there are no miners; each transaction has to validate two previous transactions to become validated.

Energy Consumption

Blockchain requires miners to solve complex problems in order to verify transactions. These miners run huge computers that consume a high amount of electricity to mine a single block, leading to enormous electricity consumptions. However, in DAG, there is no concept of mining. When a transaction is registered, it has to validate two other transactions to become verified, eliminating the need for miners.

Speed

In blockchain, every transaction requires consensus from the members to become validated, which can be time-consuming with the number of blocks involved. In DAG, there are no blocks. Thus, the transaction directly enters the network, making it significantly faster than blockchain.