What is DAG? Directed Acyclic Graph. Any good?

Lately, you must have heard about DAG and it’s cryptocurrencies and that it is a competitor of blockchain or might replace the blockchain soon. Well, in this post I will try to explain what is DAG, how different it is from blockchain, which cryptocurrencies use DAG etc

The DAG that IOTA uses is called Tangle.

DAG stands for Directed Acyclic Graph (with Acyclic pronounced as ey-sahy-klik, ey-sik-lik). Acylic means “not displaying or forming part of a cycle” As you can see it is communicated as a graph and what is graph? A graph is something that has vertices and edges.

Graph looks something like this

Below is a comparison b/w DAG and blockchain

First and foremost, DAG is not a blockchain and it is completely different from it.


Now, let’s discuss what is a Cyclic graph?
Any graph that contains at least one cycle is called cyclic graph.

Acyclic is the opposite of cyclic. Any graph that does not have a cycle is called Acyclic graph.

DAGs are direct graphs that have topological sorting. DAG emphasises that one task must be done before moving on to the second task. Think of acyclic graph like a river because it flows only in one direction but it can be divided into many parts connecting to the main river from the upstream.

We all know that with many blockchain based cryptocurrencies the scalability is a big issue, especially for Bitcoin didn’t turn out to be very scalable as people perceived it to be. DAG solutions implemented so far appears to be more scalable.

Time it takes to do a single transaction have increased significantly in blockchain based cryptocurrencies like Bitcoin which for some transactions even take 1 day to process. DAG based cryptocurrencies have faster processing time. Byteball have confirmation time of 10 minutes, RaiBlocks have confirmation time of 10 seconds and IOTA people claimed in Dec 2017 that for some of them it is taking more than a day which I guess happened for very few people.

Transaction Fees:
Bitcoin transaction fees has gone up too much with $3 or more even for small transactions, this makes Bitcoin and other blockchain based cryptocurrencies less preferable for micro transactions. Byteball claims to incur users a very small transaction fees while IOTA and RaiBlocks charge no transaction fees.

Cryptocurrencies based on DAG:

If you know any other DAG based cryptocurrencies, let us know through comments.

The advise to get from here is that DAG indeed looks like a promising solution to problems that exist in blockchain but nobody knows who will win in the end. Proof of Work worked for Bitcoin but few problems also arose, can DAG solutions propose better replacement of Proof of Work? If they do, along with solutions to other problems, then definitely DAG based cryptocurrency prices will go up.

This post was to give you a basic overview of what is DAG. I will cover DAG in more detail in upcoming posts and keep this one updated too.