DAG - What is that?
A Directed Acyclic Graph, or DAG, can be best explained as an infinitely connected series of nodes. Put simply, there is no blockchain in the conventional sense - there is a chain of sorts, but no blocks - and instead its design looks more like a messy graph. IOTA are apt to nickname their DAG architecture ‘The Tangle’ for this very reason.
Networks built on a DAG structure can do a lot of things that standard blockchains cannot. Its design lends to a much more flexible system, though this comes with the caveat of a slightly less robust mechanism. Here lies the key challenge for those in the space: how do you exploit the massive advantages of DAG without increasing the risk of a double-spend attack?
Comparing blockchain technologies is not straightforward
There is an issue here, before I list the various advantages that are specific to DAG. "Blockchain technologies" is such a vague, all-encompassing umbrella term that it can be problematic to talk about it too much in black and white.
DAG is not entirely separate from the manifold interpretations of blockchain, itself a punchy term used to denote a group of technologies that have mostly been in development for decades. So, DAG isn’t a blockchain technology insofar as it is a sort-of chain without blocks, but really it does exist in the same field if not category.
To be clear in that case: DAG shows great potential as another option to standard blockchains. Out of the hundreds of deviations from what you would normally call a blockchain, it’s quite a lot more different, too, which means that it does deserve to stand apart and be scrutinized as an alternative.
There are major advantages to designing a network on a DAG architecture, some which try to address long-standing issues that still challenge the biggest and oldest cryptocurrencies to this day.
Why DAG shows great potential
It can scale
One of the key issues for standard blockchains is scalability: a dramatic increase in users and transactions results in a clogged network and increased transaction fees, as evidenced with the CryptoKitties crisis and the effect that it had on Ethereum.
Well, while Ethereum is thought to handle around a maximum of 20 transactions per second, a network on DAG should in theory have sufficient bandwidth for several thousands per second. This is the main reason that the technology has been touted as a possible Blockchain 3.0.
Lightning-fast transactions
The only nodes required to confirm transactions are ‘neighbour nodes’ - meaning the node that comes before, and the node that follows - and this means that not every node has to download the entire network, as is often the case with other blockchains.
Transaction confirmations on DAG can be completed in a matter of seconds this way, with the validation of each built into the transaction itself. As long as there are enough neighbour nodes on the network, transactions can be confirmed and broadcast to the network near-instantly.
What are the main DAG-based networks?
IOTA
The first startup to enter this space and gain wider coverage has to be IOTA (MIOTA). Though not a fully decentralized solution - they have conceded that centrally-controlled ‘Co-ordinators’ will play a role - it is a project with enough merits to have kept the attention of the crypto community for a long time now.
CyberVein
Recently featured in Forbes, this is a project that has only just come on the radar. It may be comparable to IOTA in terms of technology and concept, but CyberVein shows interesting attempts to innovate in its design.
One example of this is the development of Proof of Contribution, where users donate disk space for a reward of CyberVein tokens (CVT). This donated memory is in turn used to store parts of datasets, thereby creating a wide network of decentralized databases.
CyberVein is definitely a new DAG on the block - or rather, blockless - and is worth keeping an eye on for future developments.
Byteball
Byteball (GBYTE) is similar to IOTA in that it uses a centrally controlled function to ensure the security of its network. A notable difference, however, is that it allows transactions to be private and untraceable.
What the platform does is make it easy for users to create custom smart contracts in order to create a robust and versatile conditional payment system; in other words, anyone could build a mechanism that arranges for payment to send automatically upon the completion of set terms.
Byteball’s website says it has a product ready to go, but you can check out their test wallet first in order to see for yourself before parting with cash for tokens.
There lies great potential in a blockless blockchain
A successfully implemented DAG network promises much and there is a chance that standard blockchains will soon be replaced by a platform built on a DAG architecture.
That being said, if blockchain technologies are generally considered nascent then DAG is positively infantile; it needs more time and must be tested to its limits before anyone can come close to a fully-fledged, working product.
Holding benefits such as the immutability of blockchain technologies means that a DAG structure may be set to trounce existing blockchains because it can offer a massive level of scalability.
Keep watching this space, and you never know, it may be that by this time next year a DAG-based network will be offering a working product and solution that is better than we had ever imagined.