DAG is said to be a new technology with a lot of potential in the data structure of Blockchain. They are used in IOT platforms such as IOTA, Nano,… So what is special about DAG? Let’s find out in this article!
What is Directed Acyclic Graph (DAG)?
Directed Acyclic Graph (DAG) is a data structure that allows transactions to be processed in parallel without having to wait for block mining calculations like on a traditional Blockchain. Instead, each transaction becomes a vertex in the DAG, and through validation processes, the transactions are linked together into a DAG structure.
It can be understood that the model of a regular Blockchain is to add block data in order to form a chain. As for the DAG model, blocks are not arranged in a chain but they are distributed into a network. With this model, Validators or Miners will not need to compete with each other to find new Blocks to add to the chain.
Mechanism of Action of Directed Acyclic Graph
Directed Acyclic Graph (DAG) is an acyclic graph-oriented data structure. In cryptocurrency systems like IOTA and Nano, DAG is used to store and confirm transactions.
Each transaction is confirmed by a number of previous transactions, called “confirmations”. When a new transaction is added to the DAG, it needs to be confirmed by previous transactions to become valid. The validation process is performed by Nodes in the network through a collaboration protocol.
DAGs provide decentralization and ease of scalability, as there is no maximum block or fixed confirmation time like in traditional Blockchain. It allows transactions to be processed simultaneously and minimizes the cost and time to confirm transactions.
Some Applications of Directed Acyclic Graph
Directed Acyclic Graph (DAG) is a popular data structure used in cryptocurrency systems to store and confirm transactions. Here are some applications of DAG in cryptocurrency:
- IOTA: IOTA is a cryptocurrency that uses DAG to confirm transactions in a distributed network. With DAG, IOTA allows transactions to be processed simultaneously and reduces transaction confirmation times.
- Nano: Nano is a cryptocurrency whose main data structure is a DAG called “block-lattice”. Block-lattice allows transactions to be confirmed simultaneously and without intermediate blocks or transfer fees.
- Hedera Hashgraph: Hedera Hashgraph is a distributed platform consisting of a DAG used for data storage and transaction management. Hedera supports complex applications such as digital securities and financial services.
- Constellation: Constellation is a distributed platform built on a DAG that uses a distributed network to store and process data. Constellation supports IoT, big data, and machine learning applications.
Advantages and Disadvantages of Directed Acyclic Graph
Advantage
- Scalability: DAGs allow for better scalability than traditional blockchain networks. Since there is no maximum block or fixed confirmation time, DAG allows transactions to be processed simultaneously and there is no competition between transactions.
- Minimize costs and increase processing speed: When using DAG, money transfer fees as well as confirmation time will be minimized due to the simultaneous processing of transactions.
- High security: Transactions on DAG are authenticated through previous transactions, so they are trustworthy and difficult to attack.
- Decentralization: DAG allows the network to be distributed without the need for “central nodes” to process transactions and store data.
- High availability: Due to its decentralized nature and good scalability, DAGs are highly available, even when some network nodes are down.
Defect
- Complexity: DAGs can be more complex than other data structures, thus requiring more computational resources for processing and storage.
- 51% Attack Potential: DAG networks can also be subject to a 51% attack, where one entity has captured more than 50% of the network’s computing power and can create fake or deleted transactions. Transactions have been confirmed.
- Data synchronization problem: When a transaction is confirmed in a DAG, nodes need to resynchronize to ensure network integrity. This can create some data synchronization problems and network delays.
- Difficulty in validating transactions: In DAG, transactions are not confirmed by integrating them into a confirmed block like Blockchain. This makes validating transactions difficult.
- Scaling Issue: While DAG can provide better performance for some Crypto projects, due to its complexity, there will likely be scalability issues. As the network gets larger, the DAG will take more resources to maintain dispersion.
- Potential for error: Since the DAG is not as transparently uniform as the Blockchain, any node in the network can create an illegal transaction, compromising the integrity of the system.
Summary
DAG is also a solution for data scalability and storage, but it also has many other problems. That’s the point of technology, it can solve this problem but will encounter other problems.
So I have clarified what Directed Acyclic Graph is? Hope this article provides you with a lot of useful knowledge!
