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Home Cryptocurrencies Directed Acyclic Graph (DAG) Coins

Directed Acyclic Graph (DAG) Coins

Directed Acyclic Graph (DAG) coins stand out with their light networks and claim to break Bitcoin and Ethereum legacy. DAG coins are more eco-friendly since those blockchains require less computing power and energy.

What are DAG Coins

In the beginning, let me explain the meaning of "DAG". DAG is the abbreviation for Directed Acyclic Graph. The Directed Acyclic Graph (DAG) is a graph representing the structure of basic blocks, displaying the flow of values between basic blocks, and providing basic block optimization algorithms. It means that a sort of data structure directed acyclic networks applying modifications to fundamental blocks. It also allows fundamental blocks to be transformed more easily.

Sergio Demian Lerner first proposed the concept of a DAG (Directed Acyclic Graph) cryptocurrency in a paper describing his concept for a digital currency dubbed the DAG coin in 2015.

In other words, a directed acyclic graph (DAG) is a diagram that depicts a series of activities. A graph indicates the order of the actions that is visually represented as a collection of circles, each representing an activity, some of which are connected by lines that represent the flow from one action to the next. Each process is referred to as a "vertex," whereas each line is called an "edge." Because each edge has a distinct orientation, each represents a discrete directional flow from one vertex to the next.

Where are DAG coins used at?

DAGs describe several different flows, including data processing flows. The multiple phases and corresponding sequences for these jobs become more clearly ordered when thinking about large-scale processing processes in terms of DAGs. Various routes in the data processing flow are a significant feature of DAGs and the data processing flow that they model. This feature is important because it acknowledges the necessity to process data in various ways to accommodate multiple outputs and requirements. The DAG concept is a potential answer to crypto's present decentralization problem. The DAG system is a possible upcoming substitute for blockchains because of its efficiency in data storage and online transaction processing.

Now, let's look at the differences between DAG and the blockchain. First of all, unlike a blockchain system, which resembles a chain, the method of DAG resembles a graph. The model of the DAG aims to resolve two of blockchain's apparent shortcomings. These are decentralization and scalability. DAG also aims to strengthen security and usability features. On the other hand, while a miner in a blockchain system can create a single block, the DAG approach removes these blocks and adds transactions to the blockchain. So, the DAG doesn't require mining. We can easily understand that less energy can support the network.

Advantages of DAG Coins

The DAG has some outstanding advantages. Now, it's time to put them in order. As we have already mentioned, it requires less energy since it does not require mining. Being energy efficient, in turn, is positively reflected in the environment. We can consider this as the most crucial advantage. It does not require mining also means that there is no transaction fee which is a significant benefit.

Simultaneously, DAG allows for a simple transformation of basic blocks. In general, their advantages are high. However, it has some downsides, of course. Now let's mention them. It has a low transaction volume. Therefore, it is vulnerable to attacks. We can consider this as a disadvantage. They aren't entirely decentralized, to be sure. The majority of DAG-based protocols keep some aspects that link them to centralization.

Finally, the topic we want to include in this blog is the DAG Coin list. Although there is a huge list, we will talk about the most famous. Let's start with the IOTA. It is a distributed ledger used on the Internet of Things (IoT) system to record and perform transactions between machines and devices. The IOTA principle is that everyone is effectively a miner. Also, it enables the network to be both extraordinarily decentralized and robust. Transaction fees are almost non-existence.

The other famous coin is Nano. Nano is a peer-to-peer digital cash system. It is a DAG-based decentralized, open-source coin. It's a mix of DAG and blockchain. Its users benefit from no transaction fees and fast transaction speeds. Another famous coin is Obyte. Obyte is a coin that uses the DAG framework entirely independently of the blockchain. However, compared to the others, it has a transaction fee. Obyte also supports anonymous transactions and inaccessible contracts.

The last famous coin that we mention is Hedera. Hedera is a public Distributed Ledger Technology (DLT) that uses a Directed Acyclic Graph (DAG) instead of a blockchain for its architecture. Hedera is one of a kind since it accomplishes the same outcome as the most widely used public blockchains. The list is getting longer, but we have presented the most famous ones to you.

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Directed Acyclic Graph Coin Comparisons

Article by Yunis
30 June 2021 (Updated 25 May 2024)
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