Blockchain without the blocks
Blockchain is undoubtedly on the rise, but you don’t have to look far to detect a number of flaws with the technology. One of blockchain’s biggest setbacks is its reliance on miners to add transaction records (AKA blocks) to the general ledger. The answer, as demonstrated by cryptocurrencies IOTA and Byteball, could be found using a Directed Acyclic Graph (DAG).
A DAG is an important programming tool for representing multiple relationships between objects and data. Each node in a DAG represents an object or a piece of data, and is connected within the system by directed edges – hence the name. Unlike blockchain, a DAG doesn’t rely on blocks. Instead, transaction issuers are also transaction approvers because each transaction is linked. When a transaction is sent to the network, two previous records are approved by nodes. Removing the need for blocks also removes the need for miners, therefore eliminating the friction that can arise between miners and users when their interests conflict. It also makes transactions fairer, as in the past miners have allegedly delayed or blocked certain transactions.
By removing the need for miners, DAGs streamline the process of uploading and approving transactions. The model also solves issues surrounding scalability and fees, as there are no block limitations. Another benefit of DAG technology is that it addresses the problem of double spending, in which users spend an amount of money more than once. As well as this, IOTA’s DAG (Tangle) can communicate with blockchains, which is promising for collaboration between the Internet of Things economy and established digital currencies. DAGs could therefore offer a viable alternative to blockchain if it continues to experience problems.