What is a Directed Acyclic Graph?

A Directed Acyclic Graph(DAG) is a graph that represents a series of activities and the flow from one activity to another. As shown in the illustration above, the activities are represented as circles (vertex), and the order in which they are depicted is as lines (edge) with a unidirectional arrow.

DAG, in particular, is a unique type of data structure that uses topological ordering and a specific type of distributed ledger technology based on consensus algorithms. As a major benefit, the DAG model allows developers to express themselves freely by engineering the technology to the specific tasks from the standard model. Meanwhile, the standard DAG connects various pieces of information and during the request for the registration of new orders, the system refers to a number of previous transactions in a whole chain. In common during the recording of transactions in DAG, two things happen at the same time: referring to older transactions and the confirmation of whole chain integrity.

Although the related problems to data processing, scheduling, finding the best route in navigation, and data compression DAG is often applied. In general, embracing nodes connected with edges comes down to a few types of web. Thus with a specific direction, the edges are a connection between nodes. So, when moving from node to node by following the edges, Acyclic means that it’s not possible to experience the same node for the second time. One of the differences lies in the data structure instead of adding blocks constant to a chain, use its Direct Acyclic Graph (or web).

After discussing what DAGs are, we’ll now highlight their key differences when compared to blockchain technology solutions. Since both technologies have significant differences, let’s take a look at each of them.

Mining process

The Mining context is generally the procedure of approving transactions in a blockchain while obtaining new coins in return. The miner solves complex computations using specialized hardware processes. To add transactions to the new block and earn tokens for his efforts, the successful miner must send a confirmation of the transaction’s correctness.

Aside from mining, blockchain networks can gain consensus using the Proof-of-Stake model. In this case, validators take over the role of miners, so achieving consensus depends on the value of stakes in the network.

Blockchain: Participants can create new tokens using various consensus mechanisms.

 Directed Acyclic Graph: The previous transaction validates the achievement of success to consensus.

Transaction speed

Although DAGs are fast, the ideology of Blockchain technologies is to be faster. As a result, the inherent waiting times are absent here, promising faster transaction speed.

However, when it comes to scalability, blockchain technology has a lower transaction number per second. But thanks to DAGs’ unique data structure, adding a large number of transactions with improved scalability is possible.

Data structure

Verified data in a blockchain system is contained within blocks, which are linked together in an infinite chain of blocks. As a result, putting new data in each block depends on existing transactions, which are all encrypted. Meanwhile, data storage in a DAG is independent, as a layer atop another.

Transaction validation

A secure transaction is on the miners or validators in a blockchain system either approve or disapprove the decision. In a DAG protocol, the achievement of a transaction relies on its expertise to approve previous transactions.

Launch date

The launch time of both technologies has a noticeable gap, so there is a difference in their development journey. In 2008 Satoshi Nakamoto anonymously released the Bitcoin whitepaper that introduced blockchain. Years after, NEXT became the first platform to leverage DAGs, and it came to the spotlight in 2015.

Popular network

Today, many networks make use of blockchain technology. Bitcoin, Ethereum, Tezos, and other blockchain-based networks are examples. Other private startups or organizations have private networks as well, thanks to blockchain technology.
As opposed to blockchains, Directed Acyclic Graphs have fewer network nodes running on them. The most popular are NXT, Tangle, and Byteball.

What Are the Benefits of DAG?

DAG, like blockchain, is a new protocol that has confirmed its uniqueness as even more revolutionary in many ways. Hashgraph technology, for example, is a distributed ledger technology that employs DAGs to achieve asynchronous Byzantine Fault-Tolerant (aBFT) consensus. Here are some of the unspoken advantages of this new technology.


One of the primary benefits of a Directed Acyclic Graph is its fast transaction speed. As a result, any user can broadcast transactions on the network and receive approval at the same time. However, in a typical blockchain network, there is a time lag or waiting period between logging transactions and confirmation. That procedure is known as Block time.

Easy Scalability

DAG’s features address the scalability and throughput issues associated with Proof of Work (PoW) blockchain networks. When compared to traditional blockchains, Directed Acyclic Graphs can process more transactions per second (TPS). Thus, scalability is possible because they are not constrained by block times.

Absence of mining

DAGs are free of mining, unlike the mining process adopted by Bitcoin, Ethereum, and other coins as their consensus algorithm. So the absence contributes to the efficiency of DAGs in recording transactions, although PoW is not bad in itself.


The approval of DAG’s use has been more cost-effective than the main public blockchain option sound today. Thus the protocol has no minors that inspire before confirmation of transaction reduces entire pressure. It boosts the addition of more transactions. And that is without the fear of increased charges.

Energy Efficiency

The high energy consumption of DAG and its projects or protocols do not use the PoW consensus mechanism. Thus the compared PoW-powered blockchain has placed all direct acyclic graphs as a more ecological option. The other DLT and role of profiling cryptocurrencies BTC-backed technologies in climate change.

Is DAG better than Blockchain?

The talking around DAG and Blockchain increasing in intensity, speculation, and reach. As we know, the bitcoin blockchain is the oldest, but DAG can indeed solve most of the blockchain’s problems. Thus DAG is the biggest and the most decentralized DLT out there. Besides the entire DLT world right now is based on the market area before the blockchain application goes mainstream. Thus we cannot be sure that the bitcoin blockchain will still be the #1 crypto technology in the world 10 years from now. It is because the industry grows two or three times its current size.

Thus it pointed out that blockchain technology and DAG have similar features and differences. The question of which is superior depends on the deployment of its use cases. The use case profiling shows that both have their advantages and disadvantages. These use cases include the Internet of Things(IoT), Microtransactions, Large Payments, and P2P Energy Trading.

There are many variations of Distributed Ledger Technologies around today among all DAG and Blockchain are some of the most related. Both these technologies share some similarities, with marked differences. The confirmation of DAG has been an enhancement and the future of blockchain technology.

Distributed Ledger Technology has already outpaced the inferior challenges in its potential growth push. So we may see more mainstream firms begin to incorporate it into their business processes moving forward. If you want to implement DLT, connect with our blockchain experts.