DAG vs Blockchain

Directed Acyclic Graph and blockchain are two different ways to build decentralized systems. Following are the main differences between DAG & blockchain

How they work?

• Blockchains typically works on different principles like Proof of Work (PoW), Proof of Stake (PoS). These mechanisms require participants to solve complex puzzles or stake their tokens to become validator and add new blocks to the chain.
• DAGs often works on principles of "mesh" in which nodes are directly linked to previous nodes, and each node verifies two previous nodes. This "confirmation" process creates a structure where multiple branches can exist, and transactions can be confirmed asynchronously.

Structural Advantage:

• Blockchain is a linear chain of blocks containing a set of data/transaction. Each block is connected to other blocks using cryptographic hashes which forms a sequential and immutable data chain.
• DAG on other side is a non-linear structure where data/transactions are represented as nodes, and the edges represent the dependencies between the transactions. As DAG does not have any strict linear order which allows its structure to be more flexible and scalable.

Scalability:

• With increasing number of transactions, the block size and confirmation times can become limiting factors because of the sequential nature of block processing.
• DAGs can provide higher scalability because transactions in a DAG can be processed concurrently and asynchronously, the network's throughput can increase as more participants join. This allows for potential improvements in transaction confirmation speed and scalability.

Security:

• PoW and PoS mechanisms provide a robust defence against various attacks for blockchain. They also makes it difficult to manipulate past transactions or interfere with the chain.
• There is no specific mechanism which can be solely responsible for the security of DAG as for DAG security mechanism can vary as per its implementation in different use cases.
• Hedera hashgraph is one of the popular example of DAG which uses gossip protocol which ensure the highest standard of security to prevent any malicious attacks.

Because of these reasons blockchains have been primarily used for cryptocurrencies, smart contracts, and applications that require a transparent and immutable ledger where as DAGs are often associated with cryptocurrencies that aim to improve scalability and transaction speed.

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