DAG based DLT Network

Transcription

1 DAG based DLT Network

2 DAG based DLTs What is a DAG ledger? DAG (Directed Acyclic Graph) based DLTs are ambitious alternatives to blockchain. They re designed to offer all the advantages of blockchain technology, while improving on their flaws. One of the core innovations behind DAG ledgers are their ability to conduct zero-fee nano-transactions on a system that is made more scalable as activity on them increases. In other words, the more the transactions on a DAG ledger, the faster the settlement times. Before delving into what this technology promises and what problems it aims to solve, we ll first examine how it works and what makes it different to traditional blockchain systems. How do DAG DLTs work? Considered by many to be blockchain s next evolutionary step, the DAG can be used as a form of Distributed Ledger Technology. DAG ledger protocol stores transactions on nodes, which serve as representations of validated transactions on the ledger. Each new transaction that must validate at least two previous transactions before it can itself become validated. It s an improved consensus system applied to a revolutionary structure. This is what gives DAG ledgers their size and scalability advantage in comparison to blockchain. It makes them more suitable to use cases that require a high volume of transactions processed per second. As is the case with traditional DLTs, each member is called a node. This is a computer that sends transactions for validation to other members. The main rule in DAG ledgers is that any new transaction must approve at least one previous transaction. The longer the branch on which a transaction is based, the more weight it carries.

3 The Mechanics of DAG Networks As is the case with traditional networks, each network member is called a node. This is a computer that sends transactions for validation to other members. A chain of transactions is called a branch. The main rule in a DAG network is that any new transaction must approve two previous transactions. The longer the branch on which a transaction is based, the more weight it carries. This is another way of saying the amount of work that has been invested in the transaction. The greater the weight, the more valid it is likely to be. Each new transaction is randomly selected by an algorithm to avoid a situation where members only choose to validate their own transactions. Once a member has verified that the two transactions selected by the algorithm are not in conflict, they are validated using the proof of work principle. DAG vs. Blockchain New and innovative as DAG based networks are, they do share a few similarities with good old blockchain. Both are decentralized concepts. Both and designed to offer a solution to the problem of data manipulation and centralization, and both offer transparency and security in how they function.

4 On the blockchain, a message is pushed to the network so that each node receives it and updates its copy of the ledger. However, the transaction must be sent in a block that is mined, and the higher the fee is the higher the chance that it gets picked up first, and confirmed faster. Transaction fees and scalability are two of the biggest problems facing public blockchain setups, and these are the two areas that solutions like DAG networks offers remarkable benefits in. There are no blocks or chains on DAGs, yet is still a peer-to-peer decentralized network that uses consensus mechanisms to validate transactions. Better yet, it can function without charging fees, and the more traffic it experiences, the faster it works. Advantages of the DAG DAG networks pack in the privacy, security and decentralization benefits of blockchain, and combine them with a number of improvements such as: No Mining The absence of blocks subsequently means the absence of miners, which in turn means there are no high-powered computers racing to solve math problems for a payout. DAG networks therefore use a fraction of the energy that blockchain systems use. Scalable The DAG architecture has no limit in terms of scalability. Throughput grows in conjunction with activity - the only limit is bandwidth. Low Difficulty Low hashing power requirement means that devices like mobile phones, routers, and smart devices can join DAG networks. Speed Blockchain networks slow down as the user base increases, and it takes more time to confirm transactions. DAG networks work the opposite way the more it is used, the faster it works.

5 Quantum Resistance DAG DLTs offer a buffer against quantum computing, meaning its advent would not threaten the security of the system. Current & Future Developments As good as a technology might be, its real potential lies in its realworld applicability. With all the talk about Industry 4.0, the fusion of technologies that connect the physical, digital and biological spheres, disruptive technologies are coming into spotlight. Thanks to its low overhead, efficient scaling and no fee transactions, a number of uses cases have already been mapped out for DAG DLTs most of them focused on mobility. The Internet of Things is one area where a technology like this is said to hold great potential. While the DAG can be put to use almost everywhere where other distributed ledger technologies like blockchain are used, it really shines in scenarios that demand faster and feeless transactions. A few examples are proof of ownership of digital and physical content, anti-counterfeit measures, digital identity, points-based value transfer, metering and grid management, fleet management, goods tracking, home automation, smart cities, detectors and alarm systems, maintenance, monitoring and control of industrial processes, as well as environment and agricultural uses. The technology also has application potential on the consumer side of things, in areas like wearables, elderly tracking, and medical monitoring.

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