8 Distributed Ledger Technology
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therefore secured as well. The execution is also transparent, immutable, and
decentralized. Essentially, smart contracts make program execution secured.
8.2.2 DAG Benefits
From computer science point of view, a DAG is a graph with directed edges and
no cycles. It is a treelike data structure that is suitable for storing, organizing, and
finding transactions.
As a distributed ledger technology, DAG has advantages over other technologies.
For example, DAG does not have blocks and miners. Validation is done by the
transactions themselves. New transactions validate old transactions in a distributed
manner when they are added to the DAG. This greatly increases the speed of DAG –
hundreds of thousands of transactions can be processed in a DAG in a second.
Distributed validation between transactions leads to much-improved scalability
as well. The newer transactions are added to DAG, the more transactions that are
available for validation, the faster the validation is done. In theory, DAG has infinite
scalability. Because DAG does not have blocks and miners, there is no mining fee
associated with DAG. This makes DAG an appropriate technology for the Internet
of Things which has a large number of transactions between sensors and devices,
and it is not logical and realistic to charge fees.
DAG is also easily made quantum-proof. That is, DAG is safe to use even when
quantum computers become available in the future, because DAG does not rely on
cryptography which could be potentially broken by quantum computers. Algorithms
have been implemented in DAG to make DAG quantum-resistant. An example of
DAG is IOTA technology which is already believed to be resistant against quantum
computing attacks. However, DAG should have a substantial amount of traffic before
it can start working. Greatly reduced traffic will make DAG vulnerable to attacks.
Solutions based on coordinators have been suggested to get a DAG system up and
running. The effectiveness of the suggestion of using coordinators is still under
debate.
It should be noted that there are a number of differences between DAG and
blockchains. First, DAG is blockless. In DAG, transactions validate each other
and transactions are not assembled into blocks. On the other hand, blockchains
assemble transactions into blocks. Secondly, DAG is more scalable. In fact, DAG
is infinitely scalable in theory. This means that the performance of DAG will
not deteriorate as new transactions are added to the graph. On the contrary,
blockchains will experience slowdown when the blockchain gets longer. DAG does
not require mining as well. Therefore, DAG uses much less electric power. However,
blockchains based on PoW use a lot of electric power.
Another difference is that DAG does not charge fees whereas blockchains
do. Furthermore, DAG is much faster because it does not require mining and
validation is done in parallel and not in a chained manner. Finally, DAG is quantumproof. Blockchains are susceptible to quantum attacks because they are based on
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therefore secured as well. The execution is also transparent, immutable, and
decentralized. Essentially, smart contracts make program execution secured.
8.2.2 DAG Benefits
From computer science point of view, a DAG is a graph with directed edges and
no cycles. It is a treelike data structure that is suitable for storing, organizing, and
finding transactions.
As a distributed ledger technology, DAG has advantages over other technologies.
For example, DAG does not have blocks and miners. Validation is done by the
transactions themselves. New transactions validate old transactions in a distributed
manner when they are added to the DAG. This greatly increases the speed of DAG –
hundreds of thousands of transactions can be processed in a DAG in a second.
Distributed validation between transactions leads to much-improved scalability
as well. The newer transactions are added to DAG, the more transactions that are
available for validation, the faster the validation is done. In theory, DAG has infinite
scalability. Because DAG does not have blocks and miners, there is no mining fee
associated with DAG. This makes DAG an appropriate technology for the Internet
of Things which has a large number of transactions between sensors and devices,
and it is not logical and realistic to charge fees.
DAG is also easily made quantum-proof. That is, DAG is safe to use even when
quantum computers become available in the future, because DAG does not rely on
cryptography which could be potentially broken by quantum computers. Algorithms
have been implemented in DAG to make DAG quantum-resistant. An example of
DAG is IOTA technology which is already believed to be resistant against quantum
computing attacks. However, DAG should have a substantial amount of traffic before
it can start working. Greatly reduced traffic will make DAG vulnerable to attacks.
Solutions based on coordinators have been suggested to get a DAG system up and
running. The effectiveness of the suggestion of using coordinators is still under
debate.
It should be noted that there are a number of differences between DAG and
blockchains. First, DAG is blockless. In DAG, transactions validate each other
and transactions are not assembled into blocks. On the other hand, blockchains
assemble transactions into blocks. Secondly, DAG is more scalable. In fact, DAG
is infinitely scalable in theory. This means that the performance of DAG will
not deteriorate as new transactions are added to the graph. On the contrary,
blockchains will experience slowdown when the blockchain gets longer. DAG does
not require mining as well. Therefore, DAG uses much less electric power. However,
blockchains based on PoW use a lot of electric power.
Another difference is that DAG does not charge fees whereas blockchains
do. Furthermore, DAG is much faster because it does not require mining and
validation is done in parallel and not in a chained manner. Finally, DAG is quantumproof. Blockchains are susceptible to quantum attacks because they are based on