What is DAG Technology? Advantages and disadvantages of DAG Technology

In the last year, a new branch of blockchain-based technology has emerged

Directed Acyclic Graph (DAG) blockchains. This new technology seeks to improve upon the blockchain that Bitcoin introduced in 2009. Most notably, DAG blockchains can settle transactions much faster than traditional blockchains.

DAG Technology

Ternio is currently developing a DAG blockchain platform that will be used to tokenize advertising and eliminate inefficiencies from digital advertising. In this guide, we will discuss what DAG is, how it works, and how it’s different from traditional blockchains.

The future is here, and it is called DAG. Directed acyclic graph (DAG) technology has been around for a while now, but it has taken significant time to get this far. The concept was first introduced in the year of 2008 by a man named Dr. Aytekin Ozdemir, who basically explained how DAG would work in a simple explanation. He stated that “the directed acyclic graph is a data structure that maintains a set of transactions and their dependencies.”

DAG Technology

DAG is considered to be more advanced than blockchain technology because it can process millions of transactions per second whereas blockchain technology only processes a few dozen transactions per second at best. This makes DAG the ideal candidate for handling smart contracts that are processed simultaneously by machines rather than through blockchains that need transaction confirmation from miners before they are verified.

DAG Technology

The power of DAG is not limited to just processing smart contracts alone as it has also been used for dApps as well. One of the most popular DAG cryptocurrencies is IOTA, which was created in 2015 and uses a unique method called Tangle where users are rewarded for validating transactions on the network by way of micro-payments. This method of operation allows IOTA to scale seamlessly with new nodes

Defining DAG Blockchains

The name “DAG” might sound familiar if you’ve been around the crypto world for any period of time. That’s because DAG (or Directed Acyclic Graph) is actually an older version of blockchain technology. The first peer-to-peer distributed ledger was actually a DAG rather than a blockchain—Bitcoin was the first blockchain, while Tangle was the first DAG. The primary difference between the two is that Bitcoin uses blocks and Tangle doesn’t.

DAG Technology

Key features of DAG include


DAG is infinitely scalable, unlike the current blockchain solutions which have limits on how many transactions per second can be processed.

Fast transaction processing time

 The transaction confirmation times are measured in seconds, not minutes or hours as with blockchain solutions.

Less energy consumption:
Since there are no miners there is no need for proof of work or consensus algorithms which translate into lower energy consumption.

DAG is still under development and it will take some time until it is ready for use in production systems but once this happens it has the potential to change the way we think about blockchain technology.

Advantages of DAG technology

Directed Acyclic Graph is an emerging technology that is being developed for the purpose of building a new kind of computational model. It is based on blockchain technology which has been around for 5 years now.

A directed acyclic graph is a relatively new technology for digital data processing which has many advantages over the traditional blockchain technologies. DAG is a database structure that does not require mining, blocks, or other hard computing problems as proof of work consensus mechanism.

DAG Technology



The Bitcoin network is limited by its architecture to around 7 transactions per second. The Ethereum network is able to perform around 15 transactions per second while the IOTA network performs over 1000 transactions per second. This makes IOTA the fastest distributed ledger technology in existence today.

No mining

The IOTA network is also sustainable because there is no mining involved nor any fees for transactions.


IOTA’s hash function Curl has a built-in quantum immunity which means it is ready for the future.


With IOTA the network will always be secure and available because it does not depend on any single entity but instead is a self-organizing network that requires no fee to participate in it and to use it in whatever way you want.


With this technology, you can develop your own applications and easily attach them to the main decentralized IOTA network.

DAG Properties

DAG technology solves the transaction problems of the blockchain through a proprietary architecture. Instead of having blocks that are generated sequentially and thus an inherent “blockchain“, DAG uses parallel processing to allow for greater scalability. This means that as more users join the network, more transactions can be processed at any given time.

 The traditional blockchain has long been plagued with these problems:

 Scalability issues

Bitcoin can handle less than 7 transactions per second and Ethereum 15 per second while Paypal handles 193 transactions per second on average

DAG Technology

 Inability to scale issues

 increasing block size will cause centralization (big server farms)

DAG Technology

 Immutability issues

 If any transaction is invalid, it needs to be reversed which is a problem if there is no central controlling authority. If a hacker gains access to 51% of the network power they would be able to reverse all transactions and double-spend coins.

DAG Network

The DAG architecture provides a high-speed ledger and uses a consensus protocol, allowing it to scale. A DAG is a directed graph data structure, where the edges have a direction. A DAG is also a topological sort of data structure, meaning that it has some useful properties relating to parallelism (if you want to know more about the details check out this paper).

DAG Technology

The DAG network is formed in several phases:

1. Each node on the network makes an announcement that it wants to participate in the network.

2. The next node makes an announcement that includes the previous announcement and adds its own announcement. This is done repeatedly until all nodes announce themselves at least once in the chain.
3. Each node receives these announcements and can verify that they are all connected properly through their first pre-specified node (node 0) and their second pre-specified node (node 1).

4. When there are enough pre-specified nodes, each node chooses another random node (in some cases nodes with high reputation scores may get chosen before lower reputation nodes). This continues until every node knows about every other node.
5. Finally, each node sends a small number of funds to its neighbor nodes and receives funds from them in return so that each.

DAG Technology

Disadvantages of DAG Technology

There are some disadvantages of DAG technology:

Energy consumption

As we know, the hash power is higher in mining dPoW, which means that more computing power is needed. In mining PoW, most of the energy is used to maintain the network. The cost of maintaining the network is much lower in PoS because it doesn’t need to solve hash collisions and thus requires less energy.

DAG Technology


 In POW-based systems, miners with more hash power have more chances to get their block recognized by other nodes, so they are likely to earn the block rewards. But in POS-based systems, even though you have more chances to win the lottery block, there is no guarantee that you will win, so it may not be economical for high-hash-power miners to participate in the consensus mechanism anymore.

No incentive for developers

 Because POW provides an incentive for developers of mining equipment, as long as a new piece of mining equipment can be developed (with higher hash power), it can get a larger share from the entire reward pool. However, from the perspective of investors and developers who invest in POS projects (transaction fees), their income may not increase proportionally with increasing transaction fees because there is no direct correlation between them.


There are many different types of technology but this is an emerging technology that will change the world as we know it. There are many innovations that currently use Blockchain and are growing exponentially.

It is important to understand what this technology is and how it will change the world as we know it.

DAG Technology

How many of you have heard of a Blockchain? This technology is new and interesting, but still very much in the developing stages. A blockchain is a decentralized and distributed ledger that records transactions across many computers so there can never be any dispute about the legitimacy of any transaction that has been made because everyone on the network knows about every transaction that happens on the network. It’s a way for individuals to send money across borders without going through a bank or any centralized institution like Paypal, which takes a percentage out of every transaction they process.

DAG Technology

I’m sure this sounds great, but there’s more to it than meets the eye. How do these transactions happen? In order to start a transaction, you need two inputs. Your own selected pattern works with your unique signature and then broadcasts it to the network so everyone can see it, but only you have access to spend from your public address.


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