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How DAGs Will Solve the Blokchain Scalability Problem


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Just as the range of social networks has expanded to a number of different platforms with different underlying attributes and capabilities, crypto platforms will proliferate for every kind of use case and requirement. Crypto technology is almost synonymous with blockchains, but this is rapidly changing and with important implications.

The DAG is coming

The central concern of cryptocurrency technology is preventing a very simple but fundamentally threatening activity: double-spending. This is where an actor uses the same funds twice, paying for multiple transactions thus defrauding the payees. Viable currencies need to be scarce as a token of value; in order to ensure scarcity, conventional currencies are centrally issued while cryptocurrencies rely on a cryptographically protected, collectively-shared ledger as a unique source of truth.

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Blockchains achieve this by (as the name suggests) linking blocks of transactions together in an immutable chain of information that is duplicated on each node of the network. This is as resource and computation intensive as it sounds; it is literally like needing a copy of everyone’s bank data on your computer in order to make an online banking transaction. While this works well enough for simple payments, it becomes prohibitively resource-intensive when more complex and novel applications (which we’ll discuss later) come in to play.

The solution that was found was to switch up the design of these ledgers to make them more efficient. The cryptoshpere is constantly expanding and tinkering to tailor hybrid platforms to specific use cases.

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One breakthrough is called Directed Acyclic Graphs (DAGs), a concept already used in network theory. “Graph” is just another name for a network or web of nodes, “Directed” means that the connections between 2 nodes are one-directional, meaning that interactions (information, value, etc.) is defined as a one-way relationship between nodes, and “Acyclic”, could be explained as “moving from node to node by following the edges, you will never encounter the same node for the second time”.

This is a little complex, but complexity is actually the point of this data structure; instead of requiring that every node take full participation in recording and processing every transaction, DAGs rely on complexity and interconnectedness to create the cryptographic walls that prevent double-spending and…

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