One of the biggest limitations standing in the way of cryptocurrency going mainstream is speed. Traditional financial systems like Visa are much faster and therefore less likely to get bogged down during periods of intense activity.

The Lightning Network protocol– Bitcoin’s answer to the speed problem– has sped up the delivery of small payments but struggles when the amount being transferred is greater than 0.04 BTC. In addition, Lightning Network payments can’t be made offline, and some worry that the protocol will eventually make Bitcoin more centralized.

Rather than attempt to speed up existing cryptocurrencies with add-on protocols, some blockchain developers have decided to come up with totally new solutions. Many are using DAG (Directed Acyclic Graph) technology to create cryptocurrencies that are faster, more scalable and cheaper to use. 

What is DAG?

The origins of how mathematicians discovered DAGs can be traced back to an 18th-century riddle about the Prussian city of Königsberg. The city had two islands, which were connected by seven bridges. The riddle asked: was there any way to walk over each of Königsberg’s bridges once and only once?

The answer turned out to be: no. Swiss mathematician Leonhard Euler determined that the layout of the city’s island and bridges formed an untraversable graph. Proving this spawned an entirely new branch of mathematics known as graph theory.

Hundreds of years later, researchers discovered that DAGs have many useful computer science applications. Certain types of electrical circuits and data compression technologies are built around DAG-based logic.

Several blockchain projects have borrowed concepts from graph theory to devise DAG-based cryptocurrencies. They are faster than ordinary cryptocurrencies and can function without miners and blocks.  

DAG-based cryptocurrency projects

IOTA

IOTA was launched in 2015, making it one of the first DAG-based cryptocurrencies to hit the market. Streams of interlinked and individual transactions called Tangles lie at the heart of IOTA’s transaction verification mechanism. The project’s ambition is to lay the groundwork for further development of the IoT (Internet of Things). In 2017, IOTA reported that the network can process 100 transactions per second with 250 nodes.

Most new cryptocurrencies borrow from Bitcoin’s SHA256 hash function, but IOTA decided to create its own hash function called Curl. In 2017, researchers discovered a serious vulnerability in Curl that could have led to a theft of IOTA’s cryptocurrency. Another problem with IOTA is that the small size of its network leaves it vulnerable to takeovers. To safeguard against this possibility, IOTA decided to create a centralized watchdog node called the Coordinator. Since the Coordinator is owned and operated by the IOTA Foundation, its network is not truly decentralized.

Conflux

Conflux borrows Bitcoin’s Proof-of-Work consensus algorithm, but uses a DAG-based structure to make it process transactions at a faster rate. The project’s co-founder Fan Long claims that Conflux can process up to 6,500 transactions per second with 20,000 nodes. Founded in 2018, the Conflux testnet is available now but the mainnet won’t go live until next year.

Since it is a Proof-of-Work cryptocurrency, Conflux is strong against DoS (Denial-of-Service) style attacks compared to cryptocurrencies that rely on other types of transaction verification mechanisms. In a blog post from earlier this year, Conflux’s developers outlined the weaknesses of Proof-of-Stake and explained their rationale for opting to go with Proof-of-Work instead.

SmartX: Taking DAG one step further with B-DAG

DAG-based cryptocurrencies are much faster and cheaper to use compared to their predecessors, but there is a key disadvantage to consider: potential security issues. Taking over a cryptocurrency like Bitcoin is nearly impossible because you need to control 51% of the network, but DAG-based cryptocurrencies are much more vulnerable. That’s where SmartX’s B-DAG algorithm comes in.

B-DAG combines the security of blockchain with the speed of DAG. Blocks called MCs (Master Components) spawn multiple partitions, all of which act like separate DAG-based sub-networks. These partitions process transactions until a time interval (called an Epoch) ends, at which point the MCs are cryptographically verified and linked. Two different layers of miners verify these MCs before their written into the SAT main chain: Proof-of-Work master nodes and Proof-of-Stake voting nodes. Since anyone in the world can become a SmartX miner, the verification system is entirely decentralized.

To learn more about B-DAG, please visit www.smartX.one. You can also join SmartX’s faucet campaign.

Disclosure/Disclaimer: This article is sponsored and produced by a third-party source and should not be viewed as an endorsement by ZyCrypto. Readers are urged to do their own research before investing or having anything to do with the company, goods and/or services mentioned in the above article.

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