The concept of a DAG cryptocurrency (directed acyclic graph) was first introduced in 2015 by Sergio Demian Lerner in his paper outlining his concept for a digital currency called DAG coin. DAG technology is an alternative system that allows cryptocurrencies to function similarly to those that utilize blockchain technology without the need for blocks and miners.  

Let’s take a quick look at a technical definition before we break it down. A DAG is a finite directed graph which does not have directed cycles.  It consists of an infinite amount of edges and vertices, each edge being directed from one vertex to another without having to start at any one particular vertex or follow a consistent or directed sequence of edges to loop back to the same vertex again.

                       Blockchain                                                   DAG

Now let’s explain using the ‘efficient teacher’ analogy. As we all know, grading  papers can be a considerable workload for any teacher. If the teacher (let’s call him ‘Vitalik’) has 5 classes and approximately 150 students in total, he may have to grade upwards of 150 to 300 papers or assignments per week. Rather than spend a significant amount of his time grading these papers from scratch, Vitalik decides to hold a peer-review session in each class, once a week, for students to grade each other’s papers. Each new student who turns in a paper must review the paper of another student who previously turned in a paper during the same class period. Now, all Vitalik has to do is quickly review each peer graded paper as they are turned in to ensure that students are grading fairly. The occasional error is inevitable, but Vitalik is on the lookout for such errors, such as a miscalculation by a student, and he will manually take care of them as they present themselves.

A DAG is very similar to this peer grading system. Instead of having large mining firms confirming transactions via proof of work, DAG employs the very transactions that users make in order to confirm each other’s transactions. DAG is essentially  a distributed peer-confirming system at scale. The more new transactions on the network, the more the available transactions to confirm previous ones. This also means improved scalability.

So, why DAG over traditional blockchain? While there’s no doubt about how innovative Blockchain technology is, and the potential it has, we do have to acknowledge that it isn’t the answer to every problem in the world.

Every technology has its own share of limitations, and it’s no different with blockchain. Here are some of them:

Blockchain technology and the usage of block confirmation leads to scalability issues. Forks on the bitcoin blockchain like BCH, SegWit2x etc are aiming to solve this issue, however, if these issues are unsolved, we’ll see rising issues with transaction failures, high transaction fees, and long transaction times.

Hardware scalability:
With the increase in popularity of blockchain and cryptocurrencies, the cost of hardware is on the rise. This is also raising the cost of entry to mining, thereby making it centralized.

This is a common issue in all blockchain based systems. The basic goal should be that system should be able to handle the volume of transactions without choking.

Proof of Work Consensus Mechanism
Traditional crypto currencies are experiencing rapid centralization which is making individuals within the network powerful and able to take advantage of the system.  This is particularly apparent with bitcoin.

The infamous 51% attack and the advancement of quantum computing. Currencies such as Bitcoin run based on cryptographic algorithms or puzzles that are hard to solve with current hardware. As tech advances, how obsolete will this become? This isn’t anywhere in the near future, but with the advancement in quantum computing, solving that algorithm will become easier.

The Developer Learning Curve:
Various protocols require engineers to learn a new language, like Solidity for Ethereum or Ivy for Bitcoin. Many developers are not going to want to take the time to learn a new language when they have spent years in other coding languages – especially within enterprise organizations.

It’s clear that there is a lot of room for improvement when it comes to traditional blockchains, but how does a DAG differ from a traditional blockchain, and what are the advantages? To explain that, let’s look at another metaphor, ‘The Party’. In more traditional blockchains, the party host (Let’s call him Satoshi) provides the food/drinks (i.e resources) for the party. When the guests arrive, the amount of resources can only accommodate so many people, the portions are small, and then everything eventually runs out and Satoshi’s party ends. Think of Constellation DAG like a potluck (a party where everyone brings food/drinks). With every added guest (node to the network), the more resources the party has to keep going. This is the nature of a DAG, and of Constellations approach to scaling.

For more in depth information on Constellation visit the site and download the Whitepaper:

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Check out our CEO Brendan talking about some of the scaling issues of blockchain:

For more information on the DAG implementation used by Constellation, check out our Whitepaper:

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Consensus/Proof of Meme overview

The term meme was first introduced in 1976 by Richard Dawkins, and refers to a unit representing an imitable idea or behavior that can be spread. In our case, it represents benevolent behavior across Constellation that is rewarded and should be imitated to improve a nodes overall reputation within the system.  

In short, as each device on our network acts as a node, and the behavior of each individual node works along with other nodes to ensure the success of the greater network. For more in-depth information on the topic, check out our video featuring our CEO, Brendan Playford, and CTO, Wyatt Meldman-Floch, entitled “Reaching Consensus – Proof Of Meme”:

Anything about constellation or the Crypto space in general that you want us to tackle?  Let us know in telegram or in the comment section.

See you next week!