DAG stands for a directed acyclic graph. This term refers to an energy-efficient data structure introduced to address the problems associated with traditional cryptocurrency systems that rely on blockchain technology. The term “directed” means that transactions are one-directional, while “acyclic” means that there is no looping back to the same node.
Instead of having the usual linear chain of blocks, a DAG comprises interlinked vertices and edges that form a graph. While traditional blockchains use validators to verify transactions, every new transaction in a DAG references a previous transaction for verification. One notable advantage of DAGs is that the transaction speed is high because there is no need to create new blocks.
Moreover, the absence of crypto miners means zero or low transaction costs. DAGs also solve the scalability problems traditional blockchains face, making it easier to develop systems and protocols that can process more transactions even when more users transact on the network.
