A Directed Acyclic Graph (DAG) is an advanced, cycle-free network structure that is used in blockchain technology to achieve high scalability and efficiency by enabling parallel transactions and potentially overcoming the traditional limitations of sequential blockchain systems.
While a traditional blockchain is a sequential chain of blocks, each referring to the previous one, a DAG enables a parallel structure where different transactions can occur simultaneously. That is, in a DAG, nodes can refer to multiple other nodes, resulting in a web-like structure.
DAG-based cryptocurrencies, like IOTA or Nano, use this structure to increase scalability and eliminate transaction fees. These systems are designed to become faster and more efficient the more users they have - a significant advantage over traditional blockchains, which tend to become slower and more expensive the more users they have.
Although Directed Acyclic Graph (DAG) networks can offer substantial advantages, they are also more complex to implement and secure than traditional blockchains.
