DAG blockchains are perceived as interchnagbale as both have distributed and decentralised technologies. They use a distributed ledger to record transactions in different ways. And we’ll tell you how they are different.

A DAG, or directed acyclic graph, is a data modelling technique used in cryptocurrencies. In contrast to a blockchain, which is made of blocks, vertices, and edges, crypto transactions are represented as vertices. These transactions are stacked one on top of the other.

Blockchain is a digital, decentralised public ledger that records every data transaction on the network. Blockchain enables us to transport data from one network node to another in real-time, correctly and securely. With the capacity to track orders, payments, and more on the network, it has begun to change the world of transactions in a new way.

Simply defined, whereas a blockchain system resembles a chain, DAG’s system resembles a graph. Due to its efficiency in data storage and online transaction processing, the DAG architecture is now viewed in the industry as a viable future alternative for blockchains.

DAG, like blockchain, is made up of a network of distinct nodes that verifies transactions. Before a new transaction can be appropriately logged onto the network, it must be confirmed by at least two previous transactions. More transactions are confirmed and recorded as more are submitted, culminating in a distributed network of doubly-verified transactions.

Because there is no block time in DAG, the transaction process is quick. Because of block time, the blockchain is slower than DAG.

Unlike the blockchain approach, there’s no need for miners in DAG to verify transactions. Human interaction is rendered unnecessary because the  “parent transactions” affirm the legality of a later transaction, resulting in an exceptionally faster process: not needing the approval of miners eventually means transactions are completed virtually instantly.

Furthermore, no miners also mean no miners’ fees. Therefore, the actual transaction cost is low. Another point worth mentioning is that this low-fee structure allows DAG to perform microtransactions, a crucial feature absent in blockchain.

You can consider DAG as blockchain’s alternative due to the latter’s scalability problems. You can think of DAG as the third step in the evolution of ledgers. First, centralised ledgers with a single gatekeeper. Then blockchains required a few gatekeepers to admit transactions. Finally, there are no gatekeepers in DAG; users contribute their transactions.