Since the creation of Bitcoin in 2009, blockchain has continued to bring its own batch of evolutions in finance as well as in industry. However, it must be acknowledged that this technology is still struggling to find its place in common usage.
Hindrances to use
It could be argued that the democratization of blockchain-based payment solutions is simply a matter of time. This thesis, underpinned by the history of consumer technologies such as Internet, or previously the telephone, is based on the idea that large-scale deployment of blockchain is possible and sustainable. This assumption is false. Indeed, the reasons why Bitcoin mass adoption, or even Ethereum, has been hindered are due to the blockchain itself and not to the means deployed for its implementation.
To get around the technological impasse that blockchain represents, two ways are possible. One is to try to optimize the existing, that is to say to try in spite of everything to make the blockchain model work, by seeking optimizations, refinements, even if it means “twisting the model” or making important compromises. The other one consists in developing alternative systems, considering that the blockchain cannot be used for mass purposes.
While both of these options are now being actively explored, we will focus on the second one, more promising, particularly examining the DAGchain case.
While the technology in question is still little known, including in the blockchain ecosystem, it has already a few years behind it. The first major implementations date back to 2015 with IOTA. In 2016, Byteball is established. More recently, projects such as Fantom are following suit.
To get a quick idea of what a DAGChain is, let’s take a look at the differences from a “classic” blockchain.
From a blockchain integrity…
Among the different data structures, blockchains can be considered as simple lists where each element is linked to the previous one by a cryptographic method which ensures overall consistency. A linear register of chained transactions is thus obtained.
Blockchains make it possible to find any record stored in the history of this large register, but their sequential structure associated with heavy consensus mechanisms (proof of work, proof of stake…) are also what considerably slow down the debit of their transactions. These consensuses are unfortunately necessary to secure these chains in their present form where all transactions are grouped by blocks, added to the chain by miners.
Beyond these intrinsic limitations, the operation of a typical blockchain (Bitcoin, for example) is a process that encourages the formation of oligopolies. A majority of resources are sent to mining pools due to the increasing difficulty to successfully extract a block. By joining one of these mining pools, individual miners greatly increase their chances of profitability while sharing their profits with the entire cartel. This leads to a centralization effect that directly violates one of the main principles of Bitcoin and cryptocurrencies, while impairing end-to-end performance. These bottlenecks are harmful to the transactions velocity (up to 20 minutes waiting time for each transaction) and become a major hindrance for a mass adoption.
To a transaction flow integrity
The DAGChain is, as its name indicates, a Directed Acyclic Graph. Each transaction is confirmed by one or more transactions occurring after it.
On the other hand, the DAGchain uses a system of mutual validation between each transactions. The more new transactions there are on the network, the more transactions are available to confirm the previous ones. It is therefore essentially a large-scale distributed peer-confirmation system. This particular structure allows the DAGchain to free itself from any mining system, since the calculation of validations within the network is shared between the different nodes that compose it.
The interest of this calculation distribution is multiple:
- An increased velocity of the chain, with a number of transactions now going up to 25,000/sec against eg. 5 to 25/sec respectively within the Bitcoin and Ethereum networks;
- A reduced carbon footprint down to its bare minimum, since without mining, there is no need to push the hardware to its limits and thus cause premature obsolescence of many graphical cards, processors, network memory cards;
- A more robust security, since without minors, these nodes in charge of the calculations, there is no longer the possibility of organizing themselves into a cartel to slow down and take the network hostage. The DAG network structure also makes any attack so-called “51%” (or “majority”) impossible. These attacks have already allowed malicious groups to take control of the mining within blockchains and steal several hundred million euros across various projects.
Legacy and Future of the DAGchain
The future will show whether the DAGchain will tend towards more reliability and resilience at low energy costs. It is clear that this particular data structure is already part of the present and avoids several functional impasses inherent to the initial choices of blockchains. From the legacy of the blockchain’s founding fathers, it will have retained the distribution of end-to-end computing and the need for effectiveness to make it a relevant tool in daily use.
By Sayah El Yatim & Thibault Truffert - @retreeb Co-Founders
Translated from French into English by Julie Lenfant
SOURCES:
[1] On Scaling Decentralized Blockchains, 2016, 3rd Workshop on Bitcoin and Blockchain Research, Financial Cryptography 16
[2] Blockchain Technological Bottlenecks and Solutions, 2018, Pankhuri Bansal
[3] Le Bitcoin consomme plus d’électricité que l’Irlande, 2017, Grégory Raymond
[4] 2nd Global Cryptoasset Benchmarking Study, 2018, Cambridge Centre for Alternative Finance
[5] Bitcoin: A Peer-to-Peer Electronic Cash System, 2008, Satoshi Nakamoto
[6] Obyte — A cryptocurrency platform ready for real world adoption, plateforme DAGchain
[7] Retreeb: Ethical Payment Solutions, solution de paiement redistributif DAGchain
[8] Fantom — The Next Step In The Blockchain Revolution, 2019, Adam Boudjemaa
[9] Comment la logique financière des mécanismes de consensus freine le développement de la blockchain et des crypto-actifs, À paraître, S. Flacher, B. Schneider Le-Saoult et S. El Yatim, La Revue du Financier
