Hashgraph is a DAG.

DAG vs Blockchain as DLT

Understanding the difference between DAG vs blockchain is essential for keeping up with the evolving distributed ledger technology (DLT) landscape. Cryptocurrency, smart contracts, and blockchain technologies revolutionized the way people see finance many many years ago. DLT is not new. Nor are blockchains. 

What is newer in DLT and can do far more than most blockchains, are directed acyclic graphs (DAGs). 

DAG's offer a promising new path for distributed ledger technologies. They are next level tech. 

It's unlikely that the new DAGs will totally replace blockchain anytime soon. Even so, DAG is an exciting alternative for enterprises, larger businesses and other users that need predictable fees and fast transaction speeds. Many astute early adopters are choosing DAG over blockchain. 

A Directed Acyclic Graph (DAG) is ONE emerging form of Distributed Ledger Technology (DLT). 

A "blockchain" is a completely different form of an older DLT and because it has been around the longest, most people erroneously think that is all a DLT is. 

They equate and hear "blockchain" IS DLT. Wrong, wrong, wrong. 

DLT is the over arching technology of which blockchain is ONE style.

It is a bit like saying you'd like a "hamburger" (The DLT) and automatically equate or assume or think "McDonalds" (which is only ONE choice of Blockchain as THE DLT) when there are literally thousands of choices of possibly more convenient or better value or cheaper or faster or healthier DLTs (hamburgers)

And then of course you can argue is that even much of a "real food"/ "real DLT" choice anyway? 

Healthier DLT or Healthier hamburger... but let's not go there... for now. 

The important point is there are many rapidly emerging choices of "technologies" entering and improving the DLT field almost daily. Who makes the governing choices and restores transparent trust to a re democratized internet? Can any one really do that? Is any one new tech or one way of doing business or one way of gaining market share able to help web3.0 emerge? NO WAY! Web3 is emerging and growing organically WITH many individuals paying attention, asking better questions, contributing to a more trusted community and essentially helping each other learn and grow and ultimately EARN a decent living for each of those contributors and individual owners (not obscene corporate and CEO profits and salaries with tight walled garden centralized data control and ownership as witnessed in web2,0)  

Hopefully web3.0 and DLT in particular can contribute positively to also solving some of our most pressing issues, like global warming. The early signs with ESG are promising but there is so much more to be achieved if any of this "tech" is to be sustainable for the next 100 years. 

DAG is ONE of the newer DLT's, that offers an alternative to blockchain, even though DAG is not exactly revolutionary or a "totally new flavour" tech either. It is simply offering an improvement in some DLT areas. There will be newer solutions emerge and that is the inherent beauty of this quickly evolving web3.0 community landscape. People care and are creating real world value and solutions that are NOT tied up (locked up?) in the hands and vaults of centralized corporate owners. 

DAG simply does some things (better/cheaper/faster/more securely) that blockchain can't. 

Older tech blockchains (like "proof or work" and "proof of stake") have many functional limitations that emerging newer DLT's (like DAG of which Hedera's hashgraph is ONE form) do not. 

Hedera's hashgraph packages transactions into blocks, but unlike on a blockchain, all hashgraph blocks are added to the distributed ledger, regardless of their order or circumstance.

Instead of a winner-takes-all race to confirm the blockchain data, hashgraphs are all used to create a more complete picture of the network’s transactional data. 

DAG is allowing a far BIGGER, more encompassing and more transparent picture to emerge, which leads to increased trust. 

That resulting more trusted DLT structure is called a Directed Acyclic Graph (DAG). Of which Hedera's "hashgraph" is one choice. 

So hashgraph is a DAG, not a blockchain as DLT. Keeping up? Good! 

One of the primary advantages of DAGs over blockchains is that they can reduce the data size per transaction, thereby lowering costs, increasing speed, and ultimately achieving higher levels of scalability. 

In contrast to a blockchain, which groups transactions into blocks and orders them in a linear fashion, a DAG is a network of individual transactions that are only connected to each other — without blocks. 

While blockchains require block validation, in a DAG, individual transactions provide validation for each other. All network users in a DAG are simultaneously miners and validators, and therefore transaction fees tend to be much lower than those common to public blockchain networks.

The following is from Hedera's own excellent DLT learning resources

How does blockchain work?

Blockchain is a distributed ledger technology that can record and store data in a publicly-viewable, immutable chain. Among their many functions, traditional blockchain networks enable users to send tokens from one wallet to another. In most cases, each new transaction is validated by global network nodes that record transactions. The nodes confirm the transaction is valid by comparing the information against the transaction history.

Blockchains use two primary consensus algorithms to approve and validate transactions. 

Some networks use a proof-of-stake (POS) consensus that lets network members lock their funds (which is their stake) to "double-check" the confirmed transaction before adding a new block. 

Some older networks use a proof-of-work (POW) consensus mechanism, resulting in higher fees and energy usage.

The chunks of immutable data stored in the blockchain database are known as blocks. 

Blocks contain information about numerous existing transactions and can be viewed by anyone at any time. Transactions with higher fees are usually prioritized over those with lower fees if the blockchain uses the POW consensus mechanism.

Blockchain is often used for decentralized finance, (defi) but the technology has countless applications. 

For example, it can be used to track physical goods in each phase of the supply chain. 

Additionally, blockchains that support smart contracts have numerous medical use cases, such as insurance claim processing and patient data storage.

How are directed acyclic graphs (DAGs) used in a distributed ledger?

Traditional graphs consist of edges, or lines, connecting pairs of vertices with no defined direction.

Directed acyclic graphs have vertices (which are the nodes) and edges that never form closed loops. DAGs require topological sorting that ensures nodes are visited only after prior dependencies have occurred. 

Still, many DAG-based ledgers can develop nodes simultaneously, resulting in fast transaction throughput and predictable fees.

Like blockchain, DAG ledgers can support smart contracts, enhancing their usefulness for many industries. 

DAGs also have publicly-viewable, immutable transactions and are applicable to numerous industries.

To accurately compare DAG and blockchain, you must examine each technology's functionality, strengths, and weaknesses. 

The two methods are similar in many ways, but key differences set them apart.

Reaching consensus

DAG-based ledger nodes reach consensus significantly faster than blockchain networks. 

For example, Hedera uses a gossip protocol that transmits data at lightning-fast speeds. 

When a node receives new information, it immediately shares it with another node. 

The two nodes each choose another node randomly and transmit the newly learned information. 

The four nodes then choose four new nodes and share the information. 

This process continues with the number of nodes exponentially growing each time.

On the other hand, blockchains create one new block at a time, regardless of whether they use POW or POS. Still, it's important to note that POS blockchains are typically faster than those using the POW consensus mechanism.

Transaction speed

Blockchain transaction validation requires the creation of a new block, and since they can create only one block at a time, speed is often lacking. 

DAG-based ledgers' remarkable consensus mechanism results in a faster transaction speed. 

Since DAGs' nodes are developed simultaneously, transaction speeds are almost always faster than blockchain transactions.

Transaction costs

DAGs are often cheaper to use than blockchains. 

For example, a Hedera transaction with one signature costs around $0.0001, although these fees are subject to change. The same trade on the Ethereum network could cost around $0.90 on the low end. 

The low fees associated with DAG-based ledgers make them a more sensible option for large corporations or anyone that does a high volume of transactions.

Degree of decentralization

Blockchains are often easier to decentralize than DAGs. 

Hedera's hashgraph consensus mechanism relies on a committee of up to 39 nodes. 

It is run by a Global Governing Council of up to 39 well-known corporations. 

Compared to Ethereum's roughly 4,500 active nodes, it could be argued that Hedera is less decentralized. 

Still, according to Coin Telegraph , around half of the active Ethereum nodes rely on Amazon Web Services. (and who owns AWS? who you trust to store and "own" your data?) 

Similarly, most new transactions on the Bitcoin network are validated by a few robust mining pools, so it isn't as decentralized as one might think.

Scalability

Because DAGs can process more transactions per second with lower energy and fee requirements, they are often seen as more scalable than blockchain. 

DAG-based ledgers are specifically more scalable than typical blockchain networks, as they don't rely on mining or a steep increase in the number of active nodes. An increase in daily transactions can have an adverse effect on POW ledgers. 

Alternatively, DAG ledgers can easily handle increased transaction volume.

Popularity

As it stands, blockchain is still the most commonly used technology for digital ledgers. 

Hedera, IOTA, Nano, and a few other ledgers are currently the only projects using acyclic graph technology. Still, we may see that change over time. 

DAGs are seen by many as an ideal replacement for blockchain, thanks to their enhanced data structure, increased throughput, ease of use, speed, and low fee structure.

Energy use

DAG-based ledgers like Hedera use significantly less energy than all POW and many POS blockchains. 

To put it into perspective, a single Hedera transaction consumes around 0.0001 kWh, which is about 605,000 times less energy per transaction than Ethereum required before switching to POS. 

Like Algorand, the Hedera Contract Service is carbon negative. 

On the other hand, popular POW chains like Bitcoin use around 250-950 kWh per transaction. 

Even POS blockchains like Tezos consume around 0.04145 kwh per transaction.

According to Ethereum co-founder Vitalik Buterin, Ethereum's switch to POS cut global energy usage by around 0.2%. If all blockchain systems were to switch to a DAG protocol, the energy savings would be even more monumental.

A step forward

DAG-based distributed ledgers are a promising step forward for digital currencies.

Hedera is one of the leading DAG ledgers and has numerous real-world applications. 

The gossip protocol is capable of quickly passing information through multiple nodes simultaneously.

Plus, users pay fees that are low and predictable. 

Additionally, Hedera is managed by many of the world's leading corporations, such as Boeing, Dentons, DLA Piper, Google, and IBM. (which may or may not be something "decentralized" DLT purists find appealing? But ultimately we choose to "trust" in anonymous nodes you DO NOT even know the voting or transactional history of, or "trust" in a 39 member transparent, elected and time limited "global governing council" The "decentralized" jury may remain out on that one for some time. Let's see...)