Blockchain-free cryptocurrency – a cryptocurrency that differs from Blockchain in many ways. Blockchain is a distributed database that holds information about all transactions in the form of blocks, which are protected against revision and tampering. Blockchain-free cryptocurrencies offer an alternative solution to this.
In DAG-based cryptocurrencies, each new transaction confirms one or more of the previous transactions.
Low confirmation speed of transactions is one of the biggest problems with using Blockchain-based cryptocurrencies. This is due to it taking a long time to process a block of transactions.
The process of confirming multiple transactions in DAG-based cryptocurrencies makes it possible to increase the security of payments and decrease the possibility of ‘double spending’.
The DAG-based cryptocurrencies are:
DagCoin – the first Blockchain-free cryptocurrency, created by Sergio Lerner in 2012. He was the first to publically suggest using DAG as a replacement for Blockchain. The project has never been completed.
Byteball – one of the modern Blockchain-free cryptocurrencies, which first appeared in September 2015. The project was designed by Anton Churyumov. Byteball is not based on Blockchain, but on DAG.
Byteball cryptocurrency is unreachable for mining. Almost all the coins available are distributed in the Airdrop. The money supply will remain fixed as the transaction fees are brought back into circulation.
Byteball has a fixed amount of fees equal to the transaction size in bytes.
In the network there are witnesses who maintain the health of the network and have a real identity. Each user can choose his own list of witnesses that he trusts.
No Scalability – numbers which affect scalability are defined before the start which is a problem for modern cryptocurrencies. Poor judgement by the person defining these variables may lead to problems occurring in the future.
IOTA – a modern cryptocurrency, based on Tangle, which, in turn, is based on DAG.
IOTA developers say that the DAG-based Tangle that they have developed solves the following problems of Blockchain:
Centralization of control – the occurrence which happens when control of the cryptocurrency is in the hands of a few miners. It may lead to improper use.
Obsolete cryptography – a problem for cryptocurrencies, which could result from the arrival of quantum computers in the near future. The calculating capability of these computers would be much higher than that of modern computers which are used in the operation of cryptocurrencies.
Inability to conduct micropayments –a problem of cryptocurrencies like Bitcoin, which results from the charges on transactions, which adds to the overall value of small payments.
Partition intolerance – an occurrence which takes place when part of the new transaction is processed separately from the other transactions. For example, when processing is carried out within a local network, with no access to the global one. In this situation, most of the transactions processed separately may be cancelled.
Discrimination of participants – an occurrence in modern Blockchain-based cryptocurrencies, connected to the strict division of roles between the participants in the operation of the cryptocurrency.
New micro-payment based data marketplace that’s powered by distributed ledger technology.
The MIOTA price is above one dollar for the first time due to the announcement of commencement of trading with IOTA on Coinone, its capitalization in compared to bitcoin is still only 2%. Ethereum was moving in similar proportions before its enormous growth.