DAG Cryptocurrency: What It Is and Why It Matters in Web3

When you think of blockchain, you picture blocks chained together—but DAG cryptocurrency, a type of distributed ledger that uses a directed acyclic graph instead of blocks to record transactions. Also known as Tangle, it’s the backbone of networks like IOTA and Byteball, where every transaction confirms others instead of waiting for miners. This isn’t just a technical tweak—it removes bottlenecks. No blocks mean no waiting for confirmation. No miners mean no high fees or energy waste. That’s why DAG is gaining traction in places where speed and low cost matter: IoT devices, micropayments, and cross-border transfers.

Unlike Bitcoin’s linear chain, a DAG lets transactions branch out in multiple directions, forming a web of approvals. Each new transaction must validate two previous ones, making the network more secure as it grows. This is called consensus without mining, a method where users validate transactions themselves instead of relying on centralized miners or validators. It’s the reason why a DAG network can handle thousands of transactions per second while Bitcoin struggles with seven. And because there’s no block reward system, fees are often zero or near-zero—perfect for small, frequent payments like paying for a coffee with crypto or sending data credits between smart sensors.

But it’s not all smooth sailing. DAG networks have trade-offs. They’re vulnerable to low participation—if too few users are actively confirming transactions, the network slows down. That’s why projects like IOTA had to launch centralized coordination nodes early on. And while DAG avoids the energy problem of Proof of Work, it doesn’t always solve the centralization issue. Some DAG chains still rely on a small group of trusted nodes, which defeats part of the decentralization promise.

You’ll find DAG in use cases where traditional blockchains fall short: supply chain tracking, renewable energy grids, and even vehicle-to-vehicle communication. It’s not meant to replace Bitcoin or Ethereum—it’s meant to fill the gaps they can’t reach. The posts below dive into real projects using DAG, how they compare to conventional blockchains, and which ones actually deliver on their promises. Some are thriving. Others are dead. You’ll know the difference before you invest.