Bitcoin utilizes what is known as “blockchain” technology. Blocks of transactions are confirmed on the network by miners who compete to solve complex math problems, and receive a financial reward for doing so.
Dagcoin employs a completely different method of confirming transactions on its network — an alternative to blockchains. Important differences in the total supply of the currency, the pricing of transactions, and the speed at which transactions are completed also make Dagcoin distinct from Bitcoin.
What is Dagcoin?
Dagcoin employs a unique framework called Directed Acyclic Graph (DAG) to confirm transactions on its network. It is designed to address some of the fundamental issues facing the widespread adoption of cryptocurrencies that rely on blockchains, namely scalability and transaction costs.
Dagcoin’s network allows for transactions to be executed concurrently, thus eliminating the delays that can occur on Bitcoin’s network due to a high volume of transactions.
I’ve never heard anyone say that they wished their financial transaction would take longer. High speed sending and receiving of funds at a reasonably low cost is one of the goals of cryptocurrency in general. So when Dagcoin claims almost instantaneous transactions, it will pique many users’ interest as a viable option.
One of the major criticisms of Bitcoin in recent years is the electrical power required to keep the network running continuously. Networks that use a Directed Acyclic Graph model address this issue, as they tend to be more energy efficient and thus more sustainable.
When looking to scale up your network to handle as many transactions as possible, energy consumption is a factor that cannot be ignored.
Consensus Mechanisms – How Transactions are Confirmed
The way transactions are confirmed on the Bitcoin network is referred to as “Proof of Work” or consensus proof. Individual miners support the network by solving complex cryptographical problems to validate new blocks on the chain, creating a network with extremely high security and resistance to malicious attacks.
Dagcoin, on the other hand, does not require miners and is therefore is not subject to the issues and individual interests that miners bring to the equation. It is easiest to view DAG systems like a web formation, with many interactions occurring in parallel.
While this method of confirming transactions leads to speedier and cheaper transactions, there is a trade-off — it sacrifices some of the security and immutability that traditional blockchain technology is known and praised for.
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Dagcoin vs Bitcoin – Nature of Use
Due to the slower processing times and higher costs involved with sending transactions over the Bitcoin network, BTC has increasingly been viewed as a store of value during times of financial uncertainty, or as an investment vehicle.
Dagcoin, alternatively, aims to become a digital currency used for frequent and common purchases and payments.
According to Dagcoin’s official website, all transactions of Dagcoin, regardless of size and activity on the network, are priced at a fixed rate of around 0.0005 Dagcoins.
Knowing the transaction fee is fixed gives users peace of mind and clarity when considering each transaction. The cost of sending and receiving Bitcoin is a slightly hazier picture. The transaction cost may increase during times of network congestion and will increase when sending large sums.
Dagcoin.org also states that transactions are typically confirmed within 30 seconds on average. The time required for a transaction to be completed on Bitcoin’s network, much like the cost, is not immediately obvious to the user.
These differences illustrate why Dagcoin is pushing to be the type of cryptocurrency one might actually use to buy a meal or cup of coffee. Bitcoin has seemingly come to be viewed as a sort of “digital gold” that can be used strategically as a safe haven or to hedge against other types of financial assets.
Dagcoin seeks instead to be an enhanced version of whatever traditional FIAT currency you are accustomed to using on a daily basis.
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Total Coin Supply & Inflation/Deflation
New Bitcoin is always being created as a reward for the crypto mining that confirms the transactions on the network. However, these rewards are structured to diminish over time and the total supply of Bitcoin will not exceed 21 million coins in the future.
The total supply of Dagcoin is completely fixed at 9 billion Dags.
Bitcoin‘s position as the flagship of the cryptocurrency sector certainly keeps the price of Bitcoin at an elevated value. However, the supply is relatively low compared to other cryptocurrencies and significantly lower than the total supply of Dags.
Especially considering many Bitcoin wallets have been lost to landfills, as well as the fact that many Bitcoin transactions have been sent to incorrect wallets, leaving the funds inaccessible, the circulating supply of Bitcoin will decrease as time goes on.
These instances of lost or mis-sent funds will also apply with Dagcoin as the frequency of its use increases, and will lead to a similarly slowly shrinking supply and slight deflationary effect.
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Cryptocurrency Communities – Choosing Allegiances
Up to this point, early adopters and investors in cryptocurrency have engaged in a sort of tribalism when it comes to the assets they own and promote to others.
Loyalty and belief in the technological properties of certain coins, and celebrities who happen to endorse them, have had a serious impact on price action and investment in Bitcoin and other widely held cryptocurrencies.
While building a cult following similar to the one enjoyed by Bitcoin or Dogecoin does not explicitly appear in Dagcoin’s published plans, growing a supportive community of users is necessary for any budding crypto-coin. It is especially important if the goal is to encourage people to use the coin for everyday purchases and payments.
There are often several Bitcoin ATMs accessible in major cities, but most vendors do not accept Bitcoin directly.
Dagcoin’s website does provide a search option to locate vendors who accept Dagcoin, but getting large multinational retailers on board could be tricky, considering the number of other payment options currently available.
Decentralization vs Centralization
One of the points of contention between Bitcoin’s blockchain framework and the DAG framework is that the ability to use a DAG method of confirmation means they are not as “decentralized” as networks that employ blockchain.
The use of an overarching authority, such as a centralized node that can be used to intervene in the network to address a major problem that has occurred, leads to uncertainty about how that entity will manage the issue.
In a truly decentralized network, there is no such authority that can intervene when a programming error or some technical issue with the network has come to light. The authority that exists on the network is divided evenly among the miners or validators and there is no single point of failure or target for a malicious attack.
Being more decentralized translates into better overall security and eliminates the possibility of an unfair intervention by a governing body.
Is Dagcoin a real cryptocurrency?
Although Dagcoin differs greatly from other more widely known cryptocurrencies like Bitcoin, it is indeed as real as any other cryptocurrency. It can be used to buy products and is also a way to send money around the world quickly and cheaply.
Where can I use Dagcoin?
Here you can do a search for all merchants who are currently accepting Dagcoin. It can be used in some restaurants, clothing shops, and grocery stores, as well as some services and automotive businesses.
Is Dagcoin a better investment than Bitcoin?
The long-term investment potential of Dagcoin in comparison to Bitcoin is difficult to pin down. Dagcoin does have certain advantages when the goal is to transfer funds quickly and economically, but the probability of mainstream adoption is unknown. Also, the primary goal of Dagcoin is to be used for payments, like a currency, not necessarily investment.
Can I sell Dagcoin?
A project called Dagcommunity, which will act as a medium between Dagcoin buyers and sellers, is currently in development. Remember, you can always spend your dagcoins at businesses that accept it.
Is there a coin better than Bitcoin?
This question could be debated at length since there are many factors that go into determining which coin is best for which specific use case. Bitcoin has a massive user base and trades indirectly on traditional financial exchanges. Its competitors have a long way to grow before threatening Bitcoin’s cryptocurrency market dominance.
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Final Thoughts on Dagcoin and Bitcoin
When considering the pros and cons of Dagcoin versus Bitcoin, there is really no reason to pick a favorite when trading cryptocurrencies. Dagcoin’s strength definitely lies in its fast and cheap processing of transactions.
Although the security may not compare to that of Bitcoin, holding a modest sum of Dagcoin for the purpose of sending cash quickly may be a worthwhile option.
Bitcoin currently retains its status as the flagship of crypto and a logical option if your intent is to invest in cryptocurrency as a developing sector of technology. Whether or not it retains its cult status in a sea of competing crypto coins remains to be seen.
Hopefully, this article has been instrumental in helping you answer the question: “Do you like Dags?”
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