IOTA, Hadera Hashgraph, and Nano are three similar solutions to the blockchain scalabilty problem. They all apply Distributed Ledger Technology (DLT) through the use of a Digital Acyclic Graph (DAG). The DAG is a data structure that is fast, free, scalable, and secure. It contains no blocks, no chains, and no miners. Unlike Bitcoin’s blockchain, that achieves consensus by having 51% of network agreement, the DAG needs only a few nodes for verification. This makes the DAG extremely efficient and fast. Each project employs its own custom version but with marked differences. These are the Tangle, Hashgraph, and Block Lattices.
IoTA’s version of the DAG is the Tangle. Similar in structure, the Tangle requires new transactions to check two previous transactions. In other words, it refers to them in order to proceed; this reference validates them. This methods reduces latency as new transactions contribute to the verification process instead of introducing more work and backlogs. IoTA is open-source and free. Although it is decentralized, the IoTA foundation still controls development. IoTA’s Tangle can theoretically achieve unlimited scalability and thus handle an unlimited number of transactions.
Hadera is an entirely different animal. For starters, Hadera is private and for profit. Haderas’ DAG, the Hashgraph, is patented and not open source. It is permissioned, meaning it’s up for lease but cloning its technology is prohibited. A council of 39 hand-picked companies governs the graph, which makes it semi-decentralized at best. The hashgraph functions are a variation of IoTA and Nano, where communication among nodes is a key component. The hashgraph’s nodes accelerate consensus of transactions by sharing information (gossip) with each other (Gossip about Gossip). And by a voting algorithm where nodes can guess the previous nodes’ vote so voting itself is almost unnecessary.
Nanos’ DAG is the Block Lattice. This system put transactions inside blocks that run on their own blockchain or “accounts”. A transaction crosses from one chain to another and it closes when the recipient acknowledges receipt and closes the transaction. In addition, the transactions perform asynchronously, meaning, the sending and receiving actions don’t have to occur at the same time. This system resists Sybil and DDoS attacks by integrating a simplified proof-of-work problem inside each block. The system also verifies transactions almost instantaneously thanks to containing a Delegated Proof-of-stake system that requires very few nodes to validate a transaction. Lastly, Nano also integrates “Witness” functions into its nodes whose votes reconcile duplicate transactions and prevent double spending. All these functions combine to make Nano a very powerful contender for an everyday use, universal coin.
All three projects offer a powerful alternative to slow, bulky, and expensive blockchains. With ultra fast, public, or private DLT using DAG, there is no limit to the application and use of any of these projects in any industry. For the moment IoTA’s focus is the IoT market, Hadera aims to be the DLT of choice for companies, and Nano aims to be the coin for mass adoption.