Introduction to Alternative Distributed Ledger Architectures
Blockchains are the original distributed ledger architecture, and the creation of blockchain was a major innovation. However, blockchains also have their limitations, such as:
Throughput: Many blockchains have a set maximum block size and block rate, meaning that they have a maximum throughput of transactions that they can process. This limits the scalability of a blockchain-based solution. Transaction Speed: Transactions are only only added to the distributed ledger as part of blocks, which are created at set intervals. The need to wait for block creation and confirmation creates delays before a transaction can be trusted. Overhead: Consensus algorithms like Proof of Work are resource-intensive, meaning that maintaining the distributed ledger requires significant overhead.
Some of these limitations have been addressed by tweaking the blockchain protocol or adding second-layer protocols that run on top of them. Another approach has been to develop distributed ledgers that take the underlying concepts of blockchain technology and apply them to a different underlying architecture.
Directed Acyclic Graphs (DAGs)
Blockchains are based off of the linked-list data structure. A linked list is a set of nodes where each node points to one other node. In the case