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| By Jurica Dujmovic |
Two weeks ago, I took you through the ins and outs of AltLayer (ALT, Not Yet Rated) and its approach to blockchain scalability.
Quick recap: AltLayer addresses the persistent issue of blockchain scalability—a persistent and troublesome roadblock in blockchain development, as my colleague Mark Gough explained yesterday.
As networks like Ethereum (ETH, “A-”) gain popularity, they become congested. This means slower transaction times and skyrocketing fees.
It's a problem that's been holding back mainstream adoption of blockchain technology for years.
With a problem this big and persistent, AltLayer isn’t the only crypto project seeking fame and activity by solving it.
One other that has caught my eye is BlockDAG, which is fundamentally reimagining how blockchain technology works at its core.
In traditional blockchains, you have a single chain of blocks, each one linked to the one before. It's simple and secure. But it can also create a bottleneck.
BlockDAG, on the other hand, allows for multiple chains to exist simultaneously, occasionally intersecting to ensure everything's in sync.
It's like upgrading from a single-lane road to a multilane highway.
And it’s possible because of the “DAG” in BlockDAG’s name. That stands for Directed Acyclic Graph. This is just a fancy way of saying it's a network where data moves forward through multiple pathways without ever looping back.
BlockDAG is not the first to leverage DAG technology. Projects like Iota (IOTA, “D+”) and Nano (NANO, “C-”) have previously implemented DAG structures in their own unique ways.
But neither of them retained the traditional block-based structure OR allowed for the parallel processing of multiple blocks.
This key difference enables BlockDAG to offer improved scalability and throughput while maintaining familiar blockchain concepts.
And when you get down to the numbers, BlockDAG shows immense promise in terms of transaction speed.
That’s because BlockDAG can support near instant transactions. With traditional blockchains, you might wait minutes (or even hours) for a transaction to confirm.
Bitcoin (BTC, “A”) can process between 3-7 transactions per second.
Ethereum — the No. 1 smart-contract platform — can process only 15 transactions per second.
But BlockDAG systems have the potential to handle thousands. This is a game changer for applications that require high throughput, like decentralized exchanges or gaming platforms. And it means BlockDAG has plenty of room to scale.
Other huge strengths that support this project include …
- Fork resistance: One of the biggest headaches in blockchain is dealing with forks. That’s when two miners create valid blocks simultaneously. BlockDAG sidesteps this issue entirely by allowing multiple valid blocks to coexist.
- Energy efficiency: By eliminating redundant mining efforts, BlockDAG has the potential to be significantly more energy-efficient than traditional proof-of-work systems.
- Broad appeal: Unlike past DAG projects, BlockDAG is designed as a general-purpose solution. It seeks to enhance blockchain technology for a wide range of applications — from decentralized finance to gaming — all while preserving the security and decentralization benefits of traditional blockchain systems.
BlockDAG’s Real Use Cases
It's easy to get lost in the technical details, so let's look at some practical applications.
As I mentioned above, complex financial applications — namely, the next step for DeFi — require high speeds to run on-chain without issue.
This makes BlockDAG a solid choice for developers looking to overcome the current limitations DeFi apps tend to face.
There are already projects working to bring this technology to life. A prime example is Kaspa, which calls itself the fastest, open-source, decentralized and fully scalable Layer-1 in the world.
A huge force backing up that claim is BlockDAG, via a protocol called GHOSTDAG. This isn't just a clever name. It's a variation of the traditional GHOST — Greedy Heaviest-Observed Subtree — protocol, adapted to work with the DAG structure.
Thanks to DAG technology, multiple blocks can coexist and be processed in parallel. This is the key to Kaspa's ambitious goal of processing up to 100 blocks per second.
If Kaspa can pull this off while maintaining security and decentralization, it would represent a significant leap forward in blockchain scalability. Its target of 100 blocks per second could translate to thousands of transactions per second.
With that high a throughput, Kapsa — powered by BlockDAG — could potentially rival traditional payment systems.
At the moment, BlockDAG doesn’t have its own token. But that will change soon.
The BDAG token is currently in presales, where it has raised a staggering $92 million. This level of financial backing is noteworthy — even in the often-frenzied world of crypto presales!
It means there is notable investor interest. And BDAG now has significant resources for development and expansion.
Supporting this are the various strategic partnerships BDAG has made in the sports world.
One standout deal is its $10 million, three-year partnership with Borussia Dortmund (BVB), one of Germany's top soccer clubs. BlockDAG has also inked a multimillion-dollar agreement with Inter Milan, another prestigious team in European football club.
These partnerships aren't just about brand exposure. Sure, they’ll instantly boost BDAG’s visibility to a wider audience.
But more importantly, they lend a degree of credibility and mainstream acceptance to BlockDAG via its token.
When fans see their favorite team associated with a blockchain project, it can help bridge the gap between the often insular world of crypto and the broader public.
After diving deep into BlockDAG, I find myself cautiously optimistic. However, I've also been in this space long enough to know that potential doesn't always translate to reality.
The challenges facing BlockDAG do exist.
After all, it's one thing to create a fast, scalable system in a lab. Deploying it in a consistent and safe manner in the real world — where stakes are higher and rules markedly different — is another beast entirely.
And there is competition in this field that makes those challenges even more intense.
Other scaling solutions — like sharding and Layer-2 networks, as well as the projects my colleagues and I have written about previously — are also making significant strides.
BlockDAG will need to prove not just that it's better than traditional blockchains. It’ll need to be better than its contemporaries, as well.
Despite these challenges, however, I'm excited to see how BlockDAG’s version of DAG technology develops.
If it can deliver on its promises while adequately addressing its growing pains and challenges, it could indeed represent an important next step in the evolution of blockchain technology.
I’ll be keeping my eye on this one. Growth investors should consider doing the same.
And all of us should continue watching the scalability race. Because the project that can actually deliver on speed and scalability could become a leader in multiple crypto narratives such as DeFi, web3 gaming and more.
Best,
Jurica Dujmovic
P.S. There is one other crypto project you may want to keep on your watchlist.
My colleague Juan Villaverde believes it could be at the heart of what he’s calling “Project Crypto” — Presidential candidate Donald Trump’s plan to make the U.S. “the crypto capital of the planet and the Bitcoin superpower of the world.”
But it isn’t Bitcoin.
In fact, he’s never named this token on the campaign trail. But with major firms like Citibank and T. Rowe Price already heavily invested in it, it could be set to soar after Election Day.
To find out the name of this coin — and hear how the election could impact the market from Juan directly — just click here.
