PoW vs DAG: Microtransactions

Settlement Assurance: Transactions are secured by immense hashing power (e.g., Bitcoin's ~600 EH/s). This provides cryptographic finality after 6+ confirmations, making it ideal for high-value microtransactions where settlement is non-negotiable, like cross-border B2B nano-payments.

Scalability Constraint: Throughput is limited by block size and time. Bitcoin processes ~7 TPS, leading to high and volatile fees during congestion. This makes it unsuitable for true high-frequency micro-payments (e.g., pay-per-click, IoT data streaming) where cost predictability is critical.

Parallel Processing: DAGs like IOTA and Nano process transactions asynchronously, enabling high TPS with zero or negligible fees. This is perfect for machine-to-machine (M2M) economies and consumer micropayments (< $0.01) where volume, not individual transaction security, is the priority.

Novel Consensus Models: DAGs often use coordinator nodes (IOTA) or delegated Proof-of-Stake (Hedera) for security, introducing centralization vectors. While fast, they lack the battle-tested, decentralized security of major PoW chains, presenting a risk for applications requiring maximal censorship resistance.

Unmatched finality and immutability: Secured by the world's largest decentralized hash power (Bitcoin: ~500 EH/s). This matters for settlement of high-value microtransactions where transaction reversal is unacceptable, such as cross-border B2B nano-payments or oracle data purchases.

High and volatile fees: Base layer fees spike with demand (Bitcoin: $5-$50+). This breaks the economics of sub-dollar payments, making protocols like the Lightning Network (LN) a mandatory, complex L2 dependency for scaling micro-TPS.

Zero transaction fees and sub-second confirmation: Architectures like IOTA's Tangle and Nano's Block-Lattice enable feeless value transfer. This is critical for machine-to-machine (M2M) economies and IoT micropayments, where transaction cost must be near-zero.

Reliance on coordinators or representative voting: Many DAGs use temporary central checkpoints (IOTA Coordinator) or delegated consensus (Nano Reps). This presents a different trust model than PoW's pure cryptographic security, a key consideration for decentralized application (dApp) architects.

Unmatched Security & Finality: Nakamoto consensus provides probabilistic finality secured by immense hash power (e.g., Bitcoin's >500 EH/s). This matters for settlement-critical microtransactions where double-spend resistance is non-negotiable, such as cross-border B2B nano-payments.

High Latency & Cost: Block times (Bitcoin: 10 min, Litecoin: 2.5 min) create inherent latency. High energy expenditure translates to prohibitive fees for sub-$1 transactions. This fails for use cases like IoT data streaming or pay-per-second API calls where cost and speed are paramount.

Sub-Second & Feeless Finality: Asynchronous structure enables parallel validation. Protocols like Nano use block-lattice for instantaneous, zero-fee transactions. This is ideal for machine-to-machine (M2M) economies, streaming micropayments (<$0.01), and in-game asset transfers.

Security & Centralization Trade-offs: Many DAGs rely on Coordinator nodes (IOTA) or centralized representative voting (Nano) for security, creating single points of failure. The network is more vulnerable to spam attacks and requires active participation for consensus, which matters for high-value financial settlement requiring battle-tested, decentralized security.