Z-DAG is Syscoin's innovative solution to the blockchain scalability problem whereby transactions per second (TPS) are bottlenecked by transaction confirmation times.
The orthodox blockchain confirmation system is designed so that transactions are protected against 'double-spending': users are prevented from making fraudulent transactions where coins are sent simultaneously to more than one address. In a vanilla cryptocurrency design such as bitcoin, this need to wait for blockchain confirmation has throttled transaction throughput to a state where it would be of limited use to a mainstream userbase. Lightning network is one proposed solution to this problem.
Syscoin's zero-confirmation directed acyclic graph (Z-DAG) counters the double-spending attack such that Assets created on the syscoin platform can transact in real-time, without the need for confirmations to secure the transaction. Z-DAG is an extension of the Dash InstantSend technology, its improvements remove the need for input lock messages, lock verify, and POW block wait time. A single message is required for the transaction, and this leads to a reduction in transaction fees and significantly less network traffic. ZDAG uses the Syscoin masternode network as a high-throughput relay network to confirm the transaction in the background, which typically takes between 3-5 seconds; for comparison, a regular bitcoin transaction takes between 10 and 30 minutes to confirm. For more technical information, Syscoin's Jag Sidhu gets into the nitty gritty, here.
When Z-DAG is fully implemented, Syscoin Assets will transact at speeds of up to 100 transactions per operating masternode; at time of writing there are approximately 700 masternodes, which would give a TPS rate of 70,000. Compare this to the VISA payment processing network, capable of 56k transactions per second, and we see that Z-DAG is primed to be a powerful addition to global payment processing.
Z-DAG will be bring near-instant, VISA-like transcations to the crypto-sphere. Imagine visiting a book store and making a purchase at speeds normally achievable only with credit or debit card services. Near-instant online payments are another example of how a retailer might leverage the power of ZDAG; indeed, any scenario where goods or services are provided in real-time will benefit from this innovative, cheap, payment processing technology.