What is Nano (NANO)? A beginner’s guide
Learn everything you need to know about Nano (NANO), the instant and zero-fee digital currency.
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Nano (NANO) is a digital currency designed to provide fast transactions, zero fees and a high level of scalability. Originally known as RaiBlocks (XRB), it uses a combination of blockchain and directed acyclic graph technology and assigns every account its very own blockchain.
As a result, Nano has developed a solid following in the crypto community. To find out how this digital currency works and whether you should consider buying any NANO, read on.
What is Nano (NANO)?
Nano is a digital currency that aims to offer an effective, viable alternative to fiat currencies. Using a unique block-lattice structure (more on this below), Nano promises several key advantages over other payment currencies, including the following:
- Feeless transactions
- Instant transactions
- Unlimited scalability
This makes Nano an attractive option for peer-to-peer transactions and micropayments, and the team’s stated mission is to become a global currency. Nano has reached its maximum supply of 133,248,290 NANO, with the full complement of Nano tokens in circulation. Nano tokens were originally distributed via a captcha-based faucet distribution system, but this ended in October 2017.
Nano or Raiblocks: What's in a name?
When it was originally launched in 2017, Nano was known as RaiBlocks (XRB). However, on 31 January 2018, RaiBlocks became Nano as part of a comprehensive re-branding, and its ticker symbol was updated to NANO on most exchanges.
Why the new name? Nano was chosen as part of the Nano team’s plans to target mainstream adoption. As explained in the official re-branding announcement, “Feedback from the community suggested that improvements could be made to better resonate with the public and a mainstream audience.”
Following the announcement, the price of NANO rose 20% in 24 hours.
What makes Nano unique?
The majority of cryptocurrencies use blockchain, the distributed ledger technology made famous by bitcoin. A major alternative to blockchain is a data structure called directed acyclic graph (DAG), which is used in projects like IOTA and ByteBall.
What’s unique about Nano is that it combines blockchain technology with DAG, a structure which sees individual transactions directly linked to one another rather than grouped together for processing in blocks. This so-called “block lattice” architecture is designed to offer the best of both worlds – the scalability of DAG and the security of blockchain – while avoiding some of the drawbacks of each approach.
How Nano works
If you’ve got a solid understanding of digital currencies, you’ll probably know all the basics of blockchain. If you’re new to this sort of thing, check out our beginner’s blockchain guide for a quick rundown.
As we touched on above, Nano combines elements of blockchain with a DAG, or directed acyclic graph, format. Under this structure, each Nano account has its own blockchain that stores its transaction and balance history. This is known as an account-chain and only the owner of the account controls it. Each account-chain can be updated asynchronously of the rest of the Nano network.
When an account owner sends some NANO, a “send block” is added to their account-chain and updates their balance. The receiving account then adds a “receive block” to its account-chain to update its balance. As a result, the most recent block on any chain contains that account’s current balance. This in turn allows the Nano system to remain lightweight and ensures faster processing speeds than many other digital currencies.
Proof of work or proof of stake?
Most cryptocurrencies rely on one of two main consensus algorithms, proof of work or proof of stake. However, Nano relies on a hybrid model called Open Representative Voting (ORV), which doesn't use mining.
Every account can freely choose a Representative at any time to vote on their behalf, even when the delegating account itself is offline. These Representative accounts are configured on nodes that remain online and vote on the validity of transactions they see on the network.
Because Nano accounts can freely delegate their voting weight to representatives at any time, the users have more control over who has power with consensus and how decentralised the network is. This is a key advantage to the design of Open Representative Voting (ORV). With no direct monetary incentive for nodes, this helps mitigate the natural tendency towards centralisation among revenue-earning nodes.
Nano use cases
What can Nano be used for? The team points to several potential use cases:
- Peer-to-peer payments. Nano lets you quickly pay friends, family and others, whether paying the rent or splitting a restaurant bill.
- Micropayments. The fact that it has zero fees also makes Nano a suitable choice for small payments, for example paying an online subscription.
- Trading cryptocurrency. With instant and zero-fee transactions, Nano could be extremely useful for cryptocurrency traders looking to buy and sell other digital coins and tokens.
- Business to customer. Nano can offer fast checkout for customers and quick access to funds for businesses, and both parties can benefit from the absence of transaction fees.
Nano team and history
Nano was developed by Colin LeMahieu, a software engineer with prior experience at tech giants like Dell and AMD. He founded RaiBlocks in 2014, launched the cryptocurrency in 2015 and turned his attention to the project full time in 2017.
In the whitepaper introducing Nano, LeMahieu outlines three core drawbacks of bitcoin that he wants to overcome:
- Poor scalability, including high transaction fees and minimal transactions able to be processed per second
- High latency, with an average conformation time of 164 minutes
- Power inefficiency, with the bitcoin network consuming a substantial amount of power per year
LeMahieu is currently Nano’s lead developer and focuses on the development of the currency’s core protocol. For details on the rest of the team behind Nano, check out the Team page on the coin’s website.
What’s next for Nano: the roadmap
Rather than a one-page graphical timeline of milestones for the year ahead, Nano’s roadmap is more of a living website. While there are no dates listed, it does detail all the areas the Nano Core Team is working on as part of its mission to “become a global currency built on a secure, decentralized network”. At the time of writing (September 2019), the completed areas include the following:
- Exchange integration guides to make it easier than ever for exchanges to offer and support Nano
- Creating simple, well-written developer documentation that includes code examples, reference implementations and applications
- Hardware wallet support
- The release of stable, secure desktop wallets
The steps partially completed include:
- The initial infrastructure prototype review of a horizontally scalable cloud infrastructure for merchants, exchanges and financial service providers, designed to promote widespread adoption of Nano
- A focus on expanding into global markets, particularly building out Asian and South American-focused communities
- Additional fiat on-ramps to make it simple and secure for people around the world to obtain and use Nano
- Consolidating the four types of blocks in the Nano protocol – send, receive, change and open – into one type of block known as Universal Blocks
- Ledger pruning to reduce database size
What to watch out forThe first key issue you need to consider is that Nano is up against some stiff competition from a host of other payment coins. Bitcoin may be far less functional than Nano in a number of ways, but it’s still got a level of brand recognition that no other crypto can match. Throw in others like Litecoin, Dash and Bitcoin Cash, and it’s clear that Nano isn’t going to just waltz in and achieve widespread adoption without a fight.
It’s also worth pointing out that there are other projects at various stages of development that could offer everything Nano does, including fast transactions and no-fee or low-fee transfers, as well as a host of other uses. Once platforms like IOTA and Cardano reach later stages of development, they could also pose a threat to Nano’s potential growth.
The bottom line
One of the key things in Nano’s favour is simplicity. In a world full of complicated and overly technical projects that are a little beyond the comprehension of the average Joe, Nano is simply a payment coin based on solid fundamentals – instant, feeless transactions and impressive scalability.
However, Nano does face an uphill battle for mainstream acceptance in an increasingly crowded marketplace, so gaining acceptance as a legitimate payment method in as many places as possible will be crucial to its success.
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Disclosure: At the time of writing the author holds IOTA and XLM.
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