Near instant, fee-less transactions that are finalized in less than a second and are limited in number only by network latency. If you’re thinking I must be talking about credit card transactions, well I’m not.
I’m talking about Nano, “the digital money for the modern world”, as the Nano Foundation calls it. But how does Nano support this claim and how does it achieve this efficiency? We’ll get to that right away, as we answer the question: What is Nano?
Nano was first introduced in 2014, so it’s one of the old players in the cryptosphere. Back then it was called RaiBlocks and it was rebranded as Nano in January 2018, a name that was chosen to represent the speed and simplicity of the project.
Nano is a lightweight cryptocurrency that was built for the sole purpose of supporting near-instant and free transactions. No complex architectures, no staking, no side-chains or second layers, no fancy dApps or smart-contracts. None of the things that generate all the buzz these days. Just simple, instant and free transfers of value. And, of course, decentralized. Basically, what money is supposed to be.
Nano was trying to solve the problem of slow transactions that other cryptocurrencies, like Bitcoin, have. Some crypto transactions can get quite expensive and that will discourage people from using cryptocurrencies for everyday transactions. The Nano team also wanted to create an environmentally friendly cryptocurrency that didn’t require the electricity consumption of a small nation to produce a block.
Nano introduced a relatively unique architecture, one in fact that breaks the blockchain archetype. It uses something called Directed Acyclic Graph, also called a DAG or “Block Lattice”. With Block Lattice, there’s no single blockchain where all transactions are recorded. Instead, every account, meaning every NANO address, has its own blockchain that only its owner can change and each block is a single transaction. This is the key feature that enables Nano to be so fast, since there’s no need to wait for a miner or witness to be selected to validate all transactions. The validation process of all transactions is performed by computers called representatives. But since each account controls its own blockchain, their duty is usually as simple as broadcasting the transaction to other representatives and nodes in the network, which requires minimal computing resources and energy.
This is why the network is able to process thousands of transactions per second and is limited in practice only by the time it takes for a transaction to reach the majority of the nodes around the world. And because each transaction is only a few bytes in size, this happens in a jiffy. In the rare case where there are conflicting transactions, only then are representatives required to vote on which transaction to keep and which one to discard.
Representatives are chosen with a voting system called Open Representative Voting, or ORV where users choose their representative and delegate to them their balance. The bigger the delegated balance a representative has, the more voting power they have. This is similar to Proof of Stake, but it involves no freezing of funds and a user can change their representative at any time.
Also, there’s no monetary reward for representatives. Instead, their incentive comes from securing the network where they have an invested interest. This is why representatives are usually businesses, exchanges or wallets, although anyone can be a representative.
Nano was designed this way so that transactions are free and to promote decentralization. Besides, all 133 million NANO coins were issued when the network was launched and no more will ever be created, so no rewards from newly minted coins either.
Although Nano is in the top 100 cryptocurrencies, it hasn’t quite found wide adoption. As a payment system it relies on companies integrating Nano into their business. Still though, there are several places and apps where users can spend their Nano and also earn Nano by playing games, like Counter Strike or Just Cause, visiting places, renting unused bandwidth, participating in surveys or even going for a jog. If you want to find out more, have a look at this site.
Today there are many fast cryptocurrencies, but it’s still hard to find one that matches the speed, scalability and simplicity of Nano. So, if you’re interested in fast and free digital payments, either as a user or as a business, Nano is definitely worth having a look at. This was all the time we had. Do you think Nano has the potential to become a widely adopted instant payments system? Let us know your thoughts in the comments below.