What is Nano? Introduction to Bitcoin’s Speedy Competitor
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What Is Nano?
Nano is a digital currency designed for speed and efficiency. It’s widely-considered to have solved some of the problems that have plagued the Bitcoin blockchain, because it doesn’t contain the information from the entire chain every time it processes a transaction. The Nano cryptocurrency promises instant transactions with zero fees, which means it’s considered a strong candidate for micropayment solutions.
Leaner and faster than Bitcoin, Nano has had some issues as its token hit the market, yet the team continues coming up with more innovative ways to market itself and crypto in general, like a recent crypto hunt.
Created in 2014 by Colin LeMahieu, Nano resolves many of Bitcoin’s biggest blunders, and the team is dedicated to keeping it up.
Bitcoin was great on paper, but the past decade has been turbulent. The flagship crypto is plagued with high energy costs for mining, slow transaction times, and heavy computational loads requiring a lot of expensive equipment to run.
Nano is feeless and uses much less electricity to run its blockchain network. Unlike Bitcoin and Ethereum, Nano spreads its blockchain over each account, building a P2P trust network of account chains that reduces clogging and bottlenecks.
It passed a recent security analysis on its tech, but its fighting a lot of legal battles in its early years.
Can this mesh network stand its ground against the big boys or will it be buried in litigation? To find out, let’s start by checking out the performance of Nano’s coin on the market.
NANO Coin’s Market Performance
Nano has a max supply of 133,248,290 NANO. Its peak price so far was $34.43 on January 1, 2018.
Originally called RaiBlocks, Nano did not have an ICO. Instead, the coins were distributed through Captcha Faucets, where people were awarded NANO for resolving a series of captchas. This occurred from March 2016 through October 2017.
There’s one NANO that’s not in circulation, and nobody knows exactly where it’s at. My personal guess is LeMahieu kept it in a USB drive or SD card in a frame somewhere, like businesses traditionally do with the first dollar they earned. It’s a nice thought.
NANO can’t be mined. In June 2018, Binance became a Representative on the Nano network. These large-scale representatives vote for 33 percent of the network, maintaining decentralization.
A variety of wallets support NANO, including online, mobile, and desktop clients.
NANO has strong market support, and is exchanged on Binance, CoinEx, Kucoin, OkEx, and many more. Over $40 million worth of NANO is traded on a daily basis, and its trading pairs include BTC, ETH, USDT, and DOGE, along with fiat currencies on some exchanges.
Building a Better Bitcoin
When it was created, Bitcoin promised a better currency using a decentralized digital ledger. What wasn’t anticipated was how quickly this new setup would bloat. Nano went a different way.
Nano is all about streamlining, even in its branding. People were confused about how to pronounce RaiBlocks, so in January 2018 it was rebranded through a Medium post.
Nano uses a block-lattice structure that distributes this ledger across each node. It’s accomplished using a Directed Acyclic Graph (DAG) architecture that shrinks everything down to the meat and potatoes.
Individual accounts track their own balance and transaction history to build an asynchronous network. Exchanging Nano is a two-step process where a sender must initiate a send transaction, while the receiver adds a receive transaction.
Each of these transactions is fitted into an individual UDP packet and handled independently. Wallets are also pre-cached to proactively prepare for the next transfer.
Because there’s no middleman, Nano transactions don’t require fees. The network structure makes transactions instantaneous too, because verification is reduced to two factors – your account balance and the transaction. This much more closely mirrors the way Visa transactions are processed.
Visa’s transaction-per-second (TPS) speed is often referenced in cryptocurrency, but it’s not a one-to-one comparison. A bitcoin transaction, for example, includes processing every prior transaction plus the current transaction. And every node needs to process every transaction to keep the network running.
This means one Bitcoin transaction is processed potentially millions of times. It doesn’t matter if any cryptocurrency matches Visa’s transaction speed when it’s bogged down with redundancies. Bitcoin is a Rube Goldberg machine that overcomplicates the process.
Nano’s transactions are only processed once. While they may contain twice as many operations, they’re exponentially faster because only two nodes need to be involved.
Perils of Cutting the Blockchain Fat
Just because it’s leaner and faster doesn’t mean it’s not a blockchain. Nano still has the hallmarks of a traditional blockchain, such as a delegated Proof of Stake consensus algorithm that ensures a majority owner (over 50 percent) of the network needs to hold over 50 percent of NANO coins. The price of doing such would incentivize the 50 percent owner to maintain coin value.
With mining removed and slimmed-down transactions, Nano is more energy efficient than Bitcoin. The team is even constantly looking for ways to prune the ledger.
Still, Nano may be forced into a hard fork because of several lawsuits stemming from the BitGrail hack. The Italian exchange was hit for $150 million worth of Nano, and everyone is anxious to point fingers. BitGrail is attempting to reimburse victims to avoid being dragged into the fray.
BitGrail founder Francesco Firano asked Nano’s development team to change the coin’s ledger, which wasn’t a popular decision among the community. Suddenly, the leaner model became a liability, and the absence of an immutable and decentralized ledger showed its weakness.
Both companies blame each other for the hack, and Nano’s network resynchronization has the proper timestamps to uncover the missing coins. Whether or not the network is compromised is being hotly debated both online and in court, and April’s class action against the Nano Foundation rocketed the crypto into the public spotlight in many of the wrong ways.
An Italian bankruptcy court ruled Firano and BitGrail were fully responsible for the heist. This is likely to help Nano in its other legal battles, and investors seem confident.
The quarreling has taken some of the focus off the coin’s actual performance and potential, but the Nano team is clearly looking forward – as are their supporters. Nano has a fervent and passionate community, who believe in the foundation’s vision enough to keep trading and exchange rates high. The foundation is also actively pursuing partnerships to sustain the network moving forward.
Nano focuses on speed. This coin has the potential to age better than Bitcoin, with a speed gap that will continue being more apparent, regardless of how many sidechain fixes are used. Nano’s success depends on these key factors:
- Instead of processing the entire blockchain on every node for every block, Nano streamlines the process to Visa’s standard account balance and transaction order.
- Nano’s blockchain can continue being pruned as needed to maintain efficiency. The delegated PoS model makes becoming a 50 percent stakeholder prohibitively expensive.
- NANO is an OG first-gen crypto with support deep within the crypto community. It is easily exchangeable on or off crypto markets.
With these pieces in place, Nano is poised to survive the lawsuits and hacks. The network can remain sustainably slim, and it will continue to be an attractive coin for many years to come.
This article has been updated to reflect the fact that Nano disputes that it was hacked during the BitGrail incident.