A Digital Currency For The World
Nano, formerly known as RaiBlocks, wants to be the cryptocurrency of choice when it comes to payments. Scratch that. Nano wants to be the main currency for payments in the real world.
An ideal cryptocurrency for payments should have very low fees as well as fast and secure transactions. A lack of these features has made most cryptocurrencies unsuitable for payments. Nano claims that it has the technology that provides all these features.
How Nano Works
Every wallet on the Nano network comes with its own blockchain. This structure is known as Block lattice and differs from blockchains. When it comes to validating transactions, the transactions on Nano are not lumped together in a pool to await confirmation.
With Nano, senders and receivers of transactions are directly paired with each other. When a transaction is executed, the sender creates a send (S) block while the receiver creates a receive (R) block. These blocks amend the blockchains of the parties involved in the transaction. Whiles the “S” block reduces the sender’s wallet balance by the transaction amount, the “R” block increases the receivers balance by the same amount. What we have here is transactions occurring separately from other transactions on the network and without waiting for confirmation. As a result, transactions are almost instant and “fee-less”.
Potential conflicts on the network are to be resolved by voting. Users are allowed to transfer their votes to representatives. The weight of a vote is based on the total amount of funds held in all accounts that have transferred their voting rights to a particular representative.
What About Scalability?
Most cryptocurrencies eventually have to grapple with handling more activity on their networks, as adoption grows. Failure to find solutions to this problem results in clogged networks, high fees, and painfully slow transactions.
As stated earlier, Nano wallets have their own blockchains. These are known as account-chains. Now, the nodes on Nano can be trimmed to leave only current account-chain data. With less data, more transactions can be handled while maintaining the speed of transactions. Consequently, the remaining restrictions to Nano’s almost unlimited scalability are bandwidth and hardware.
Why The Network Is Not Being Spammed
You might be wondering how “fee-less” transactions would not lead to massive spamming on the Nano network. Spamming on Nano does not make economic sense even with no fees on transactions. Clients on the network are required to solve cryptographic puzzles before transactions can be sent. This dis-incentivizes potential spammers. Moreover, using computing power to solve puzzles for each spam transaction doesn’t achieve much and would not be without costs
Value Transfer Only?
As already mentioned, Nano focuses on the transfer of value only and wants to be the best cryptocurrency doing it. At least this is the direction Colin LeMahieu, creator of Nano, plans to take it. The plan is to focus on value transfer and do it well. It is, therefore, unlikely that there will be smart contracts and other features on Nano anytime soon.
LeMahieu, however, considers privacy important and sees the privacy feature as one that could be added to Nano if the technology is sound.
Community And Adoption
Nano has an active and growing community behind it. The Nano cryptocurrency subreddit has over 36,472 subscribers. The community can also boast of good membership on their Discord, Telegram, and Twitter. The cryptocurrency was also the Binance community coin for January 2018. This is quite a feat considering the fact that it’s barely a year old.
Having a large and active community backing a cryptocurrency is at least as important as the technology these days. Besides sound technology, more people talking about and using a coin would cause the general public to have more confidence in it. This confidence in a coin translates into more adoption.
The re-branding of RaiBlocks to Nano is a step towards reaching out for mainstream adoption. According to LeMahieu, the team was looking for a name that is easy to say and remember. This means that there is focus on making the technology work, as well as getting more people to know about and use the coin.
Competition From Other “Value Transfer Focused” Cryptocurrencies
The introduction of the Lightning network on Bitcoin has caused many to question the future of other cryptocurrencies with focus on payments. Lightning is secured by Bitcoin’s hash rate. It also does not require huge marketing efforts since Bitcoin is already quite popular. At the time of this writing, the number of Lightning nodes had reached 1878 with 4631 channels. The transactions on the Lightning network are also almost instant and come with very low fees.
Litecoin is arguably the only other top cryptocurrency platform with payments as its main focus that is well known even outside cryptocurrency circles. It currently has low fees and fast transactions as well.
Nano competes favorably with its cryptocurrency competition when it comes to payments. It also beats traditional payment methods like VISA as far as transaction costs are concerned. It, however, falls behind when it comes to network effect and adoption. Nano, at the moment, is not really known outside the cryptocurrency space and few vendors accept it. Nonetheless, this is understandable since Nano is relatively new.
Are There Any Downsides?
Issues with Nano are issues every new cryptocurrency faces. Some cryptocurrencies, after Bitcoin, have even been criticized for being centralized. They are also most vulnerable to attacks in the early stages. Notably, the ones that are not clones of Bitcoin and are built on different technology are considered unproven technologies. Such problems can be expected to be of less and less significance as a coin, its community, and its transaction history grows.
Currently, all eight nodes responsible for voting on the Nano network are under the control of the developers. This is, however, a temporary state of affairs. With a very low cost of running a node on the Nano network, it is expected that more users would set up nodes of their own in the future. According to LeMahieu, entities such as retailers who stand to benefit from the “fee-less” transactions would be motivated to run nodes.
Another catch is that Nano’s technology is built on a new codebase. This means there could be unrealized problems. Once again, this is a problem with all new technologies.
It’s hard to find fault with the technology behind Nano. Almost instantaneous transactions with no fees have been demonstrated. However, we will still have to wait till there are merchants accepting Nano worldwide before we call it a success. Before such a time, the technology would have to be tested and proven as sound. For now, we can argue that Nano has a fair amount of potential.
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