8 min read
In recent years the crypto ecosystem had its focus on DeFi, high returns, interoperable networks and, lately, NFTs. Meanwhile the future envisions decentralized social networks and tokenization of real assets.
This is how low-cost peer-to-peer transactions, one of the main objectives stated in Satoshi’s White Paper, ended up being put on the back burner.
NANO is a decentralized blockchain focused on cheap transactions, which goes a step further by offering them directly for free, peer-to-peer on an eco-friendly blockchain with, in principle, infinite scalability.
But then, what is NANO?
NANO is a decentralized blockchain, focused on providing the necessary structure for its users to make transactions or shipments of its native cryptocurrency, also called NANO, in a simple, inexpensive and fast way.
From the outset, its creators set out three clear objectives, which summarize the philosophy of the project:
- Transactions without costs, in order to provide a practical and inclusive network, which is the way money should be, in the words of its creators.
- Instant transactions, by developing an innovative structure, the NANO blockchain manages to process transactions with remarkable speed, up to 8,000 transactions per second and an average confirmation time of 0.372 seconds.
- Environmentally friendly or “eco-friendly”, by not relying on mining, which usually involves complex and repetitive mathematical calculations that consume a large amount of energy, NANO is sustainable digital money.
Structure and scalability
To achieve the goals stated in the previous paragraph, NANO was created as a network containing unique features. Colin LeMahieu, known as the father of NANO, published, on November 21, 2015, his whitepaper, although at that time the network was called Raidblocks it was later renamed to NANO on January 31, 2018.
From the beginning, it sought to differentiate itself, in terms of structure, from the majority of the most renowned networks, which have a main chain where each transaction occurs and is stored. It also left aside scalability solutions such as “sharding”, “side chains” or “L2 solutions”.
The NANO blockchain has a very particular approach known as “Directed Acyclic Graph” or “Block Lattice”.
This structure determines that each account or address created in the network, which of course has a balance in NANO, has its own blockchain. In this way, the owner of the address is in charge of creating and adding new blocks to its own chain with each transaction, allowing the correct and secure exchange between users, avoiding the subsequent validation of a miner or validator.
Each new block contains only one transaction, with a weight of only a few bytes, added to the simultaneity of available strings, at a glance we understand why the network speed is so fast.
NANO and its particular consensus mechanism
After such a particular and unusual blockchain structure, we cannot expect from NANO a common consensus method, if not something special, and, spoiler alert, the mechanism will not disappoint us.
The network’s consensus mechanism, known by the acronym ORV, which stands for Open Representative Votation, is another outstanding feature of the network.
Beyond the owners of NANO accounts or addresses, whom we could also simply call users, there is another actor in the network called a representative. The way to reach consensus is through their vote, as they are in charge of deciding on the validity of each individual block shared on the network.
These representatives are elected by each NANO account owner, who only give up their voting power, without compromising their NANO, without blocking its immediate use and without receiving any financial compensation.
In this way, the voting power that each representative holds is directly related to the number of NANOs held by the accounts that have designated him/her.
After validating each block, its next task is to send this result to the rest of the nodes in the network, which, of course, is a synonym for representatives.
It is noteworthy that the representatives do not receive any type of economic compensation for validating blocks, their only incentive being to ensure the proper functioning of the network in which they are part.
In the event of conflicts or disputes over a transaction, the method of conflict resolution is a simple vote by all the representatives, who must decide which block is valid and which should be discarded.
NANO and its tokenomics
After having seen the technological structure that gives life to the NANO blockchain, it is time to focus on its cryptocurrency.
As for their numbers, we find that NANO’s total working capital is 133,248,290, a number that coincides with the total supply.
As for its price, as of today it is US$4.95. Its historical maximum dates back to January 02, 2018, the day on which it reached a quotation of US$ 33.69, while its historical minimum was observed on July 16, 2017, the day on which it traded at US$ 0.02617900.
The last particularity to highlight about NANO, which directly involves their tokenomics, was the method chosen for the launch of their coin. Instead of resorting to a trendy mechanism, as ICOs were, they decided that all coins would be delivered through a “faucet” (which could be translated as tap) that did not require any kind of investment for those wishing to claim NANO. By simply completing a captcha, to prove that they were a human and thus avoid bot attacks, users were able to claim all the NANOs issued.
As the total supply has been issued in this way, it is evident that the vision of the project is consistent from the outset.
Function, philosophy and adoption
After the description of each important component of NANO, it is clear that its purpose in the ecosystem is to solve the problem, which can be observed in networks such as Bitcoin or Ethereum, of costly transactions, which can even exceed the value of the amount to be sent. Added to this problem is the slowness, countless stories about transactions waiting in the various “mempools” for a miner who considers it economically attractive we know. And finally, something that also concerns the team is the sustainability of consensus methods and their environmental cost.
It is clear that through its consensus mechanism and data structure, NANO solves these problems and focuses its purpose on giving its users a simple, extremely fast and free blockchain to send value between peers, without the need for third party intervention.
As for its adoption, I consider that, far from being massive, today it is acceptable and depends on achieving strategic alliances with large companies that need the virtues of the system proposed by NANO.
And finally, without a doubt, the connection with other networks is one of the important points to work on in order to advance on the road to mass adoption.