What is Nano?
Based on a block lattice architecture, Nano, formerly called Raiblocks, is a cryptocurrency where each account has its own blockchain. This “account-chain” blockchain that is attached to every account acts as a balance and transaction history. This means that the account-chain can only be updated by the account owner, which makes transactions almost instant. Since only the account holder can create or update blocks, that means two separate transactions are required when moving funds in the account; one transaction would be created by the sender which is called a ‘Send transaction’ while the receiver creates the second one which is called ‘receive transaction’.
Nano uses delegated proof of stake (dPoS) consensus model for its validation. This dPoS model ensures the security of the network as any intending attacker would be required to have 50 percent of the voting power in the system. This can only happen if the attacker has 50 percent of the entire XRB token which is either difficult to possess or financially unwise as it would require the attacker to attack a platform he has 50 percent stake on. Not only that, the dPoS used by Nano also minimizes energy consumption enabling full nodes to function properly on inexpensive hardware and low power.
Unlike many cryptocurrencies, Nano cannot be mined. A portion of its maximum stock of 133,248,290 XRB tokens was distributed in October 2017. That amount is the only amount of XRB that will ever be created. As a part of its rebranding effort, Nano changed its name from Raiblock to Nano on January 31, 2018. It is a cryptocurrency without transaction fees and has scalability where each transaction is processed independently thereby eliminating block size related issues.
The lightweight protocol of Nano cryptocurrency makes transactions processed in the network free of any charge. That means transactions are completed free as the cost of running nodes is insignificant due to its lightweight protocol. Since there are no transaction fees attached to transactions on Nano network, would the system not be prone to malicious attacks from spammers? You might ask, while the entire Nano platform runs on a delegated proof of stake consensus protocol, its individual account-chains are run on a proof of work protocol when sending transactions as a security measure to ensure that spammers are deterred from sending thousands of malicious transactions, as completing the proof of work required for thousands of transactions would be daunting for spammers. Although the effect of completing a proof of work protocol when sending a transaction is insignificant for a single user but would be daunting for a spammer.
Nano’s account-chains make use of digital signatures where blocks which are sent to the ledger for confirmation must be signed or validated by the account owner alone. This would make it impossible for an attacker to change user’s account-chain since only the user will have access to his or her private key.
Features of Nano
Block Lattice Architecture
Nano is built on a block lattice architectural protocol known as Directed Acyclic Graph (DAG) where each user has his or her own blockchain called ‘account-chain’ that records the account history and transactions instead of the number of transactions in the account. This protocol aids the use of less heavy storage requirements through database pruning. With this in place, each blockchain will only reflect the balance history of its individual account which can only be signed or updated by the account holder.
Send and Receive
Every transfer of funds within the Nano network requires that two separate transactions must be set in place, namely the ‘send and receive’ transaction. For funds to be moved in the network, the sender must create a send transaction, which would occur when the fund amount has been deducted from the sender’s account balance. Each send transaction done on the sender’s account must reference the owner’s previous block to make sure that the current balance is lower than the previous. This reference is done so as to avoid double spending on the block lattice. Once the send transaction has been sent then the receiver would complete a receive transaction which would occur when the fund amount transferred from the sender’s account is added to the receiver’s account balance. Nano’s send and receive protocol helps keep data footprints and transaction sizes small.
Delegated Proof of Stake
Nano network runs on delegated proof of stake (dPoS) protocol for its consensus. This protocol gives users the ability to choose a node to represent and vote on their behalf. Verifying signatures of processed blocks are done by the representative nodes chosen by the user. And when there are conflicting transactions, the nodes vote for the valid one. The voting power of each representative node depends on the amount of Nano tokens linked to the account.
Proof of Work
Nano only uses proof of work protocol on its account-chain when making a sending transaction as a means to deter spammers. It is a security means to deter spammers from spamming the network since there are no transaction fees, a small amount of work is attached to the ‘send’ transaction, these small works take up to 5 seconds to generate and 1 microsecond to validate. This would cost a spammer a significant amount of computing power to perform but requires a small amount of work for other users.
Difference between Nano and other Cryptocurrencies
- Nano’s block lattice architectural protocol sets it apart from the rest of the cryptocurrencies. As this protocol gives users ability to have their own blockchain called account-chain which in turn helps Nano build a decentralized ecosystem of free transactions and near instant transaction speed.
- Nano uses a hybrid of delegated proof of stake (dPoS) and proof of work (PoW), unlike other cryptocurrencies that only use either one. dPoS is used in the entire network for consensus while PoW is only used in account-chains as a security measure to deter spammers.
- Nano uses account-chain to sign digital signatures which can only be validated by the account owner.
Nano’s Recent Twitch Partnership
Nanex has recently announced that they partnered with 1upcoin to provide an avenue to Twitch streamers to instantly receive NANO donations for free from viewers. This is a big deal as Twitch is the premier game streaming platform which brought around $4 billion revenue in 2017. With Twitch’s platform growing rapidly every quarter, Nano is now going to be in a prime state for familiarization and adoption.
Nano Pros and Cons
- No transaction fees: Unlike other cryptocurrencies which charge fees for transactions on their platform.
- Transparency and open-source: The team behind Nano might decide to leave the project yet Nano will still stand.
- Higher Scalability Nodes are pruned to reduce system resources making only the latest block of each account-chain important.
- Decentralized: Nano has many nodes and that equals more decentralization.
- Instant transaction processing: Since transactions are not grouped in blocks, transactions can easily be confirmed in the ledger.
- Transactions per second are 7,000. To put that in perspective, Ripple has 1,500,
- Block lattice isn’t widely known outside of Nano’s community.
- Nano needs a dedicated team of marketers that can bring attention and more partnerships that it deserves.