An Undervalued Cryptocurrency: NANO

There are many great projects in the crypto space. That said, I believe digital cash solutions are far much neglected and undervalued. Pretty much the real reason why cryptocurrency exists in the first place and NANO is my preferred choice of focus.

Disclaimer: This is not financial advice. Everything that is written here is solely based on my own opinion. Please do your own due diligence before making any investment decisions.

TL;DR

• NANO focuses on P2P digital cash solution
• NANO is feeless and environmentally friendly

• NANO transacts almost instantly with high transaction throughput but is not widely adopted yet

What is NANO?

Nano is a low-latency cryptocurrency designed as a peer-to-peer digital cash payment, primarily for consumer and merchant adoption as well as micropayments. It was launched in 2015 by Colin LeMahieu, an experienced software engineer with an aim to remove inefficiencies present in digital cash solutions and be used as an everyday currency.

Image Source: CoinMarketCap

As of 29th December 2021, NANO's current price is at $3.63 USD, standing at roughly 493 million market capitalisation with a fixed supply of 133,248,297 NANO.

How does NANO work?

NANO uses a variation of Delegated Proof-of-Stake (DPoS) called Open Representative Voting (ORV) as its consensus mechanism to prevent the breaking of software rules. Account owners have more control over who has more power with consensus and how decentralised the network is as they are able to vote freely for their representatives. Representatives are the ones that keep the network secure and stable by confirming blocks and validating transactions on the network.

NO mining or rewards. NO inflation. NO fees.

Uniquely, NANO has no miners thus, no monetary incentives to those running the nodes. This avoids any possible opportunities for profit maximisation. And since there's no mining activity, there will never be any new NANO issued. With such factors, it removes emergent centralisation forces for longer-term trending towards decentralisation of the network.

Image Source: Nano Charts

Network decentralisation will be critical moving forward. Although NANO is not truly decentralised yet, NANO is growing towards it by day. This can be measured using Nakamoto Coefficient (NC). According to Nano Charts as of 26th December 2021, it has NC Safety of 12 and NC Liveness of 3. NC Safety represents the number of entities needed to threaten network safety while NC Liveness represents the number of entities needed to collude to stall or halt the network. Essentially, the higher the coefficient is, the more decentralised the network is.

If you would like to experience how easy it is to send and receive NANO, you can check out NANO faucets. Simply create a NANO wallet from Natrium and receive a small amount of NANO for free. Alternatively, you can watch the process over here.

Why NANO?

Digital money should be easily transferable, non-reversible and have little to no fees. And NANO complements these criteria.

Feeless and Transacts Almost Instantly

Why is feeless so important? Imagine having to pay a fee for something you use on a daily basis. This happened back in the early days when email was first launched. Before it became free, for every email sent, a user was charged a small fee just to deliver a message on the internet. Although it looks cheap on a single course, it doesn't appear practical for mass adoption and accumulatively, it's expensive for everyday use. I believe such a concept applies the same to day-to-day transactions.

Image Source: Hacker Noon

On top of that, NANO achieves full confirmation in under one second. Unlike many other cryptocurrencies, NANO uses a unique block-lattice architecture where each account has its own blockchain and only the account owner can add blocks to their own chain. This allows transactions to occur asynchronously, without waiting for other transactions to be processed. With ORV and block-lattice structure, it enables feeless and near-instant transactions.

Image Source: ShutterStock

You can also use this advantage to send money overseas for free and immediately with NANO, making NANO borderless. You no longer need to pay a percentage amount of fees just to transfer money across borders which we are currently practicing. In addition, this could potentially turn NANO into a great tool as an FX pipeline in the near future.

Environmentally Friendly

NANO does not involve miners to do expensive Proof-of-Work (PoW) to secure the network thus, NANO is very light on energy consumption, using only 0.11Wh per transaction. Since NANO is in a similar segment as Bitcoin, here's a visualisation of its comparison on transaction energy usage as of October 2021.

Image Source: Twitter

High Transaction Throughput

With such capabilities, it makes NANO the leading cryptocurrency for consumer transactions. However, it raises some concerns about its security, especially spam attacks due to NANO's nature of being feeless.

For instance, an account user could send many unnecessary but valid transactions between accounts in an attempt to flood the network. With that, every block in NANO has a small PoW at the transaction level to bring additional security to the network.

Unfortunately, NANO experienced the largest spam attack a few months back, causing significant delays in the network. Since then, NANO's protocol has been improved, making NANO spam-resistant. A priority feature was implemented, creating further limitations on spammers. Now, spammers can no longer send dust amounts frequently to harm the network.

Initial Token Distribution

Image Source: Messari

NANO was originally distributed via a public faucet. Just like airdrops! The purpose is to distribute NANO as 'fairly' as possible by contributing time and effort rather than hash power, promoting a more distributed network. Anyone and anywhere in the world can receive a small fraction of NANO by solving a CAPTCHA. Basically, all you need is access to an internet connection and a computer or mobile device to participate.

In 2017, such distribution was shut down to shift focus on protocol development. The remaining undistributed NANO was sent to an inaccessible burn address, leaving only 133,248,297 NANO in supply. Following the closure of the faucet distribution, 94.75% of the total token supply was successfully distributed to participants worldwide and 5.25% to a development fund for expansion purposes.

Further Utility

On 12th October 2021, an alternative payment was introduced for Ethereum miners via NANO. Ethereum is infamous for its expensive gas fees especially when the network is congested. With this integration, Ethereum miners can finally avoid hefty gas fees and get paid fully in NANO. As of today, it has successfully paid over $10 million USD in total. This adds another brilliant use case for NANO, providing a steady volume of transactions that is ever-growing.

Closing Thoughts

NANO is truly innovative with its speed and cost-effectiveness which is suitable for a fast payment system. Although cryptocurrencies are still known to be speculative assets, I believe NANO has some room to tap on the standards for digital cash solutions and likely deliver more value than where it is today as a medium of exchange.

I hope this gives a good understanding of NANO. If I happen to miss any crucial information on NANO, please feel free to correct me. Cheers!