Nano Explained - How Does Nano Work? (Cryptocurrency Beginner's Guide - XRB)
Nano (previously called RaiBlocks) strives to achieve what Bitcoin was originally intended to do:
- Instant transactions - no delay on purchases large or small.
- Zero fees - no payment fees for the user no matter how large the transaction.
- Infinite scalability - unlimited transactions per second, no queuing or priority payments.
If a cryptocurrency like this were to succeed - think of the global benefits. Half the world can't afford to pay a $0.20 transaction fee.
Billions of people will be able to enter the global economy and the world will be better for it.
Nano vs. Bitcoin - The Differences
Bitcoin has run into scalability issues which means users have to deal with high transaction fees when the network is busy.
Bitcoin also no longer offers near instant transactions due to high latency - the busier the network the longer the transaction time.
We can't ignore the environmental factors either. The proof of work uses an increasing amount of electricity - and it's showing no signs of slowing down.
During busy periods the electricity requirements to run the network can trump the electricity requirements of whole countries!
Check out my Bitcoin And The Environment - Pros & Cons article.
How Nano Works - Block Lattice Explained
Nano's Block Lattice is blockchain with a twist - a few changes allow us to avoid the problems mentioned above. For now anyway.
Each user on Nano's network gets their own blockchain called an account chain. This allows users to update blocks on their own chain rather than on Nano's main chain.
Any funds sent require two transactions - a sender and a receiver.
The receiving user has to sign a block that the sender user sends over. The transaction doesn't go through until this happens.
The big difference between Nano's block lattice compared to Bitcoin's blockchain is the way they store transactions.
Nano only records your account's balance on the main chain rather than every single previous transaction.
Each Nano transaction uses its own block. Whereas...
Bitcoin has thousands of transactions stored in each block. Your transaction will not go through until the entire block is added to the blockchain.
One block transactions fix the scalability issues and the latency issues that Bitcoin runs into.
This sender and receiver transaction system eliminates the need for miners, lowering the environmental impact of cryptocurrency.
How Does Nano Keep The Network Secure?
Nano uses a delegated proof of stake model. If there are conflicting transactions, a vote is held to verify which transaction is valid.
Each account selects a representative node. The more funds assigned to a node, the stronger the vote.
An example makes this easier to understand:
Imagine two representative nodes - 1 & 2.
- Node 1 has 7 accounts tied to it with a combined balance of 500 Nano
- Node 2 has 4 accounts tied to it with a combined balance of 600 Nano
Node 2 has the stronger vote.
The more funds you have in the system, the more you're incentivized to keep the system honest.
Anybody can be a representative node - even you.
An attacker would have to own more than half of the online voting power to do anything bad. Doing so would destroy their large financial investment in the process.
Nano's Team & Community
You won't find many cryptocurrency communities as passionate as the Nano one. They share Satoshi Nakamoto's original vision for Bitcoin and they're doing their best to make it a reality.
The Nano team is full of experience and can be found on social media interacting with the community - answering questions, disarming FUD, and releasing regular updates on their progress.
Don't take my word for it - go and look them up.
They're doing everything right so far, which is why I was ecstatic when Binance listed them on their exchange.
How To Buy Nano & Store It Safely
I suggest you make an account on Binance and purchase Nano there.
Check out my 3 Best Cryptocurrency Exchanges For Beginners article for a more detailed run through.
Don't leave your Nano on the exchange. You need to move it into a wallet to keep it safe. Exchanges can get hacked and they can freeze your account if they choose to do so.
Check out my How To Keep Your Cryptocurrency Safe guide for more information.
A Nano wallet you can use can be found on their website: Nano.org
Interesting Nano Projects - Last Words
Nano's network has processed over four million transactions and they've managed to keep the ledger size under 2GB.
Energy consuming mining is a thing of the past. The maximum supply of Nano (133,248,290) has been reached and they did this in a unique way by distributing it via captcha solving. Pretty cool if you ask me.
Aside from the instant and free payments for businesses - another cool project is the partnership with 1UpCoin.
Twitch streamers now have a way to instantly receive Nano donations from their viewers.
Think of the Twitch audience - teenagers and young adults who are vital for cryptocurrency adoption. Bringing cryptocurrency to them rather than them seeking out cryptocurrency is much better.
The future will be incredible and I honestly can't wait.
Thanks for reading, I love you all. Speaking of Twitch - I like to stream when I can. Come and chat crypto with me live!