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Bitcoin was envisioned as the decentralized currency of the future, but today the narrative has shifted, and its adherents call it a store-of-value instead of a currency. Why is that? Why did they back-track on the vision?
One must only try using Bitcoin to know that it is non-functional as a currency. The average transaction takes between 1 and 3 hours and comes with a fee of $20. The network barely pulls 4 tx/s (transactions per second) but it consumes 0.3% of the world’s total electricity production, which means that a single Bitcoin transaction consumes the same amount of electricity as a Tesla driving the 41-hour trip from New York to Los Angeles!
Okay. Bitcoin is terrible, but maybe it’s the best we can hope for if we want a globally decentralized currency? The answer is NO because technology evolves and just as Netflix overtook Blockbuster, Nano is on the path to overtake Bitcoin. So let’s go through why Nano is what Bitcoin hoped to be one frequently-asked-question at a time.
What is Nano?
Nano is a fee-less, instant, decentralized, scalable, and energy-efficient digital currency meant for large and small payments and for storage-of-value.
Can I test Nano without buying it?
Yes. Nano is completely fee-less which allows for community-driven faucets from where you can transfer a small amount to your wallet and test it yourself.
How fast is Nano?
Nano is the fastest decentralized currency in existence, with a median transaction time of less than one second (irreversible, full-settlement).
How energy-efficient is Nano?
Nano is very light on electricity consumption mainly because it does not rely on miners doing expensive Proof-of-Work to secure the network. You can do 6 million Nano transactions with the energy consumed by a single Bitcoin transaction.
How scalable is Nano?
Most decentralized currencies are inherently limited by the protocol, such as with Bitcoin’s theoretical limit of 7 tx/s. Nano scales with the hardware of its nodes which means it has no theoretical limit. The live network has on multiple occasions confirmed 100+ tx/s while still serving users with sub-second transaction times.
What enables Nano to be fee-less?
Most decentralized currencies rely on a single shared block-chain where users compete on fees to convince miners to confirm and add their transactions. Nano has a block-chain per account that only the account owner can modify, and instead of relying on miners to secure the network, it uses an Open-Representative-Voting system.
How does Nano protect against spam?
Users need to perform a small PoW (Proof-of-Work) calculation before a transaction is made. The PoW can be verified 20 million times faster than it is generated.
Update: The dev team is working on a solution that might allow us to remove the PoW altogether.
Note: Bitcoin uses PoW as a consensus algorithm which is why it’s wasting so much energy. Nano only uses PoW as a means to discourage spammers similar to how it's used in emails.
What incentivizes node owners if Nano has no fees?
You can run a Nano node for less than $20 per month and those who are incentivized to do so include:
- Exchanges that benefit from people buying and selling Nano.
- Vendors that save money from the lack of fees.
- Investors who want their investment to grow.
A list of active nodes can be seen on nanolooker.com.
Note: Bitcoin relies on both miners and nodes to run the network, but only the miners have a direct monetary incentive, yet there are 1000s of active nodes.
Are new Nano being created?
No. Nano has a fixed supply of 133 million — all of it in circulation.
How was Nano originally distributed?
Nano was distributed for free via a CAPTCHA faucet system where people around the world solved CAPTCHAs in exchange for Nano. The faucet ran for two years and was closed in 2017. 126 million Nano were distributed via the faucet, 7 million were set aside in a developer fund, and the remaining Nano were burned.
Note: The lack of an ICO, where coins are sold off to early investors, means that Nano is safe from the SEC charging it for an unregistered securities offering.
Are Nano transactions reversible?
Most decentralized currencies have probabilistic finality, which means you are never 100% guaranteed that a transaction is final. Nano has deterministic finality which means transactions are guaranteed to be irreversible once the recipient sees a 51% voting weight from the representative nodes, which on average takes less than one second.
How decentralized is Nano?
Bitcoin has grown less decentralized over the years because of how the economies of scale incentivize miners to form larger and larger pools. Nano does not rely on miners to run the network, which means it has no incentives that pull it towards centralization. If measured by the Nakomoto Coefficient, Nano is growing more decentralized by the day and is already ahead of Bitcoin.
How divisible is Nano?
If you divide $100 worth of Bitcoin between five accounts, you will be left with $0 worth of Bitcoin, which is of course due to its very high transaction fees. Nano has no transaction fees and is divisible down 30 decimals, and there is no lower limit on the amount an account can hold.
Is the Nano network healthy?
The Nano network has had zero downtime since its inception. You can see live stats at nanoticker.info.
Is Nano suitable for charity?
Yes. With the WeNano app, you can create a spot anywhere on Earth where people can go and pick up your donation. The lack of fees also makes it perfect for tipping, which you can do with the Nano Tipper on Reddit or the Nano Tip Bot on Twitter.
Bitcoin failed us on its promises and has proven non-functional as a currency, but Nano has picked up the torch and is rapidly gaining awareness. If this piqued your interest you should go and ask some skeptical questions over in r/nanocurrency. I have added sources to most of my claims but please DYOR (Do Your Own Research), and if you do decide to invest I recommend checking this buyer’s guide.
