There seem to be new cryptocurrencies appearing on the scene constantly. For the average user, this can make keeping up with the latest developments and getting in on the latest opportunities much more challenging. Even those who like the idea of Bitcoin are often deterred by the sheer complexity of it. For all its strengths, and the improvements that have been made, Bitcoin is still just a very user-friendly way of doing things.
The Problem with Bitcoin
There have been a number of proposed solutions to Bitcoin’s problems, but some of them are inherent in the way it works. In the whitepaper for their new currency, the developers of Nano cited the following concerns regarding Bitcoin’s future as a common currency.
First of all, the limited scalability of the technology involved in Bitcoin means that transaction fees aren’t just unavoidable, they are high! The average fee for a BTC transaction is $10.38.
Next, the high computational latency of Bitcoin, and the energy-intensive way in which it is mined, means that the average transaction time is 164 minutes. Thirdly, bitcoin is not very user friendly, in fact, this is true of most cryptocurrencies. Even relatively simple tasks like trying to find the best crypto exchange can be bothersome. And finally, there is bitcoin’s dark and dirty secret – pollution. Bitcoin mining is an intensive process which each year uses around 28 TWh, a number which is constantly rising. As a result, industrial and state-sponsored Bitcoin mining operations are becoming a major source of pollution.
What is Nano?
RaiBlocks was one of the solutions to Bitcoin’s woes, and in 2018 they rebranded as Nano. The Nano whitepaper laid out the goals for the currency quite clearly. It was intended to offer an efficient, reliable, and viable alternative to fiat currencies, while also addressing the shortcomings of other popular cryptocurrencies. Nano promises to allow users to deliver fee-less real time transactions that don’t require the colossal overheads or energy consumption that Bitcoin does.
How Does it Work?
It is only natural to be at least a little suspicious of a product that comes along and claims that it will not only replace an old product, but it will fix all the mistakes that product made. However, in the case of Nano, it is able to deliver on these promises. Not only that, but the development team have no trouble walking you through exactly how Nano manages to deftly solve the issues present with Bitcoin.
Crucially, whereas Bitcoin and most other cryptocurrencies make use of blockchain technology, Nano uses a block-lattice infrastructure. They work in a similar way, but there are some crucial differences between the two. First of all, under Nano’s infrastructure, every account has its own Blockchain. This individual blockchain is called an account-chain and the only person who can modify it is the owner. This means that a user’s account-chain can be modified asynchronously to the rest of the network, then updated and re-joined when a connection is available.
Whenever funds are sent between two users on the Nano network, two transactions are required. There must be both a sender transaction, and a receiver transaction. Before a transaction can be settled and processed, both parties must sign their respective blocks to confirm this.
Does it Work?
The use of account-chains rather than a collective blockchain definitely improves the latency (speed) of transferring any funds. The requirement for both parties to sign up on each transaction allows for faster and feeless transactions and eliminates the need for miners entirely!
Because the transactions on Nano are handled away from the network’s main blockchain, they can be recorded in a singled UDK packet. This essentially removes any potential issues relating to block size, as they now only need to store individual account balances for each user, not their entire ledger.
If Nano continues to deliver on the promises it has made, and there is every indication that it will, it could easily usurp Bitcoin. If cryptocurrencies are ever to become mainstream, they will need to become way more accessible. Nano is an excellent first step towards achieving that.