Nano is a digital currency that uses cryptography to enable peer-to-peer transactions. The project seeks to address blockchain limitations by implementing the innovative block-lattice structure and a delegated Proof-of-Stake consensus system.
Finrazor continues Essentials section providing guidelines on crypto and blockchain basics, and now we are going to focus on specific projects and materials on them. Let's start with Nano!
What is Nano?
A payment system...
Nano, formerly known as Raiblocks, is a cryptocurrency that seeks to replace traditional payment systems — a quest Bitcoin originally set out on. Nano emerged as an alternative to the first cryptocurrency which with time showed a number of weaknesses such as growing fees and long confirmation times.
… with instant transactions
Nano employs a novel data structure called the block-lattice which functions as a lattice of intercommunicating blockchains. Each blockchain stores an individual user’s balances and updates asynchronously to the rest of the network. This mechanism makes transactions in Nano nearly instantaneous.
… and non-existent fees
Nano establishes network consensus via delegated Proof-of-Stake. This is a balance-weighted consensus mechanism where the burden of maintaining network security lies the hands of those who are interested in it above all others, i.e. users with the highest balances. This means that there are no miners to take a cut from each transaction in fees. Each user chooses a representative, a constantly running node, to confirm transactions. A user can choose themselves as their representative. A representative’s vote weight depends on the source user balances.
How does Nano work?
Nano uses the Directed Acyclic Graph (DAG) data structure. To understand what a DAG is, let’s first look at a blockchain. A blockchain is a sequential ordering of blocks where each block always points to a more recent particular block and not the other way around. A DAG is also an ordering of blocks. A block in a DAG still cannot point to an earlier block but there is no strict sequence of blocks. A DAG is a much more efficient data structure than a blockchain and gives Nano tremendous scalability. Each user chain is replicated to the rest of the network, and the entire arrangement is called the block-lattice.
Sending a transaction
Each user controls their account-chain with their key-pair, a public key and a private key. When a user sends a transaction to another user, two operations take place: a send-transaction signed by the sender’s private key and a receive-transaction signed by the receiver’s private key. Each block in an account-chain is a single send- or receive-transaction.
Sending a transaction requires the sender to attach a small proof-of-work, which does not take more than a second to compute. This protects the Nano network from spam attacks.
- Raiblocks, now Nano, was launched in 2015 by Colin Mahieu.
- Nano is now at its maximum supply of 133,248,290 NANO. All token were distributed via a captcha-based faucet system in October 2017.
- According to Nano’s website, the network has processed over four million transactions but the unpruned ledger is still only 1.7GB.
- Pruned nodes only need to keep the latest block of each account-chain which makes the node easy and lightweight to run on low-end devices.
- All messages in the system were designed to fit within a single UDP packet.
- Nano is sometimes criticized because the majority of voting weight belongs to a small percent of representatives.