NANO Overview & Why it is Worth Looking at
As of 2/20/2018
Market Cap: 936.12MM
Circulating & Total Supply: 133,248,290 NANO
*Please keep in mind that as of 1/31/2018, The Core Team of NANO changed their name from RaiBlocks to NANO because they wanted a, name that represented the simplicity and speed of their project. The logo depicts several nodes playing on the block-lattice design of the network, forming the letter “N.”
*Also keep in mind that it was recently reported from the CEO of BitGrail that it was hacked 17 million XRB coins (equivalent to about $170 MM)
Words that sum up NANO: Miner-less, Fee-less, Block-Lattice Architecture, Delegated Proof of Stake (DPoS), Directed Acyclic Graph (DAG), Pruning, Good Community, Decent Management Team
What is NANO?
NANO is a cryptocurrency that utilizes a block-lattice architecture (NANO Whitepaper) in which each user or account has his/her own blockchain which is controlled by the account’s private key, and each blockchain would be replicated to all the users in the network.
Under the block-lattice architecture, there will always be a send block and also a receive block. In order for a transaction to be completed, one user must create a send or receive block on his/her blockchain, while another user must create a send or receive block on his/her blockchain. The send block will send out a certain balance, or NANO amount. to another account, and the receive block will receive a certain balance, or NANO amount from a send block.
The send block would deduct from its total balance when the funds are sent, and those funds will add onto the balance of the receive block. In essence, balances are transferred between blockchains through send and receive blocks.
If only one block is created, then the transaction will not go through. Think of it like a regular transaction where there is a buyer and a seller. If there is only one buyer and no seller, or vice versa, then the transaction cannot go through. Same concept here. If there is a sender but no receiver, how will the transaction go through? You thus need two blocks.
There is also an “open block”, which is basically the first block created on the blockchain of your account, that will be shown on your account. The open block should act as a receive block because when opening up an account, which can be done by signing up for the NANO Web Wallet, there will initially be no funds in the account. In order for a transaction to occur, there must be some sort of balance on the account, hence open blocks could not act as send blocks. You can create an open block by sending money from an exchange such as Binance or Kucoin, into your NANO Web Wallet. Keep in mind that you cannot purchase NANO with Fiat Currency; You must first purchase Bitcoin, Ethereum, or any other exchange currency from a cryptocurrency exchange. Then you can transfer NANO from the exchange into your NANO Web Wallet.
In the photo above, you may notice that there is a “Time” symbol with an arrow going up on the side.
This basically means that send and receive blocks do NOT have to be created at the same time in order for the transaction to process. A node may be offline and complete the transaction whenever it goes back online. That is why some send and receive blocks are ahead of another instead of all of them being side by side.
This indicates that transactions may occur asynchronously, on their own, as opposed to Bitcoin transactions which must happen synchronously because it goes through the process of transactions going into a mem pool, then being picked by miners, and then finally put into the blockchain. The Bitcoin transaction process must all occur synchronously as opposed to NANO’s transaction process which may occur asynchronously, and almost instantaneously because they are done on their own.
In addition, don’t think of Block-Lattice as a long blockchain like that of Bitcoin,but rather think of it more like a web-like, database of blockchains in which each user gets his/her own blockchain that they can create send, receive, and open blocks.
Miner-Less and Feeless
NANO is miner-less; Its current supply was pre-mined, and the total supply of NANO was eventually poured into the circulating supply. This means that little to no resources are required when verifying transactions (don’t need expensive mining equipment), it is energy efficient, and it can still process a large number of transactions.
When the NANO (Prev. RaiBlocks) Whitepaper was created, the network had processed 4.2 million transactions with a ledger that only takes up 1.7 GB (currently 3+ GB).
https://streamable.com/natpz [Check this cool video out to see a side by side race between NANO’s transaction time vs. Usain Bolt’s 100M PR/WR Run.]
How are Transaction Verified?
In order for transactions to be considered valid it must follow a set of conditions. The block must not already be in the ledger (don’t want duplicate transactions),the transactions must be signed by the account’s owner (shouldn’t be signed by any one else), the account must have an open block, the previous block is the head of the account chain, and the computed hash meets the proof of work threshold limit. Keep in mind that NANO utilizes the Delegated Proof of Stake (DPoS) Consensus Algorithm and uses the Proof of Work (PoW) consensus algorithm minimally (I will touch more on this later), so there are representatives overseeing the validity of transactions.
This allows each account chain to be updated individually and quickly to the network. As a result, transactions are extremely fast, and are usually processed within seconds (4–5 seconds to generate the block and microseconds to validate the transaction), and has unlimited scalability (essentially no limit to how many transactions can occur simultaneously), and are feeless.
Each account chain can only be updated by the owner, and each block in the chain must be signed by the account’s private key. The rest of the node network checks and verifies that every block is valid and ensures that there is no double spending,
If the account owner misbehaves, representatives will vote against the invalid block and will reject it.
How to Create an Account and Blockchain
In order to create your own account and blockchain, you will need to use NANO’s web wallet in which you can seamlessly create an account in less than a minute. Just to re-clarify this point, when you create an account, you are also creating your own blockchain. NANO does have a desktop wallet option and an Android/IOS application wallet option, but those are currently in beta testing stages at the moment. From there you could send NANO from an exchange such as Binance, into your NANO Web Wallet. This transaction would create an “open block” for you. To re-clarify, you cannot purchase NANO with Fiat Currency, you would first need to purchase Bitcoin and Ethereum on an exchange first.
From personal experience, I transferred and received funds within 10 seconds, and there was also a .01 NANO transaction fee transferring XRB from Binance, in which other exchanges may impose greater fees. Transferring cryptocurrencies with and from the NANO Web Wallet should be fee-less itself.
However, if you just want to trade or hold NANO, you could simply just sign up for an exchange that trades NANO such as Binance and Kucoin. However, keep in mind that signing up for the NANO web-wallet yields benefits such as understanding how it functions, and is a safer place to hold onto your NANO coins as opposed to an exchange wallet. Even if you lose your NANO, only the team behind NANO can be blamed, and they will eventually find a way to refund you.
Media Portrayal & Consensus Algorithm [DPoS & PoW (Minimally)]
NANO has been known as the Bitcoin killer in terms of cryptocurrency adoption for everyday use, and it is clear why due to the fact that it has a latency-advantage, scale-advantage, no fees, and less of a barrier of entry (miner-less). It has also been known to be a competitor of IOTA due to the fact that they both have a Directed Acyclic Graph (DAG) structure. As opposed to blockchains that utilize Proof of Work in which miners on necessary to validate transactions and blocks, Directed Acyclic Graphs (DAGs) goes around this issue by getting rid of the block and miners who process, broadcast, and confirm transactions entirely. DAG transactions link from one transactor to another, and thus, one transaction confirms the next and so on. With the DAG structure, transaction times would be processed within seconds as opposed to Bitcoin’s 10 minute block time because miners and the validation process are taken out of the equation.
However, IOTA is different than NANO because it is used more in machine to machine purposes rather than peer to peer purposes. IoTA wants to create a machine to machine economy in which machines can operate themselves and utilize its DAG structures. For instance, a car that can include a set amount of IoTA that will cover all types of car expenses for the useful life of the car. IoTA also uses a different consensus algorithm than NANO; IOTA uses Tangle (Your transaction will be verified when you verify other transactions), and NANO uses Delegated Proof of Stake (DPoS) & and Proof of work (to a minor degree, see below.) There are other differences listed in the photo above.
“IOTA’s consensus is decided by Proof of Work (PoW) stacking of consecutive transactions, while RaiBlocks’ is achieved by voting on conflicting transactions. Stacking requires maximizing the continuous network hash rate which is an expense that is inherently paid in electricity by users of the network. Because RaiBlocks doesn’t rely on high network PoW to maintain security, the operating cost of RaiBlocks nodes and RaiBlocks users are much lower.” (NANO_FAQ)
How NANO’s Delegated Proof of Stake Consensus Algorithm works is that users have the ability to choose a representative node to vote on their behalf. The voting system is balance weighted, meaning the weight of the representatives vote, is directly proportional to the amount of NANO that is linked to their account. The greater the number of NANO linked to the representative, the stronger the vote will be. What these representative nodes generally would do is dictate which transactions are valid, and try to keep the network safe. When you sign up for NANO Web Wallet, you will automatically be assigned a representative node to validate your transactions, and you will also have the option to pick whichever representative node you want (check the public list of representatives below), in which there is a transfer of voting power from the old to new representative. Even if you do not vote, you are randomly assigned to a default representative (usually the developers of NANO) given the wallet you have chosen from.
Votes are weighted by account balances. Those who have more funds in the system are inherently incentivized to keep the system honest; a dishonest system would make their investment worthless. Thus, the security of the network would rely on 51% of the network that is voting using DPoS to be honest. DPoS can actually be safer than PoW because with the PoW coin, miners do not need an investment in a specific coin. They can just acquire 51%+ of the hash power and can run a 51% attack. For instance, because Bitcoin has about 10 times of the hash power of Bitcoin Cash, and it would be easy for a Bitcoin miner with malicious intentions to switch from mining Bitcoin to mining Bitcoin Cash and begin a 51% attack.
You may have heard that NANO uses the Proof of Work (PoW) consensus algorithm as well, and it does, but to a small degree. It is used as an anti-spam measure to prevent spamming of transactions due to the fact that those transactions do not incur any fees and take seconds to process. However, the main consensus algorithm is Delegated Proof of Stake.
You can check out the public list of representatives here: [https://www.nanode.co/representatives]
PRUNING of Chains
We understand that when opening a NANO account, you also create your own blockchain. Thus, the more NANO transactions you make, the more blocks that will be on your blockchain. However, as NANO becomes more widely known and adopted, scalability might be an issue for them as not many DAG structures have been used in a large scale. Therefore NANO is working on a concept called Pruning.
Pruning is the process in which only blocks up to the previous Send Block (or most recent block) need to be kept. All previous send blocks of the most recent Send block do not necessarily have to be kept and may be removed, or “Pruned” off the blockchain. Only those who are interested in participating in full ledger validation such as bootstrappers, peers, representatives, actually need to store the full ledger history. But this is not necessary for everyone. This will ultimately increase scalability for NANO, and allow greater transactions because there is more space in the network. In addition, this will help solve any issues when NANO gains a larger user base. The NANO Team is currently working on this concept at the moment and will try to add chain “Pruning” hopefully by the end of 2018.
*I illustrate this in the photos below
G= Genesis Block, O= Open Block, (-) = Send block, (+) = Receive Block
Potential Problems with NANO
The Directed Acyclic Graph (DAG) structure has not been tested at a large scale because not many cryptocurrencies have adopted this structure. Thus, more problems may arise when cryptocurrencies such as NANO,Byteball, and IOTA obtain greater traction.
In addition, the more NANO you own, the more voting power you own which raises the red flag of the <50% attack. However it is unlikely that someone would spend an exorbitant amount of money to take control of voting power within a cryptocurrency; There are other cryptocurrencies out there to hack as well.
More attacks on page 5–6 of the White Paper
NANO’s Management is composed of a team of eleven people; seven Software Developers, one person in design, one person in charge of legal issues, one person in charge of operations & partnerships, and one person in charge of community & public relations This is a very entrepreneurial (some college dropouts and self-taught programmers) team of people in which developers have worked at top companies such as Square, Dell, National Instruments, Qualcomm, Corning, Splash, Geomagical Labs, and more. The development team is very diverse because there are different types of software developers such as Zack Shapiro having a decades worth of experience as an iOS Developer, and Mica Busch having several years worth of experience as a Control Systems Engineer.
However, it is concerning that this team is relatively young, ages spanning from 23 to 40, and lack work experience at well known companies. Colin LaMahieu seems to be the most experienced developer who worked at Dell, Qualcomm, National Instruments, and AMD alone. Brian Pugh graduated University in 2016 and also received his Masters in 2017, but most of his “work experience” came from internships during his undergraduate studies. I broke down the entire team down below for you to look at.
Despite the fact that degrees from name-brand universities does not equate to how successful one will become, it does gives investors confidence that the team may efficiently complete a project because people who go to these name-brand universities are generally efficient and very intelligent, and thus can quickly execute any goal efficiently.
Furthermore, aside from the Development Team, the other teams are only made up of one person, in which some of them have not had formal experience (Josh Kleiman of the Legal team created both his companies, Troy Retzer may possibly be a freelance business consultant, etc.)
Overall, I am skeptical of the management team for the reasons listed above, and frankly do not believe that they will complete their goals as listed on their roadmap below, in a timely manner. Last December was when they should have released the Mobile Wallet, but it is still in beta testing as of late February. I do think that the team overall is very small still.
Team Broken Down:
CEO & Lead Developer, Colin LaMahieu: 10+ years of experience, worked at AMD, Dell, Qualcomm, and National Instruments, St. Cloud State University.
iOS Developer, Zack Shapiro: 10 years of experience building products and software, worked at Square, Splash and product hunt, UC Boulder.
Infrastructure Lead, Prev. Control Systems Developer, Mica Busch: Self-taught programmer, making Android lite Wallet, did not go to University?
Software Developer building Software Solutions, Devin Alexander Torres: Loves building fault-tolerant distributed systems, 10+ years of experience building software solutions for publishing, travel, insurance, and e-commerce industries.
Experienced coder in crypto space using C++, Russel Waters: 10+ years of work experience coding with C++ at Carbonite, Zmanda, Megapath, Telenetwork, did not go to University?
Non-Protocol Programming Development, Brian Pugh: Received masters in Carnegie Mellon in Computer Vision in 2017, Penn State University (EE Major) Class of 2016, worked at Corning, Geomagical labs.
Web Services such as cryptocurrency exchanges & building merchant services that use NANO, James Coxon: Been involved in NANO since March 2016, background in software development particularly focusing on rapid prototyping, embedded hardware, remote sensing and blockchain development.
Community & Public Relations, led by Troy Retzer: Was a business consultant for the last 10 years, and has worked to grow a number of other companies into successful businesses, Clemson University.
Design, led by Tito Vecchione: Deals with UI/UX design, UC San Diego, 8 years of work experience at Trepantech, Plethora Media Group Inc.
Legal, led by Josh Kleiman: Experienced litigator and corporate advisor, Partner at Scoolidge kleiman, founder of the Supreme Reporter, Brooklyn Law School Class of 2007).
Operations & Partnerships, led by George Coxon: Involved with NANO for several years, managers partnerships globally.
You may check out the Management Team at: https://nano.org/en/team/
The hacks had been first reported by CEO of BitGrail, Francesco “The Bomber” Firano, in which $170 MM worth of XRB (17 Million Nanos) was stolen from the exchange.
The chat between NANO executives and Francesco was hard to follow, but in short, a bug in their node (causing it to crash and allowing a “double withdrawal”) as well as their official explorer (Thus no time stamp). As a result, this led to a potential double withdrawal. A double withdrawal is when the send transaction occurs two times instead of one, in which the money is sent from an exchange wallet to a person twice, and the supply stays the same while the exchange loses money. This is different from “double spending” because in double spending there is an increase in supply in which the receiving block would receive NANO twice, while the sending block only sent NANO once.
As of now, no one will really knows for sure who was liable for the 17 Million XRB being hacked.
You can decide for yourself by reading the official chatlog below.
Official Chat Log between Colin (CEO of NANO), Zack (iOS Developer), Francesco “The Bomber” (Founder of BitGrail): https://www.scribd.com/document/371172957/Colin-ZS-Bitgrail-Chat-Log-TheBomber
As of 2/20/2018
Reddit: 30,000+ Readers
Twitter: 77k Followers
Medium: 2,600+ Followers
Github Contributors: 31 Contributors
The NANO community is quite good. There are posts regarding NANO being made daily, and the community is very active. More importantly, even after the BitGrail hack, there are many Redditors and people on 4Chan who are still bullish on the future of NANO, and are willing to “hold on for dear life” (HODL) NANO. For cryptocurrencies, it is imperative to have a loyal and strong community that believes in the product because they have a large influence on how other people view NANO, and can convert others into believing in the vision of NANO.
This does not compare to Bitcoin’s 750,000 followers, but the community is quite large given its minimal publicity and was only created 3 years ago.
Since the beginning of February, NANO’s price has dipped more than half of its previous trading prices from $18 to less than $8. This was due to the BitGrail hack in which investors believe that the NANO team was liable for, any hack of some sort would create a lot of FUD and cause a large selloff of the cryptocurrency, coupled with consistent FUD in the cryptocurrency market during prior weeks. However, there was no evidence of who was responsible for what, and even if it were NANO’s fault, we can expect that NANO’s management team will not let this bug issue occur again.
For these reasons, I believe that NANO’s lowest trading price should be around $6.81, and will be trading at $10 mid-March, assuming that there will be no negative surprises for NANO or in the cryptocurrency markets. It is currently trading around the $7 range with less than a $1B market capitalization, which I believe is a cheap price because all the FUD occurred last week and is dying out. The only thing I would be concerned about is if BitGrail’s CEO, Francesco, has proof that it was NANO’s fault for the hack. Then NANO would probably have to sustain another month of negative performance because they would need to find a way to refund $170 billion dollars, or suffer the loss of a lot of loyal community members.
In addition, I believe that NANO will perform well in upcoming months because it will officially issue more products soon, there are a lot of opportunities to improve NANO’s management and products, and there is also an opportunity to be listed on more popular exchanges.
The NANO Web-Wallet and Desktop Wallet should be officially released within the coming months, in which the markets are expected to react positively about this because there will then be 3 ways of accessing the NANO wallet. The NANO Android Wallet is currently released in Google Play, but is in beta-testing phase in order to fix bugs, and any data issues. This is coupled with the fact that these wallets are fee-less (exchange may charge a fee from .01 to even up to 1 XRB), transactions are processed quickly, and has great scaling ability.
On top of new product issuances, NANO will add chain“Pruning”, which is when only the most recent send block will be kept while all the other send blocks will be cut removed from the blockchain. This will increase scalability because there is more memory for users and space on the blockchain. Other major goals include the NANO adding in IPv6 multicast to the transaction broadcasting so that every user on the network may see the announcement for a NANO transaction.
In terms of other opportunities, NANO has great opportunity in expanding its small team of 11 by bringing in more talents, developing new partnerships and merchant services. It also has the opportunity to get listed on more popular exchanges such as Bitfinnex, GDax, and Bithumb which would give greater access to NANO trades, increasing volume and ultimately increasing NANO trading prices. NANO currently trades on Binance, OKCoin, Kucoin, Bit-Z, BitFlip, RightBTC, CoinFalcon and Mercatox.
For all these reasons, I believe that NANO would be worth $15 by mid-March, and $25 by the end of the year if they successfully bring out new products and capitalize on its opportunities.
*I am not a financial advisor; Please do more research before investing into NANO specifically, and only put in what you can afford to lose.
*I would also like to thank 4Chan user RZ10JSYG for clarifying the concept of “double withdrawals.”
*I would like to thank Kevin Ho & Louis Liu for helping me edit this article. They are visionaries in the cryptosphere and I highly recommend you check out their content.
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