Cryptocurrency NANO — why the right choice for our aid project?
(Dear reader, this story is linked to the main story, please see HERE)
— Disclaimer: This project is not linked to the NANO foundation (see here the official Medium page of NANO) it just make use of the cryptocurrency from the NANO-Foundation —
Why is NANO the chosen one?
Maybe you are new to cryptocurrencies maybe you’re not. In fact cryptocurrencies aren’t that different to your money run by the government so — called fiat-money. Both are divided into units and to every unit is assigned a value.
When perceived in dollar: one Dollar bill is assigned to $1.00; 1 NANO is assigned to, at date of writing, $0.95.
When perceived in NANO: one NANO is assigned to 1 NANO, $1 is assigned to 1.05 NANO.
Both are divisible:
USD currency provide different coins and bills for “breaking” one unit down (or stepping it up) — $1 USD consists of 100 smaller units (cents:1 cent = smallest possible unit)
NANO cryptocurrency is divisible in (nearly) every step you like — 1 NANO consists of 1,000,000,000,000,000,000,000,000,000,000 raw (1⁰³⁰) (raw: 1 raw = smallest possible unit).
The differences between those two currencies are even more interesting.
First the most obvious one: Fiat money is physical, cryptocurrencies are digital. Moreover, you don’t need banks or states to run cryptocurrencies, which in fact is a huge advantage, but at first thought scary though.
When speaking about cryptocurrencies most of you will think of Bitcoin. Bitcoin was the very first cryptocurrency and the first use case for a new technology called: “blockchain”, or more technical correct: “Distributed Ledger Technology” (DLT).
At the beginning Bitcoin did a very good job. It enabled people to send funds around the globe in a matter of an hour for the first time in human mankind. This without an intermediary entity like a bank or other financial service institution.
So you may wonder why not use Bitcoin to send funds to the families in Venezuela? Bitcoin or better to say Bitcoin’s network is about 10 years old. Unfortunately the underlying protocol of Bitcoin doesn’t changed much during this time to provide the user with faster transactions and lower or even better no fees. After all these years Bitcoin has still some very important bottlenecks which are very hard, most likely never solvable for the developer which are:
2) Transaction fees
(These two are the most critical. Obviously there are much more. But keep in mind: This technology is very young and need some time to mature.)
Bottlenecks in Cryptocurrencies:
Bitcoin is in theory and in practice not able to handle more than six transactions per second (tps).
This is maybe enough to handle some transactions between some computer enthusiast but not when it comes to greater adoption like many more people use it for daily groceries etc.
Above this a transaction takes at least 30 minutes up to several hours of processing or better to say “to validate this transaction”.
However, NANO is able to handle theoretical several thousands of tps.
See here a very short article and a nice visualization.
2) Transaction fees
When you send someone funds you have to pay a transaction fee to the network to validate your transaction. This fee pays the so called “miner” which run computer hardware to “build” the network.
This mechanism is called “proof of work” (pow).
Not to go deep into this topic, but this mechanism has many faces and bring some mayor advantages but as well major drawbacks as well.
When comparing Bitcoin to NANO (both make use of this mechanism) Bitcoin is burning, due to the underlying protocol, gigantic amounts of electric energy to secure the network and all funds and transaction in it. In times of global warming and a raising awareness of handling our resources with care, Bitcoin is the exact opposite if this.
In contrast, NANO’s pow-mechanism relies on another strategy. To secure the network and all funds and transaction in it, it relies on so called “Representatives” and a small necessary amount of computing power from your sending/receiving device (mobile, desktop PC, etc.).
By this the electrical energy consumption of NANO´s network is way less than Bitcoin’s network.
You can say NANO is a “green” currency which fit future requirements in terms of a very small energy consumption.
This is where NANO comes into play. NANO is, when compared in terms of a currency, very similar to Bitcoin. It’s only usage is to send funds. Out of a technological view NANO is way different to Bitcoin with a way more enhanced network without the drawbacks of 1) and 2) and more which are not mentioned here.
NANO is able to perform more than 3000 tps and this without need of paying fees to anybody. Moreover, a transaction is done in a couple of seconds and takes about that much time like paying with your EC-Card.
See here for yourself a very nice tool to experience the speed of a real NANO transaction (here for article, here for tool).
You may now ask:
“Why NANO? — They are over two thousand listed cryptocurrencies today!”
Yes, that’s right! But if you have a deeper look into their underlying protocol or at their network (in fact most of them don’t have an own network and depend on third party platforms) no one can compete with NANO up to now. NANO’s network works for several years know without flaws and provided us with high secure transactions. Moreover, the development is fast and steady, the NANO foundation provides every user with very easy to use wallets (see here for an article: “Creating a NANO wallet”) and NANO have a big ecosystem full with 3rd party developers and enthusiasts who provide more tools, apps and adoption to the network.
Furthermore NANO is accepted on a famous Venezuelean exchange “LocalBitcoins” so the families can either exchange NANO into their national currency “Bolivar Soberanos” or are even, thanks to a rising adoption rate, able to pay directly a merchant for goods.
That’s why this project relies on NANO and encourage the families to use it as well.