Cryptocurrency
NANO Red Flags
Researching The Most Aggressively Promoted Token
Nano / Raiblocks is a scam in the sense it is created for free, and old users need new users to dump their nano at a profit to new bag holders.
- quote by nosuchthing
We consistently advise readers to approach any cryptocurrency-related story with a critical mindset, conduct their own research, and draw their own conclusions.
This story contains information from research conducted online regarding cryptocurrency Nano, and we analyze the cryptocurrency based on publicly available information to present an unbiased evaluation.
We will however explore this cryptocurrency and its history with a critical approach since malpractice in this industry is dominating, and we often encounter abhorrent practices that “pump bags” of vaporware tokens and offload them to the unaware investors at the peak of a bubble.
As we delve into the Nano rabbit hole, we come across several unexpected discoveries.
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The Launch And Distribution Of RaiBlocks (Nano)
Nano was the inception of developer Colin LeMahieu.
The purpose was to offer feeless transactions with a confirmation time of less than a second and a scalable network that can perform up to 1000 tps (transactions per second).
In 2014, the dev started working on Raiblocks (later renamed to Nano), and in 2015 launched the network and initiated a “fair” distribution of the pre-mined Raiblock tokens via a faucet mechanism using the well-known captcha system for security.
This faucet shut down in 2017, having distributed more than 150 million tokens.
Nano is claiming it had a fair distribution via this captcha solver mechanism, while many analysts disagree on the fairness of this process.
The initial distribution of XRB was performed through
“manual mining” limited via a captcha.
The distribution rate was:
17 XRB (Raiblocks) per hour per ip4.
Nano marketers assert that the captcha mechanism ensured a fair distribution, but critics argue otherwise.
To anyone with an average understanding of Python, VPNs, and the options available, this method was certainly easy to automate. With the plethora of VPNs available today, changing the IP and allowing users to claim every few seconds is not difficult. Furthermore, a Python dev can create scripts to bypass Captcha effortlessly.
Any desktop can handle several instances of an OS, while apps that replicate the Android environment on Windows and Linux also exist and can be used with multiple instances allowing anyone to claim several times more than once every hour.
It is possible to run multiple instances of an operating system on a desktop computer. In addition, Android emulators on Windows and Linux exist, and these apps can also be used to run multiple instances.
Therefore this process (one IP and captcha security) can be rigged.
And this is what happened with Nano.
Several YouTube videos describe how the captcha process of the Nano faucet was manipulated, and how cheaters of this process grabbed most of the the Raiblocks (Nano) tokens.
Automated captcha solvers with VPNs and several instances of an OS running generated massive cheating in this supposedly fair token airdrop.
Therefore, the distribution was not really fair as some took advantage and collected enormous amount of tokens.
Concerns have been raised about the level of centralization in Nano, with critics suggesting limited capabilities in this issue:
“It seems to Only Cost $3m to Centralize Nano (RaiBlocks)”
Nano is broken at the core with its free transactions and missing “block size” limit (or any limit for that matter).
Nano coin doesn’t solve any computer science problem and doesn’t make any progress in decentralized consensus research. It simply removes the key component of a complete system — the limits necessary to keep the whole shit together.
Nano naively relies on unconstrained data growth to temporarily offer free and instant transactions. This is simply unsustainable if Nano has any ambition to be decentralized and censorship-resistant currency.
Since 2017, Nano has operated a massive online advertising campaign utilizing cheap “marketing” teams with multiple accounts (burner accounts on Twitter and Reddit) and posts with fake engagement.
It is one of the coins that has not recovered since the 2017 pump and struggles to survive when competition is fierce, with top P2P networks constantly developing and evolving.
The Nano whales (individuals who abused the distribution system) also understand that 2024 could be a chance to offload their massive amounts of tokens and dump them to unaware retail investors.
When hype strikes in a possible new crypto bull run, investors rush to buy anything, therefore they operate this ad campaign, relying on harassing individuals in support of competing blockchains, while constantly attempting to manipulate discussions to promote Nano and boost its social presence.
Investing And Price History
The details provided in this story are intended solely for informational purposes. We do not offer any financial advice but only gather relevant information from the internet that investors may deem useful (or not).
I don’t advise anyone to buy Nano (or not), as I don’t give financial advice for any low-tier token in this market (As of now, Nano stands at the 278th position in the market cap rankings).
Undoubtedly, the price of any other token can increase during a bull run, yet upon analyzing the charts, we also discover the high risk these investments include.
Any token can generate colossal pumps and dumps, and Nano experienced one in 2017.
Unaware investors (victims) may be drawn to any worthless token, as exemplified by previous scams such as Bitconnect and Terra Luna, and the FTT token managing to attract investors until the inevitable collapse of these schemes with unstable foundations.
Since the cost of operating a token is minimal, tokens can revive on every bull run, and their top holders can keep milking them for several years.
They also utilize hype to succeed in their goals. This phenomenon is not limited to Nano, rather it is prevalent in this market. We can find thousands of tokens re-appearing out of nowhere and “pumping” when interest in cryptocurrency rejuvenates.
Nonetheless, hype is always ephemeral, and the chart history of Nano serves as a testament to this fact:
Nano’s all-time high ($33 ATH) was achieved during the 2017 pump and dump, and during the 2021 bull run only reached around 20% of that price.
Despite Nano’s efforts with social media advertising more accurately, the fundamentals do not seem to suggest a positive outlook:
Nano Spam Attack
The coin’s design guarantees very low transaction fees. But as evidenced by this attack, this comes at a cost of decentralization and Sybil resistance.
— Coindesk
In 2021, Nano suffered a spam attack that damaged its reputation severely.
The entire network went out of synch, and the processing of transactions halted.
Nano creator Colin LeMahieu told CoinDesk that nodes were first knocked out of sync by the attack which stressed “cpu and disk limits.”
“Lowering the bandwidth limit,” he said, “preserves disk and cpu resources so they can stay in sync.”
“The network was at a sustained 70+tps over a week and nodes were falling out of sync. When representatives lower the bandwidth cap it effectively reduces the network tps which allows them to catch up. Unfortunately the attacker was also exploiting a poor performance case in the node so resyncing is slow,” LeMahieu continued.— Coindesk
Nano is not a blockchain but a DAG (Direct Acrylic Graph), a similar system that was first tested/developed with IOTA, that also massively failed as well (in 2020), requiring a manual shutdown and centralized intervention by developers to fix a wallet exploit that was affecting the users.
The Nano BitGrail Hack And A Re-Org Proposal
Nano was in the news in 2017 and early 2018, as every other coin was enjoying a pump, and subsequently a dump followed.
Bitgrail was a small and almost irrelevant exchange that actually nobody knew at the time, yet, for some reason it managed to attract several investors trading Nano tokens.
In February 2018, Bitgrail was hacked and lost 17 million Nano (~$170 million), and at this point, several strange events emerged.
First, the Bitgrail founder Francesco Firano accused Nano developers of inadequacy that enabled double spending exploits.
Nano released a statement with an announcement that they found no double spends on the ledger and did convince the cryptocurrency community.
Furthermore, Nano devs rejected a re-org as a solution proposed by Firano:
“We will say that the devs refuse to cooperate despite the proposed solutions. We are going to report the incident to the police, first and then we will explain what happened. Millions of dollars of your supporters depend on your decision. I hope you have understood this before making the decision not to cooperate.”
Hundreds of millions of dollars were indeed lost, but the fault was on Bitgrail, not Nano.
Firano did report the incident to the police (as he had no choice), and eventually, an Italian court sentenced him to pay back the users in full ($170 million). Since the exchange assets would not be enough, the court also decided his personal assets to be liquidated and used for creditors’ reimbursement.
Firano maintained his stance that he had proposed to Nano a way out, but the Nano team rejected it. This proposal was the re-org.
Here’s why I chose to include this event in the story:
The Nano team rejected a re-org proposed by Firano, but not because a re-org was not possible. In a truly decentralized network, that was not a decision for the devs to take anyway but for the entire community.
Yet, this fact alone suggests that a re-org is technically possible and probably can easily apply in this network.
Therefore, not decentralized, at least not as much as we’d expect.
The small team of devs can re-org the chain, reverse and censor transactions if they want to. They decided not to, because it was not in their interests.
It would have been an entirely different history if those $175 million on Bitgrail belonged to the devs and not the stakeholders.
Therefore, the entire system of Nano is based on trust in the team of devs who have the ulterior motive and the power to not re-org the chain, until they are forced or incentivized to.
Censorship resistance is a crucial element that adds value to anything related to the cryptocurrency space, and its absence can significantly impact the overall value of such assets.
A re-org compromises censorship resistance, the fundamental component of cryptocurrency.
The Nano team rejected Firano’s proposal, but will it also reject a request by government agencies, or would it have accepted the request if this was their money at stake and not the investors’ funds?
In Conclusion
Critics have raised concerns about potential abuses in the initial distribution of Nano tokens, highlighting perceived weaknesses in the structure of the faucet.
In the cryptocurrency space, the concept of decentralization has often been misused and manipulated, resulting in a distortion of its original meaning.
Networks shut down, admin keys in smart contracts showcase a potential threat, and everyone forgets that decentralization is the mechanism that secures censorship resistance.
Nano has been active in its promotional efforts across various platforms, including social media, YouTube, and forums. These campaigns are aimed at increasing awareness and demand, potentially leading to enhanced liquidity and a subsequent rise in token prices, providing an opportunity for large token holders to divest their substantial allocations.
It is important to be cautious and spend time researching and conducting due diligence before investing in anything in the cryptocurrency market.
We recommend taking everything you read with an extremely critical viewpoint and conducting thorough research before making any investment decisions.
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