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Nano

By Victor & Grayson
August 22, 2019

Disclaimer

The following review is not financial advice. Coin Grades’ ratings and letter assignments reflect the technical and practical viability of these cryptocurrencies in the eyes of the Coin Grades team. As always, we encourage you to do your own thorough research using multiple sources before choosing to invest in any cryptocurrency.

Review

A little known cryptocurrency called RaiBlocks launched in 2015 with the promise of becoming a lightweight, green alternative to the old and expensive cryptocurrencies of the previous generation. RaiBlocks gained notoriety towards the end of 2017 when Bitcoin’s fees had reached a staggering $50 per transaction, and confirmation times spanned from several hours to several days. The glaring inefficiencies of older digital currencies such as Bitcoin sparked an interest in RaiBlocks as a potential candidate to eventually replace Bitcoin as the leader in the cryptocurrency space. This led to a massive increase in RaiBlock’s value in the latter portion of 2017, with the price rising from just $0.20 to nearly $37 within a month and a half.

What made RaiBlocks unique is that it used a new “block lattice” structure as opposed to a blockchain that allowed it to confirm transactions thousands of times faster than Bitcoin and with zero fees to boot. With a blockchain there is one central record of transactions and transactions must be confirmed by the majority of the network’s nodes to be verified. Block lattice allows each account to keep its own mini-blockchain in a sense, where proof of work is performed locally so transactions do not need to go through an extensive verification process. Only the account balances are kept permanently on the ledger (not all past transactions). This allows Nano to remain lightweight with minimal power consumption and for transactions to be completely free and devoid of miner fees.

Despite all of the impressive technological advancements that made RaiBlocks superior to older generation cryptocurrencies, RaiBlocks (or XRB, as it was known), fell over 97% from its all time high in just under one year. So how did this happen, what went wrong?

Some people suspect it was the rebranding that occured in early 2018, that changed the name from RaiBlocks to what it is called today, Nano. Many people feel that Nano had lost its recognition that it had attained back in late 2017. Others suspect that it was the fraudulent BitGrail exchange where user funds were stolen in a large scale Nano heist, with well over $100 million worth of Nano being stolen from users’ funds in early 2018..

In late 2017 and early 2018, when RaiBlocks had seen its massive increase in price, it was only available to trade on a small number of small exchanges, one of them being BitGrail. Though the owners of BitGrail were deemed by Italian courts to be at fault, the specifics aren’t clear and many dispute the details. Perhaps it was both the rebranding and exchange theft that had occurred so closely together that led many to believe that Nano was a scam project. One can understand this initial thought when many projects had been exit scamming at the time. Despite this conspiracy theory, there is no evidence to believe that the Nano team was involved in the theft.

Since the drastic fall in price for Nano, hype around the project has fallen relatively flat. Nano lacks a dedicated business development and marketing team, meaning that it largely relies on its faithful community to spread awareness. Nano’s community is one of the largest and most active you will find outside of a mainstream cryptocurrency. As such, Nano may be considered one of the most grassroots cryptocurrencies currently in the market.

Nano also prides itself on its fair distribution model, where RaiBlocks was originally given away for free by completing captchas. Only 133,248,297 Nano will ever exist, and they are all fully distributed and non-mineable, meaning that Nano has an inflation rate of 0%. However, there were certainly early investors who were able to pick up loads of RaiBlocks when it was still trading for a fraction of a cent, so the actual distribution of Nano is still up for debate. At this time of writing, around 21% of Nano’s supply is locked up on Binance, giving Binance a lot of power over the functioning of the network. Though it is unlikely that the top few representatives would collude, the possibility is there, and one would prefer for the possibility not to even exist in the first place.

In terms of adoption, the U.K. based payment processor Kappture deemed Nano the only cryptocurrency worthy of use in their payment terminals. This was a major step forward for the Nano project as a whole, as it had achieved something many cryptocurrency projects have failed to accomplish–real world adoption of their product. Many hope that this is just the beginning for Nano’s entry into the mainstream, and that this will be the first snowflake in what will become a snowball within the next couple of months to years.

Nano’s team consists of approximately one dozen highly qualified tech experts. This is both good and bad. It means that the quality of the product being delivered is very high, however the quantity and direction of productivity remains very unclear to outsiders. This paired with the comparatively poor communication between the team and its community creates a lot of difficulties when competing visions and practices collide. This makes it challenging for the team and community to rally their efforts behind a single cause and give it their all. It seems as though the team is aware of their shortcomings in this regard, as the team has recently made an effort to bring on more members to their team, presumably to address these issues.

Security in the Nano network is achieved through delegated proof-of-stake (dPoS), where each user can delegate a representative node to perform a proxy vote for them. This node will then verify transactions and vote for the correct transaction for blocks that may have conflicts. The representatives with higher Nano balances have a larger vote weight and impact on securing the network. Spam is prevented through a dynamic proof-of-work system, where each individual block has a small amount of work involved. This requires anyone spamming the network to use significant computing power––more than the network itself.

A disadvantage for Nano is that there is no inherent incentive to run a node, as there are no mining rewards or fees to be paid out to the validators. This leads to a large amount of people worrying that Nano will remain within the control of exchanges and corporations who can afford to be altruistic in their approach. A counter to this is that a business operating a node would have costs made up for by the fact that Nano is completely free to accept, unlike with credit card processors. However, they could opt not to run a node at all.

Since the Nano network is relatively small, its security and durability have not truly been tested. Since each account has its own blockchain, some may say that this makes it incredibly decentralized as people can interact with each other within the network without the entire network’s participation. This makes the “governing body” less powerful, giving users more control over their accounts. The scalability of Nano is still something that needs to be tested, with most estimates topping Nano’s processing times at about 120 transactions per second (TPS) which is much faster than Bitcoin at 7 TPS but much slower than VISA at 45,000 TPS.

In all, Nano on the surface seems like a cryptocurrency that should be at the leading edge of the cryptocurrency world. It is one of the only cryptocurrencies that can reliably deliver sub-second transaction times all while remaining completely free to send and receive. It is premined and has an inflation rate of zero, meaning every user of the network should incrementally increase the value of the cryptocurrency. However, despite the amazing technology, Nano is held back by its small team and lack of a flexible budget. Most blockchain projects keep a substantial amount stored in a developer fund, but the Nano team only kept 5%, meaning that at the time of writing the Nano team has only about $3,000,000 to work with, and once it’s gone, it’s gone. Nano continues to maintain an impressive community which continues to build amazing community directed sub-projects, but without a firm direction, many are just waiting around for something to happen, whatever that may be.

Nano’s success will depend on availability and awareness. Currently Nano is only listed on a handful of exchanges, making it very difficult for newcomers to get their hands on it. If Nano wants to truly break into the mainstream, it will need to be listed on more exchanges, especially US based fiat on-ramps that allow for the direct purchase of Nano with USD from a bank account. The more exchanges that list Nano, the more decentralized the network will become. This should also increase the value and security of the network. Nano will also need to find a way to continue spreading awareness. These are not easy tasks, but in the event either were to be addressed and acted upon, the technical viability and potential are certainly present for Nano to become one of the biggest winners in the cryptocurrency market. However, even if Nano were to become a mainstream crypto, there is still the ever-present debate as to whether or not cryptocurrencies will ever become a viable alternative to traditional money. This is something that only time will tell.

Rating

Pros - Incredibly fast and feeless transactions, great community, positive real world adoption.
Cons - Lack of a clear vision, small team with small budget, untested on a large scale.
Security: 8/10
Decentralization: 4/10
Scalability: 7/10
Speed: 10/10
Energy Consumption 9/10
Team: 5/10
Community: 8/10
Adoption: 6/10
Growth Potential: 9/10
Liquidity: 3/10

CoinGrades Rating: 69/100
Coin Grade: B

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