Just days after the TechnoKing’s widely anticipated appearance on Saturday Night Live (SNL), he tweeted this.
Call it FUD, call it controversial, one thing is for sure — it brought about a HUGE debacle around the energy usage of the world’s biggest cryptocurrency.
On one hand, proponents of Bitcoin, like Ark Invest and Square, argues that Bitcoin supports the efficient usage of clean renewable energy.
On the other hand, critics like Treasury Secretary Janet Yellen and Elon Musk (who knows which side he is on), are concerned about the environmental impact of Bitcoin mining, from its energy intensive nature to usage of fossil fuels.
Renewable energy or not, one thing we know for certain is this:
- Maximum block size of 2 MB
- Average confirmation time for transactions is about 10 minutes
- Currently consumes around 110 Terawatt Hours per year
Bitcoin technology has scalability issues, and while Bitcoin developers are working on these issues, such as the lightning network, it is still speculative and in the early stages.
One of the highly touted use-cases of cryptocurrency is to have a secure digital currency to transact seamlessly worldwide. So if Bitcoin does not fit that mould, what are the alternatives out there?
Nano is a Directed Acyclic Graph (DAG) based cryptocurrency. Basically, instead of recording transactions into blocks on a blockchain, each transaction is built on top of another, making up vertices. A good article explaining how DAGs work can be found here.
Let’s attempt to understand how Nano work in simple terms:
Nano utilises the Block Lattice structure, which means each account has its own blockchain (account-chain), and account owners can easily add blocks to their own chains.
This defers from Bitcoin blockchain, where everyone competes to add blocks to a single chain.
Every block must also contain a small, user-generated Proof-of-Work value, which helps Nano prevent the spamming of network. Once blocks are added, it will be sent to the network.
Nano then uses a consensus mechanism called Open Representative Voting (ORV). This allows users to freely choose any Representatives (configured on nodes) to vote on their behalf.
Once a node sees a block has enough votes, the block is confirmed. Because the blocks and votes are lightweight, transactions are able to reach confirmation in seconds.
Bitcoin’s PoW consensus results in the consolidation of miners with the highest resources and computational power.
However, Nano’s ORV mechanism means users get to freely delegate which Representatives (Nodes) has consensus power. There are no direct monetary incentives for nodes. This keeps the network decentralised and fee-less.
Because Nano uses a voting mechanism, there is no mining required. Furthermore, the user-generated PoW can be done in a few seconds on a normal CPU. This results in significantly less energy per transaction.
Because of these design advantages, Nano is trust-less, fee-less, and a low-latency cryptocurrency.
With ultrafast transactions and zero fees on a secure, green and decentralised network, this makes Nano ideal for everyday transactions.
While the above sounds amazing in theory, a digital currency would be pointless if there is no use cases.
One interesting use case is the WeNano app. It is a Nano wallet that allows users to experience Nano in interactive ways. Users can earn Nano by visiting merchant pop-ups, called Spots, on the map.
With over 250+ spots and 4000 payouts, this is a good way to onboard new users and merchants on to the Nano network.
Other Side of the Coin
As always, we need to explore the other side of the argument.
Firstly, some cons of DAGs are:
- Not entirely decentralised
- Not tested at scale, still an emerging technology
Digging deeper into some of the cons of Nano, as per this reddit thread:
- Lack of progress towards adoption
- Too volatile to be used as currency
- Lack of privacy feature, Nano account balance is shown when you transact
Also, just recently in March this year, Nano network was hit by a transaction spamming attack that disrupted operations and caused nodes to be out-of-sync.
Nano definitely has some great benefits and superior features that solves some of the pressing issues faced by Bitcoin and cryptocurrencies.
As with all emerging technology, the ability to scale is critical. However, having the vision and being early investors is what reaps the most benefits.
Now all we need is Elon Musk to tweet about Nano.
For more information, read Nano whitepaper.