You might have encountered the term 'pure cryptocurrency' in your endeavours around the field. But what are those and how does NANO fare in this aspect?
Crypto was envisioned with and have been (at least in theory) applied for two basic use cases: Store of Value and Means of Exchange.
However, with time and adoption these have expanded, and nowadays most crypto aims for (or to get close to) a collection of other properties: decentralized, secure, low latency and feeless.
Applying even some of these have proven rather difficult for the most well known players currently in the field and remains a significant struggle.
And this is where NANO comes in.
Below, I will try to 'briefly' explain how all these properties work in the coin.
- Store of Value
NANO's 133m coins have been already distributed via captchas and there is no mining possible to gain more. This means it's deflationary in nature.
- Means of Exchange
Due to its unique tech (a combination of Directed Acyclic Graphs and Block Lattice), it produces transaction times (wallet to wallet) ranging from 0.15s to 1.5s (and even in the middle of a spam attack attempt, 10s). Transaction throughput scales with hardware, currently around 200 Confirmations Per second. So far during stress tests, over 7000 TPS have already been achieved. NANO is the fastest and probably most scalable crypto out there.
- Decentralization
There's no incentive to mine, no incentive to stake.
Coin transactions need confirmations, that's how crypto works.
Voting on transactions is done by nodes that anyone can run and anyone can delegate to representatives that do it. Initially, new wallets get assigned semi-random (as in depending on which wallet you use) and anyone can change reps any time.
If the network is disputing a contradictory transaction, it takes 6 (soon 7) different confirmations to approve such a transaction, making it that much harder to go through, compromising the system. This is known as the Nakamoto Coefficient and is the highest in any crypto to date.
Here's the latest distribution of top voter nodes.
This also means there are way fewer bigger parties in the network and thus way less chance for manipulating the underlying mechanisms of the NANO system, making it even more secure to use.
- Security
There are several types of attacks that a crypto network can face. NANO's network has never been compromised. A quick rundown:
Spam attacks: as mentioned earlier, due to its efficiency, NANO shrugs off spam, even with zero fees (there are mechanisms implemented to make these costly in the latest versions should the system got scaled up with even more adoption). Here's a rundown of an attack/test, you can find many like these out there.
51% attack (taking over the network): This could've been possible in the early days but NANO's market cap is already $0.5B. All coins are already distributed and the process of buying up 51% will drive up the price incessantly.
The difficult part isn't driving the price up for a rich person or entity, it's that if they were doing so for profit they would also want to sell and that is a lot harder to do without pushing the price back down again.
NANO uses Proof of Work (PoW) to avoid spammers as there is no transaction fees on the network. Each block has a small amount of work associated with it, approximately about 5 seconds to generate, and 1 microsecond to validate. This forces a malicious actor to dedicate a significant amount of computing power to carry out an attack, whilst requiring only a small amount of computing power by everyone else. Furthermore, it is also even possible for these spam transactions to be pruned away, limiting the amount of storage that can be consumed from this type of attack.
Add to these that due to representatives and inherent security, a significant portion of the supply is offline in wallets so 51% of the coins needed for this might wouldn't even be available to purchase on centralized exchanges.
Double spend by a malicious user: Both versions of the double spend need to be signed by the users private key. It is easy to identify the accounts that are responsible for spam attacks and then blacklist them for a certain period.
The list does go on, for more details see here: https://docs.nano.org/protocol-design/attack-vectors/
- Low latency and feeless
The largest 'selling points' of NANO, we already mentioned these so I wouldn't go into detail any further here than the neat demonstration vid created a year ago (the coin's been improved since then).
Hope this helped shedding some light on some of your questions that might have arose during your time researching the project.
Godspeed!
