Understanding Nano, advanced

1The block lattice

Bitcoin and Ethereum keep one shared chain in which all payments follow one another. Nano works differently: in the block lattice every account has its own chain (docs.nano.org, Ledger).

Only the owner of an account can write blocks into its chain. A block is a single transaction and is processed individually and independently of the others.

It follows that there is no waiting for a shared block.

2Send and receive

A transfer is two blocks: the sender writes a send block into his chain, the recipient a receive block into hers.

In between, the amount is pending (receivable). The recipient need not be online for this. According to docs.nano.org the amount stays pending indefinitely until the receive is created. The sender cannot take it back.

Why two steps? Because only the owner may write into his own chain, receiving included. The receive is the owner's consent.

3Representatives and voting

How does a transaction become final? Through Open Representative Voting (ORV). Every wallet names a representative who may vote on its behalf. The voting weight equals the balance of the wallets that named him.

Representatives vote on each transaction. Once, under the default settings, more than 67 percent of the online voting weight has agreed, it counts as confirmed (docs.nano.org, ORV Consensus).

Naming a representative locks no money. You can spend everything at any time and change the representative.

4Feeless and energy: documented only

Feeless: sending costs no fee in the protocol. According to docs.nano.org representatives earn no transaction fees. Their incentives lie outside, such as visibility or fee savings for businesses that accept Nano.

Against spam there is no fee but a small computation (proof of work) per block.

New Nano is not mined. Distribution ran through captcha tasks until October 2017. The undistributed rest was burnt (docs.nano.org, Distribution).

This course gives no figure for power consumption, because no verified source is available for it.

5Units and finality

The smallest unit is called raw. It holds: 1 nano = 10 to the power of 30 raw (docs.nano.org, Distribution and Units). Programs therefore calculate in whole raw numbers to avoid rounding errors.

Finality: after confirmation by the representatives a transaction is irreversible. According to docs.nano.org a typical time is under one second. That is a measurement from operation, not a promise for every situation: under heavy load or network problems it can take longer.

In practice for payments: wait for "confirmed", not just "sent".

6Nano, Bitcoin and Ethereum compared

Bitcoin: one shared chain, miners write the blocks, senders pay a fee. Ethereum: one shared chain, smart contracts, transactions incur a fee.

Nano: a chain per account, voting by representatives, no fee in the protocol. It is designed for payments.

Limits: Nano does not run smart contracts like Ethereum. Voting weight can sit with a few large representatives, so it pays to choose your representative deliberately. And the price of XNO moves like any cryptocurrency.

This is a comparison for information, not a recommendation.