“Bitcoin: A Peer-to-Peer Electronic Cash System” published in 2008 was a groundbreaking 9-page document that proved centralized financial institutions were no longer necessary for the verification of digital monetary payments. With the power of cryptographic hashes, transaction timestamps are attested using Proof of Work, which solves the double-spend problem through an ongoing chain of increasingly complex mathematical computations. The 12 part paper expands on game theory, monetary policy, attack vectors, privacy, consensus algorithms that apply to the network. 13 years later, Bitcoin’s technology is still robust, after decades of many engineers attempting to solve the digital payments double-spend dilemma. However, Bitcoin is not a functional peer-to-peer electronic cash system anymore. Confirmation times for transactions can take up to an hour, fees can average $7-$20 per transaction, and network participation is extremely expensive with CPU power becoming more centralized to large warehouses of ASICs working together as Mining Pools as the block difficulty increases over the years. Nano is a catalyst that optimizes blockchain technology to its practical potential. It was engineered to hold all the intrinsic properties of its predecessor Bitcoin, but can also process transactions instantly, without fees, little CPU power, and minimal electricity. That whitepaper is called “Nano: A Feeless Distributed Cryptocurrency Network.”
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The Bitcoin protocol is built to achieve consensus on a single blockchain using a distributed timestamp server of hash values via proof-of-work to compute a valid nonce. Although Bitcoin solved the electronic double-spend dilemma, the structure of its technology is the problem with its efficiency as a usable cash system. A single blockchain has given Bitcoin a disadvantage in scalability. Currently, Bitcoin can only process about ~7 transactions per second. The incentive to run the Bitcoin network is built into the proof-of-work process in the form of minting new coins and fees with the tradeoff of CPU power and electricity. Over the years as the halvings of miner rewards have occurred and difficulty to solve blocks has increased, participation in the network has become more centralized to wealthy mining pools or regions and or countries that now control a significant portion of the hash rate. The mining equipment needed to solve the computational problems has increased significantly from basic GPU power to ASICs with mass amounts of electricity, leaving small participants at a disadvantage as time continues. Currently, a 51% attack can occur on the Bitcoin network by simply four mining pools, three of which exist in one country alone. Collusion is not a far-fetched idea if double spending can exist on soft forks without disrupting the network, thus delegitimizing the calculations set forth in the whitepaper of attacker probability and incentive. Decentralization is the foundation of the autonomous structure that builds and empowers cryptocurrency. Bitcoin’s inability to scale poses a ceiling and all of it points to its underlying technology.
Nano is a novel block-lattice account blockchain system where asynchronous transactions occur instantly and without fees allowing for unlimited scalability of the network. Nano uses a Directed Acyclic Graph architecture via a balance-weighted vote on conflicting transactions called Open Representative Voting. A node configured to broadcast votes is called a Representative, whose vote weight is determined by the sum of balances delegated to them. Account-chain technology allows every account their choice for Representative, giving instant access to participation in decentralization. Nodes observe votes for each block, once enough votes are reached to achieve quorum, that block is confirmed. With instant transaction finality sometimes achieved under 250ms, attackers are prevented from altering confirmed transactions regardless of the voting weight acquired. An attacker can neither add extra nodes to acquire extra votes making it resistant to Sybil attacks. Node hardware requirements are lightweight since they are only responsible for recording and rebroadcasting blocks for most transactions and network requirements are minimal, permitting each transaction to fit within the required minimum UDP packet size for internet transmission. The hardware requirements to run a Principal Representative Node can be met with a $62 3 Amp Raspberry Pi 4 plus the SSD. The electricity needed to power a single node is the cost of running the minimum hardware, which can range from a few dollars a month for most users. Nano’s genesis account is a fixed genesis balance of 133,248,290 Nanos. The distribution of Nano was done by a free faucet via captchas, therefore, removing proof-of-work as the economic system to incentivize mining of coins and transaction fees. Proof-of-work in this case is used as an anti-spam mechanism. The result is a Layer 1 protocol design of ultrafast instantaneous transactions with zero fees and unlimited scalability rooted in high participation of decentralization with the utmost security.
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In conclusion, Bitcoin’s whitepaper promise of a peer-to-peer electronic cash system for online payments has far from achieved its goal due to its inability to run efficiently on its Layer 1 engineered code of a single blockchain. The high fees and long confirmation times for transactions make it a non-working currency for the everyday use of goods and services. Nano, through its block-lattice technology, is able to solve the Bitcoin trilemma and deliver a true electronic P2P cash system without breaking any of the intrinsic properties that make a cryptocurrency valuable by offering an autonomous system that is fast, fee-less, and secure. While Bitcoin is referred to as ‘digital gold’ for its store of value property, it truly is its last standing leg.
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