Nano was designed solely as a peer to peer payment system. It’s unique features include instantaneous transactions, no fees (basically no fees. Each transaction costs .00035 cents), no inflation (all of the coins that will ever exist already do (200M supply)), no miners and no stakers.
How it works
Each wallet has its own blockchain that records transactions generated by that wallet. Everytime there is a transaction, two blocks are recorded. One on the senders wallet, and another on the recipient’s wallet. This is why there is no need for tx fees as there are no third party validators. This doesn’t mean no work is required for validation. When a transaction happens, a small proof of work is required. The work is done by the wallets generating the transaction. However the work is so small that it doesn’t require miners. The computers where the wallets are based can do this transaction.
While each wallet records its own transactions, these transactions still have to be recorded to a general blockchain. To do this, Nano has a delegated proof of stake system. Normally, all stakers can get chosen to verify the network. However, if there are disagreements among stakers as to transactions on a given block, members of the network then vote for delegates who will vote for a version of the transaction.
This all begs the question, why be a node in Nano’s network? Unlike regular systems, validators don’t get paid in nano. First of all, anyone using Nano is already running a node through the Nano wallet. If you’re using a web wallet like Nanowallet, you are essentially assigning your “representation”, or voting power, to one of Nanowallet’s accounts. They do the Proof of Stake voting for you. Anyone with a Nano account can create another account as their representative – it’s expected, since representative accounts need to be online all the time to verify transactions. When you first create a Nano account, your representative is assigned to one of the 8 official nodes, maintained by the devs. This is obviously going to change as the network becomes more popular.
The growth of Nano’s network will depend on adoption by businesses. Normally, businesses get charged a 3-5% transaction fee by merchants. These fees can be eliminated by adopting Nano and simply running a node. Because Nano nodes are so cheap to run ($3 per month), this would be advantageous to businesses.
NANO is an interesting project because of the lack of inflation and instantaneous transactions. However, there are other coins with these features. Coins with instantaneous transactions that I’m aware of include PIVX, DASH, Fastcoin and Pascal Coin. Their level adoption makes them a good option for coins that track the market, but I’m not convinced that the infrastructure of the coin will allow them to emerge as a mainstream currency.