Development on Nano (formerly RaiBlocks, XRB) began in 2014 with official mainnet genesis on October 24, 2015. The project aims to address inefficiencies in digital currencies and modern financial payment systems through high scalability, fast and feeless transactions, and energy efficient design.
NANO was distributed entirely for free by way of a CAPTCHA faucet from October 24, 2015 to October 20, 2017. Users could solve complex CAPTCHA tests and be rewarded with the network’s digital currency for their time and effort.
When the faucet was shut down in 2017, only 126,248,289 NANO of the initial planned supply of 340 million had been distributed. 207,034,069 NANO was promptly sent to an unrecoverable burn address and 7,000,000 NANO was donated to the development fund. This fixed maximum and circulating supply at 133,249,297 NANO, 39% of what was originally planned.
In January 2018, the project rebranded from RaiBlocks to Nano in reference to one of the network’s key use cases, microtransactions, as well as its lightweight design. Many community driven projects have since been built leveraging Nano ranging from NANO specific wallets, to Nano driven marketplaces aiming to make NANO the “digital money of the modern world.”
Nano combines distributed ledger technology with a directed acrylic graph (DAG) algorithm. As opposed to a blockchain with a central chain, each Nano account has its own blockchain, known as an "account-chain" that stores a record of transactions and balance history. The goal of this design is to provide more scalability while also offering users the ability to send funds when the recipient is offline. In order to send or receive transactions, a Proof of Work (PoW) problem is executed. This implementation of PoW is different from a traditional blockchain that leverages PoW for consensus. Nano PoW, at the transaction level, is used to prevent spam attacks that may attempt to flood the network with arbitrary transactions at no cost given Nano’s feeless nature.
When an account owner executes a transaction, a “send block” is added to their account-chain and their balance is updated. The transaction is then in an irreversible "pending" state until the receiving account adds a “receive block” to its account-chain and updates its balance. As a result, the most recent block on any chain contains that account’s current balance and each account-chain is updated asynchronously to others on the network.
For consensus, Nano uses Open Representative Voting (ORV) a form of distributed Proof of Stake (dPOS) whereby volunteers can help secure the network by becoming representatives. In this system, accounts choose a representative by updating their account chain, providing more control for users to decide who validates transactions. There are two distinct types of representatives: Principal Representatives (PR) and non-principal Representatives. The only difference between the two representative types is that PR votes are rebroadcasted by other nodes who receive the votes, helping the network reach consensus more quickly. To become a PR, a Nano account must have at least 0.1% of online voting weight delegated to it. By creating a system where representatives are not paid to operate, the incentive to participate in the network is shifted to be indirect, operational cost savings. In addition to securing the network, this consensus mechanism uses less energy compared to other popular blockchains.