The beginner's guide to cryptocurrency and nano
Welcome to The beginner's guide to cryptocurrency and nano!
This is where we cover some of the most commonly asked questions about cryptocurrency - which, let’s face it, can be a pretty confusing topic.
We’ll explain everything from what cryptocurrency is, to why it was created, and how it can help to solve some of the problems with the current banking system.
We’ll also introduce you to the cryptocurrency nano. We’ll explore what makes it so special and show you how to try it for free - simply and safely - with handy video tutorials along the way.
In fact, by the end of this guide, you’ll have the knowledge and confidence to use nano for all sorts of things, time and time again.
So, if you’ve ever thought, ‘I’d love to know more about cryptocurrency but don’t know where to start’, well then - you’re in exactly the right place.
Let’s jump in.
Table of contents
Introduction to cryptocurrency
Right, let’s start with the big question:
What is cryptocurrency?
Cryptocurrency is a type of digital money.
And what’s digital money?
Well, it’s basically what it sounds like… It’s any form of currency stored, managed, or exchanged on computer systems. You can use it to pay for goods and services, just like physical currency, but it only exists in electronic form.
A good way to think of it is like the electronic money in your bank account. You can spend it online, or via contactless payment, but unlike electronic money - which you can turn into physical money at an ATM - digital money never takes physical form.
And cryptocurrency is named as such because its transactions are verified and records maintained by a decentralised system, using cryptography.
Now, you might be thinking, okay, ‘all that’s fine, but what’s so wrong with normal money, that they had to make it digital?’
Good question. Let’s find out.
What are the problems with the current financial system?
Right now, the way most of us store, send and spend money - the global financial system - works just fine.
But it doesn’t work for all of us. And it’s definitely not perfect.
So, if we want to understand the driving force behind the creation and rise of cryptocurrency, we need to take a look at the problems with the current financial system.
Here are six of the biggest:
-
It’s not accessible to everyone:
An estimated 1.4 billion adults have no bank account, so can’t involve themselves in the financial sector. For them, digital payments are impossible and growing wealth is hugely challenging.
-
It can be expensive and slow:
Across the world, the average cost of sending money internationally is over 6% (and even higher when using banks). Also, these transactions often take days to complete.
-
It can be difficult to understand:
It’s estimated that, worldwide, only 1 in 3 adults has a basic understanding of the key concepts in finance. This makes it incredibly difficult for people to take full control of their money.
-
It contributes to rising inequality:
The financial markets are dominated by people who fully understand how they work and are best connected to them. They have access to more information, expertise and opportunity. They also usually have capital to deploy.
In 2020, the richest 1.1% of the world’s population owned 45.8% of its wealth. The bottom half of the world’s population owned 1.3% of its wealth with little opportunity to change their circumstances. -
It is open to currency manipulation and censorship:
Countries have the power to manipulate and devalue fiat currencies, which can damage people, as well as financial markets. You can see some recent examples of this, here.
The current system also gives governments and financial institutions the ability to financially censor citizens by freezing accounts, denying access to payment systems and removing funds.
-
It causes the build up of systemic risk:
When financial power is concentrated with just a few institutions, such as central banks and ‘too big to fail’ companies, it means that one decisive failure can be devastating for the whole system.
In fact, it was in the wake of one such devastating failure that the first cryptocurrency was created…
Why was cryptocurrency created?
Cryptocurrency began with Bitcoin, developed by Satoshi Nakamoto after the 2008 global financial crisis.
It was designed as a way for people to control their money themselves, without relying on companies, banks, or governments. And it was groundbreaking.
Users could send bitcoin internationally, without the need for banks or other intermediaries, and transfers could not be blocked by any one party. This placed more power in the hands of the individual.
It all sounds great and Bitcoin is (quite rightly) regarded as a brilliant idea. But unfortunately, it has some rather serious flaws that make it pretty much unusable as a means of payment.
What’s wrong with Bitcoin?
The pros and cons of investing in bitcoin are explored at length across the internet and beyond. In this guide, we’re only really concerned with one question:
How does it function as a digital currency, to be used in the real world?
And the short answer is… not great.
Here are some reasons why:
1) Bitcoin transfers take too long - around two hours on average. Nano transfers, for example, take under half a second.
2) Bitcoin needs a huge amount of energy. In fact, its estimated annualised rate is 128 terawatt-hours (TWh), which is more than the annual electrical consumption of Norway. The nano network, by way of comparison, consumes the same amount of energy as the output of a single wind turbine.
3) Bitcoin doesn’t scale, with capacity maxing out at around 7 transactions per second. Nano can provide around 1000 transactions per second.
4) Bitcoin has a transaction fee. Nano - yes, you guessed it - is free.
So, using Bitcoin is slow, expensive and environmentally damaging. It was a wonderful idea, but as a means of payment, it’s a beautiful failure.
All of which poses the question: ‘If Bitcoin isn’t the answer to the problems posed by the current financial system, what is?’
And this feels like the perfect time to introduce nano.
Introducing nano
What is nano?
Nano is digital money in its most efficient form.
It can be sent, spent and accepted anywhere in the world, securely, in a fraction of a second. So, whether you want to buy your morning coffee, settle a bill, or pay someone on the other side of the planet, you can do it with nano.
Not only that. Nano is free to access and totally free to use, making it unique among cryptocurrencies.
Why is nano special?
As well as being global, fast and feeless, nano is sustainable.
It doesn’t need to be printed, minted, or mined, which means its carbon footprint is miniscule (and it’s non-inflationary - as it has a fixed supply). And when you use nano, you can be certain that 100% of the value will end up exactly where you send it.
All of these factors make nano the world’s most efficient decentralised currency.
And it’s not just the way it works that sets it apart.
Nano was designed by a not-for-profit organisation, the Nano Foundation, with a singular vision: to empower equal economic opportunity.
Listen to George, Director of the Nano Foundation, explain the ethos of nano in more detail:
From day one, nano was sent out into the world in the spirit of fairness and equality.
Let’s look at how it was done.
How was nano distributed?
Once a cryptocurrency has been created, it needs to be distributed. There are a few different ways of doing this, with the most common being something called an Initial Coin Offering, or ICO.
However, ICOs only benefit those with capital to invest in new coins. The Nano Foundation wanted to do things differently.
Created to empower equal economic opportunity, it faced a unique challenge: How to make nano as accessible as possible, to as many people as possible, as fairly as possible?
The solution it devised was called The Faucet.
The Faucet was a website open to everyone. It allowed users to complete Google CAPTCHAs - think of these like small puzzles - and be rewarded with nano. This format benefited the people who had the most time (as opposed to money) to invest and therefore, whose time was valued the least on a global scale.
In this way, nano was able to reach emerging economies and get into the hands of people with fewer economic opportunities.
Some users earned more through The Faucet than their weekly wage.
And so the nano experiment took the first step towards achieving its goal.
What is the goal of nano?
Nano was designed to be the world’s most efficient, accessible and sustainable digital currency. But at its heart, it was created to be used in the real world to solve real world problems.
So, how does it do this?
Firstly, because nano is decentralised, it puts financial independence in the hands of its users. Let’s imagine you’re one of the 1.4 billion people who do not have access to a bank account. Nano removes that obstacle, offering you control of your money. You can do what you like with it, whenever you want. All you need is a smartphone and the internet.
And this is just one of the ways nano empowers its users. It has so many more real life applications.
What are the uses of nano?
Nano is a currency, not an asset to be held and traded at market valuation. Here are a few of the ways it can be used:
Nano as digital cash
Because it’s instant and feeless, nano is an ideal substitute for cash. Transactions are as simple as scanning a QR code and hitting send.
The nano alternative to cash:
- Your money, without governmental restrictions:
Private, secure and tamper-proof. You're in control of where and when you send, spend and accept nano. - Non-inflationary (fixed supply):
Nano is designed to protect its own value, creating more stable and equitable economies. - Always with you:
As a true virtual currency, all your nano can be accessed, sent, spent and accepted from your smartphone, 24/7.
Check out the ever growing list of vendors that accept nano.
Nano for remittances
Over $500 billion dollars are sent to low and middle-income countries every year from individuals working abroad - at an average cost of over 6%. And some of the world’s poorest regions have the highest costs. For example, sending money to sub-Saharan Africa cost 7.8% in 2021.
The average time an international bank transfer takes to clear is 1-5 working days (and sometimes longer).
So, how can nano help?
Quite simply, nano is much cheaper and quicker than traditional remittance methods. With a cryptocurrency exchange at both ends, a foreign worker in the US could buy $100 worth of nano for under 0.5% and send it instantly to their relatives in, say, Indonesia, who could then exchange it instantly into Indonesian rupiah (also for under 0.5%).
The nano alternative to banking institutions:
- No hidden fees:
Transacting with nano ensures that 100% of the value is transferred directly to the recipient - regardless of transaction size or type. - Lightning fast:
Sending money across the counter or around the world is instantaneous. - Owned by everyone:
Decentralised and democratised, nano is non-inflationary and manipulation resistant by design.
In other words, using nano means more money, arriving more quickly. Why not take a look at it in action?
Nano for merchant payments
Nano helps merchants bypass credit card processing fees and easily receive payments from anywhere on earth. If you’re interested in finding out more about how this works, head here.
Nano for charitable donations
Nano’s suitability for merchant payments also makes it a fantastic option for charitable donations. Here’s how:
For charities based in sub-Saharan Africa, receiving money from American and European donations comes with high costs. Nano allows these charities to receive donations instantly, feelessly from any country in the world. Their only cost is exchanging nano to the fiat currency of their choice on a crypto exchange - typically below 0.5%.
Nano means more money reaching charities - where it is most needed - and less profit for payment processing companies.
Nano for so much more…
For more uses for nano in the real world, including microtransactions and store of value, check out this excellent article by nano community member, Senatus.
How does nano work?
You definitely don’t need to know how nano works to be able to use it. But this guide is about building knowledge and confidence - so if you’re interested, this short video does a great job of explaining some of the fundamental aspects of nano’s technology, without getting too technical.
Below, we’ve simplified matters a bit and focused on how nano achieves three of the key things that make it different from other cryptocurrencies: its feelessness, its speed and its sustainability.
What makes nano free?
As we learned earlier, nano was given away for free using an innovative distribution system. But not only is nano free to get hold of, it is also totally free to use. This is down to the unique way the nano network is structured.
When two users of a cryptocurrency want to make a transaction, the network must approve it before it can be completed. There are many ways this can be done but the nano method is unique.
To verify every transaction, the nano network uses something called Open Representative Voting (ORV). Basically, once you hold nano, you can vote for a representative using your nano balance. This representative then confirms the transaction as soon as it becomes visible.
Anyone who holds nano can be a representative and anyone can change their vote at any time.
The whole process is collaborative, meaning there is no money for being a representative, only the continued development of the network as a whole. This keeps it free for everyone.
So, the ethos of the Nano Foundation - equality and opportunity for all - not only drives the Foundation, but also underpins the technology of the nano network itself!
What makes nano fast?
Most cryptocurrencies rely on a system called the ‘blockchain’. Transactions are grouped together then wait to be processed on a single chain of data.
As this video shows, the nano system is different.
Nano is built on something called the ‘block lattice’. Instead of each transaction waiting to be processed on a single blockchain, with the block lattice, each user has their own blockchain and transactions can happen between them, simultaneously. This means no queuing and a network that scales as it gets busier, keeping transactions lightning fast.
Not only this, the ORV system that makes nano free, also contributes to making it so quick. Because representatives confirm transactions as soon as they see them, nano’s speed is mostly only limited by internet connection latency - practically the speed of light.
What makes nano sustainable?
The block lattice network is incredibly energy efficient because, unlike mining, it doesn’t rely on computing power to process transactions. In fact, the entire nano network could be powered by a single wind turbine.
Nano is absolutely the most energy efficient cryptocurrency. Just how efficient it is can be shown by comparing it to the energy usage of Bitcoin:
Beyond the energy reduction of using nano to make every day transactions, this article outlines further environmental benefits to be gained by swapping bitcoin for nano.
If you want to explore the fundamentals of nano in even more depth, you could even jump in here, with a lecture by nano creator, Colin LeMahieu.
Nano: the name, ticker and the symbol
The goal of the Nano Foundation has always been for nano to be used and recognised in everyday, ‘real life’ situations. That’s why nano is unique among cryptocurrencies in having its own currency sign and ticker; so it can stand alongside other global currency symbols as a tried and tested method of transferring value.
Nano's currency symbol is an X overlayed with an = sign:
Its ticker is XNO, which is what you’ll see on exchanges and wallets.
The logo (below) is used to identify the Nano Foundation, helping to keep the currency separate and independent from the organisations which support it.
For a detailed explanation of the thinking behind the nano ticker, check out this article.
So, now you know all about nano, why not try it out for yourself? Go ahead and make your very first transaction!
How can I try nano for free?
You’re ready to make your first cryptocurrency transaction using nano!
We know the first time doing anything can be daunting - that’s why we put this guide together, so you have a source you can trust, to take you through everything step by step.
And remember, nano is free to pick up and free to use. So even if you do make a mistake (you won’t), you can just get some more and try again!
Right. Grab your phone and let’s do this.
Try nano tutorial
Our handy tutorial will walk you through the whole process.
Step 1 - Download a wallet
The first thing you need is a wallet. This will store your nano, as well as let you send and receive it on the nano network.
For the purposes of this guide, we’re using Nautilus - it’s a great nano wallet and it’s totally free!
Download it from the Play Store and the App Store.
Step 2 - Set up your wallet
Nautilus will guide you through exactly how to set up your nano wallet. If you’re not sure at any point, our video guide also talks you through it.
Step 3 - Visit a faucet
Now you have a home for your nano, you need to visit a faucet to pick some up. Copy your wallet address (Nautilus will tell you when and how) and visit nanodrop.io.
Paste your address and tick the box requesting your nano. Then complete the CAPTCHA puzzle and that’s it!
Step 4 - Check your wallet
Jump back to Nautilus and boom - your nano should be deposited and ready to use!
WeNano
If you’d like to explore more possibilities with nano, WeNano is a fantastic place to start.
It’s a social application which lets you claim nano by visiting specific spots around the world, connect with other users and even set up spots of your own, all in a really entertaining way.
This video explains everything in more detail.
And this is a walkthrough guide for how to download and use it!
That concludes The beginner's guide to cryptocurrency!
We hope it demystified some of the common concepts of cryptocurrency and helped you feel confident enough to try nano for yourself. We believe its technology has the power to change the world, but for that to happen we need people to know what makes it so special.
Thank you for being part of that journey.
If you'd like to find out more about nano and the exciting things the Nano Foundation is up to, check out our blog.
You can also interact with our awesome community via our socials:
Twitter, YouTube, Reddit, Discord, Linkedin, Facebook, Instagram and Telegram
Glossary
CAPTCHA Faucet
A CAPTCHA faucet is a system of coin distribution which rewards users for solving complex CAPTCHA tests with a percentage of allotted coins. The process rewards time and effort and is open to anyone with access to a computer or phone and the internet.
Cryptocurrency Exchange
A cryptocurrency exchange is an online marketplace where users buy, sell, and trade cryptocurrency.
Cryptography
Cryptography is the method of using codes to protect information and communication, so that it can only be accessed by those for whom it is intended.
Decentralised Currency
Decentralised currency, peer-to-peer money, and digital currency all refer to bank-free methods of transferring wealth or ownership of any other commodity without needing a third party.
Faucet
An online platform that gives away small amounts of cryptocurrency - sometimes for completing simple tasks.
Fiat Currency
Fiat currency, sometimes simply referred to as ‘fiat’, is government-issued money that is not backed by a physical commodity, such as gold or silver, but rather by the government that issued it. Examples include the US dollar and the pound sterling.
Initial Coin Offering (ICO)
An initial coin offering, or ICO, is a way for companies seeking to create a new coin, app, or service to raise funds. Investors can buy into an ICO to receive a new cryptocurrency token issued by the company.
Satoshi Nakamoto
The creator (or group of creators) behind Bitcoin. His identity is unknown and been the source of much speculation since his last communication in April 2011.
Wallet
A cryptocurrency wallet is an application that works as a wallet for your cryptocurrency. Think of it like the wallet that stores your cash and cards but instead holds the passkeys that you use to sign for your cryptocurrency transactions. Find a list of nano wallets, here.
Nano Foundation does not endorse or approve products and/or services used or developed by third parties. Any links to third party software or sites are for informational purposes only. Nano Foundation bears no responsibility for the operability, accuracy, legality or content of third party products and/or services. Any questions regarding third party material should be directed to that party.