Q: How were Nano originally distributed, if no mining took place?

A: Nano were initially distributed using a CAPTCHA faucet where people could receive Nano (formerly known as RaiBlocks, or XRB) by inputing text from audio captchas on a website maintained by the developers. Any undistributed Nano were “burned” leaving a total supply of 133,248,290 Nano. Nano is a deflationary cryptocurrency, as no additional Nano will ever be issued. Naturally, the price of an entire Nano will rise from scarcity, but smaller units can be used to represent values for everyday transactions. Much like how one BTC contains 100,000,000 (one hundred million) satoshis, 1 Nano can be divisible into 1000000000000000000000000, 1024 raw, where raw is the smallest unit in Nano. For more information, refer to this Github page.

When Nano was created, the entire supply was pre-mined into a Genesis wallet controlled by lead developer, Colin LeMahieu. He safeguarded the private key for this wallet, and would move funds into the Landing wallet each week, a “hot wallet” for the expected amount to be distributed through the Faucet wallet. These addresses are no longer used, with the excess supply above 133,248,290 Nano destroyed by sending it to a Burn address that the core team does not possess the private key or seed for. These funds have not been claimed, and cannot ever been moved. You can see the burning ceremony for yourself on YouTube.

Q: If there are no mining rewards, how are nodes incentivized to support the network?

A: Every Nano Desktop Wallet is a full node. Every fully synced desktop wallet possesses a complete copy of the blockchain (consisting of all the accounts in the block lattice). As long as you leave the Nano client open, it “seeds” blocks peer-to-peer to other Nano users, much like a BitTorrent client uploads the fragments of the data you’ve already downloaded to other clients. This happens in the background so you can continue using your computer; it uses only a few percent of a modern processor.

Nano is cryptocurrency’s Napster moment. P2P file sharing proved that users are willing to continue seeding files after their download completes to help other strangers, as long as it doesn’t impose a prohibitive cost on their system or network resources. With the help of the same network effect, you can help build a strong, worldwide payment network. When Nano becomes widely adopted in the real-world, millions of individuals and businesses will have their Nano clients open on their PCs, sending their own transactions and helping strengthen the network.

Can’t leave your wallet open all the time? Set your representative to one of these community operated Nano representatives to help decentralize the network when your wallet is offline. These nodes are controlled by known community members and maintain high uptime to ensure they are available when called upon for a vote.

Q: What prevents malicious users from spamming the Nano network with transactions to perform a DoS attack?

A: Because every user maintains their own blockchain (consisting of their own transactions only) within the block lattice, they are required to perform Proof of Work (PoW) to send and receive Nano. Whenever somebody sends you Nano, the amount is credited to your account on the blockchain as “unpocketed.” These coins are reserved for you and cannot be taken back by the sender.

However, to send the coins onwards to another account, you must first create a receive block using the desktop client and perform a nominal amount of PoW using your computer’s processor to make those coins “pocketed.” The PoW uses your computer’s processing power for a short period of time (less than 10 seconds) to compute a hash, a complex mathematical formula, to receive the coins.

When using Nano as intended, the PoW is not designed to be a huge burden on the user. On the other hand, spamming the network with thousands of tiny transactions to try and slow it down will be computationally very expensive and difficult to sustain for a long period of time. When hardware becomes much more powerful in the future following Moore’s Law, the difficulty of the PoW can be increased via a user activated soft fork with an update of the nodes to a new version.

Q: Coins I received are showing up as “unpocketed”, how do I “pocket” them on the desktop client? 

A: Normally, the desktop client will automatically scan for incoming coins and create receive blocks as long as you leave it open to synchronize. If you see “unpocketed” coins when you view your address on the block explorer or the coins are stuck in a pending status in the desktop client, make sure your wallet is up to date with the latest block displayed on Nano.org. Then, click Advanced and Search for Receivables. If that doesn’t trigger the creation of the receive block, try clicking Refresh. Closing and reopening your desktop wallet may also help.

Q: Why can’t Nano users double-spend coins or forge the ledger to create counterfeit coins?

A: Nano relies a consensus system of nodes and representatives to maintain the true copy of the ledger. It’s a modified version of Distributed Proof of Stake (DPoS), similar to other coins such as ARK. When you leave your Nano wallet online, you’re helping to secure the network by storing a copy of other users’ balances, and your node will automatically vote against users trying to introduce a tampered version of the ledger to the network. When your node or wallet is offline, your voting power (proportionate to the number of Nano you hold) is delegated to a representative that is online 24/7 voting on your behalf on the authentic copy of the ledger. By default, your wallet uses one of the Official Representatives maintained by the core developers. You are free to change this to a different delegate if you wish.

Q: Is a web wallet or desktop wallet more secure to store my Nano?

A: The official desktop wallet is a secure way to store coins for day-to-day use, similar to a checking account. Although there is still the risk of malware on your PC, it’s much more likely to have your coins stolen through a phishing attack if you visit a fake website posing to be a web wallet such as RaiWallet. If you choose to use a web wallet, always exercise extreme caution checking the URL in your browser’s address bar and consider uninstalling Chrome or Firefox add-ons that may track your activity.

Q: How can I ensure my Nano desktop wallet is backed up in case my computer crashes?

A: As long as you possess the seed, you have access to your funds. All the Nano addresses (i.e. accounts) you see in your desktop client, if you have multiple, are deterministically generated from a single seed. You can view the seed to write it down in a safe place by clicking Accounts and Backup/Clipboard wallet seed in the desktop wallet GUI. For security reasons, we suggest not storing this seed on your computer or any cloud storage service. Instead, write it down long hand and store it in a safe place, such as a fire-proof safe or a bank safety deposit box.

Q: What is the most secure way to store Nano long term (for advanced users)?

A: A paper wallet where the seed (i.e. private key) has never been exposed to an Internet-connected computer is the safest way to store Nano. You can generate a wallet like this by copying the Nano wallet binary on a USB drive to an air-gapped computer, preferably booted up using a live operating system (in memory) such as an Ubuntu Live DVD. Write down the seed using pen and paper and check it for accuracy multiple times, before shutting down the system. Transfer your funds from a desktop (hot) wallet or an exchange to the public address associated with the cold wallet. You can verify the funds arrived using the block explorer, and simply leave them “unpocketed.” When you want to spend the funds in the future, simply install the Nano wallet on any computer and restore the seed.

If you wish to “pocket” the funds and delegate them towards the voting power of a representative, you should follow this excellent video walkthrough by developer Brian Pugh. It shows you how to generate a wallet using an air-gapped computer and sign the open and receive block transactions offline.