Challenges

Nano faces a variety of conceptual, operational and regulatory challenges that require further development, time and adoption to resolve.

Nano has a relatively small market cap and limited number of exchanges, resulting in a lack of liquidity to support any substantial use as a payment network. Liquidity is essential for any tradable asset, especially for one intended to be used as digital money.

Liquidity will continue to grow with further speculators but will be a near term impediment to utility.

The number of limited trusted exchanges are an impediment to both speculative use and use as a payment network.

There is a lack of regulatory clarity that impedes the use and adoption of digital assets like Nano. In many jurisdictions, each transaction is considered a taxable event which further impedes future use as digital money.

Nano was distributed in a manner that has allowed it to avoid being treated exclusively as a security. However, further regulatory clarity and regulation is needed to allow for mass adoption and use as digital money.

One of the key properties of money is acceptability. This is mostly an issue that will be faced by early adopters. Given Nano's ability to have a positive feedback loop that strengthens its network effects, the problem of acceptability will naturally resolve itself once the network effects exceed a tipping point.

Data loss and transmission latency can lead to situations where nodes mistakenly attribute a voting state to a representative that has changed their vote. This issue was largely addressed in v22 with the release of vote spacing, ensuring a representative doesn't flip its vote too quickly, and final votes. Further work is needed to refine the process of vote spacing to provide a formal specification that can be better analyzed and formally proven.

Nano's ledger provides pseudonymous protection, which by itself is not enough to ensure that privacy is preserved. Currently, users bear most of the burden of preserving their privacy as there are limited tools, services and wallets that support managing and safeguarding privacy.

Feeless transactions and a pseudonymous ledger provide a good foundation but further development is needed to automate privacy preserving transactions, alleviating users of this burden and making it intuitive and effortless.

Each small business will not be capable of directly integrating with the Nano network. Thus, a pre-requisite for mass adoption is the development of software and companies providing turnkey and commercial-grade payment services that use Nano as the underlying settlement network. Additionally, businesses will want features like subscription management, invoicing, reporting, analytics, etc that they are accustomed to receiving currently with existing payment processors.