Investment Thesis

Adoption is often slow at first, then all at once. This was the case with personal computers, the internet, and — I believe self-sovereign digital money. It's only after being heavily commercialized by mainstream companies that its inevitability becomes obvious.

In the meantime, transformational technologies spend most of their time on the fringes, developed by relatively anonymous researchers.

Before getting into the potential value of this technology it may be helpful to understand the advantages, why it matters, and how it works.

The practical implication of the technical problems being solved is that Nano provides a way for one Internet user to transfer a unique piece of digital property to another user, such that the transfer is guaranteed to be safe, secure, instant, and feeless. The consequences of this breakthrough are profound.

This is digital money, one of its most advanced forms.

The Nano ledger is a new kind of payment system. Anyone in the world can pay anyone else in the world any amount of value, with no authorization required and with no fees.

That last part is essential. Nano intends for all transactions to be feeless, meaning no value is lost during a transaction. Traditional payment systems charge fees of about 2 to 3 percent – and that’s in the developed world. In lots of other places, there either are no modern payment systems or the rates are significantly higher.

Nano's value is driven by two things: the use of the payment system today and speculation on future use. In other words, Nano has value because of its usefulness as money, something that can be traded with no fraud, no fees, etc.

At this moment, the value comes mostly from speculation rather than actual payment volume. Without any value, it can't be practically used as a payment system. Therefore, speculation will always predate any actual usage. A rise in value driven by speculation makes the reality of its use as a payment system arrive much faster than it would have otherwise.

Like with any new technology, it is not worth very much until it is worth a lot.

In the meantime, critics will continually reference its lack of use by ordinary consumers and merchants, while overlooking its potential use. Over time, more and more consumers and merchants will adopt it as developers rapidly improve its useability to make it more accessible. The Internet was at first hard to use and now everyone is using it.

An advanced form of money that is digital and denationalized was predicted by two of the most influential economists of the 1900s.

One thing that’s missing but will soon be developed is a reliable e-cash, a method whereby on the Internet you can transfer funds from A to B without A knowing B or B knowing A – the way I can take a $20 bill and hand it over to you, and you may get that without knowing who I am. Milton Friedman in 1999

The decentralization of money has its theoretical roots in Denationalisation of Money: The Argument Refined by Friedrich A. Hayek

I don’t believe we shall ever have a good money again before we take the thing out of the hands of the government, that is, we can’t take it violently… all we can do is by some sly roundabout way introduce something that they can’t stop. Friedrich Hayek in 1984

The thing we call money is just an information system for labor allocation. What actually matters is making goods & providing services. We should look at currencies from an information theory standpoint. Whichever has least error & latency will win. Elon Musk in 2021

The more people who use Nano, the more valuable Nano is for everyone who uses it, and the higher the incentive for the next user to start using the technology. This is driven by every consumer, merchant, developer, and entrepreneur that uses or builds on Nano. This creates a positive feedback loop, strengthening its network effect.

Nano shares this network effect property with the telephone system, the web, and popular Internet services like eBay and Facebook.

Nano's base layer is scalable making it well suited to capture feedback loops driven by utilization.

In early 2014, Marc Andreessen made one of the strongest cases for Nano without even knowing it. Nano of course did not even exist yet. In his article "Why Bitcoin Matters", he laid out Bitcoin's advantages and potential use cases, relying heavily on its ability to have "low or no fees".

Fast forward, Bitcoin is no longer viable for any of the potential use cases he laid out without resorting to layer 2 solutions like the Lightning Network. Though he couldn't predict Bitcoin's high fees or inability to scale, he made up for it with his vision for digital money and its potential.

Nano is still viable for all of them.

Let’s say you sell electronics online. Profit margins in those businesses are usually under 5 percent, which means conventional 2.5 percent payment fees consume half the margin. That’s money that could be reinvested in the business, passed back to consumers or taxed by the government. Of all of those choices, handing 2.5 percent to banks to move bits around the Internet is the worst possible choice. Another challenge merchants have with payments is accepting international payments. If you are wondering why your favorite product or service isn’t available in your country, the answer is often payments. Chris Dixon

advantages

eliminates the risk of credit card fraud for merchants
protects sender identity information from criminals
merchants save money on fees

Credit card fraud is such a big deal for merchants, credit card processors, and banks that online fraud detection systems are hair-trigger wired to stop transactions that look even slightly suspicious, whether or not they are fraudulent. As a result, many online merchants are forced to turn away 5 to 10 percent of incoming orders that they could take without fear if the customers were paying with Bitcoin, where such fraud would not be possible. Since these are orders that were coming in already, they are inherently the highest margin orders a merchant can get, and so being able to take them will drastically increase many merchants’ profit margins. Marc Andreessen

Nano's anti-fraud properties even extend into the physical world of retail.

You fill your cart and go to the checkout station like you do now. But instead of handing over your credit card to pay, you pull out your smartphone and take a snapshot of a QR code displayed by the cash register. The QR code contains all the information required for you to send Bitcoin to Target, including the amount. You click “Confirm” on your phone and the transaction is done (including converting dollars from your account into Bitcoin, if you did not own any Bitcoin). Marc Andreessen

Target is happy because it has the money in the form of Bitcoin, which it can immediately turn into dollars if it wants, and it paid no or very low payment processing fees; you are happy because there is no way for hackers to steal any of your personal information; and organized crime is unhappy. (Well, maybe criminals are still happy: They can try to steal money directly from poorly-secured merchant computer systems. But even if they succeed, consumers bear no risk of loss, fraud or identity theft.) Marc Andreessen

Every day, hundreds of millions of low-income people go to work in hard jobs in foreign countries to make money to send back to their families in their home countries – over $500 billion in total annually, according to the World Bank. Every day, banks and payment companies extract mind-boggling fees, at an average rate of 6.8% and sometimes even higher, to send this money. Marc Andreessen

Switching to Nano, which charges no fees, will raise the quality of life of many workers and their families who are disproportionately affected by fees as they have less wealth.

Only about 20 countries around the world have what we would consider to be fully modern banking and payment systems; the other roughly 175 have a long way to go. As a result, many people in many countries are excluded from products and services that we in the West take for granted. Even Netflix, a completely virtual service, is only available in about 40 countries. Marc Andreessen

And even here in the United States, a long-recognized problem is the extremely high fees that the “unbanked” — people without conventional bank accounts – pay for even basic financial services. Bitcoin can be used to go straight at that problem, by making it easy to offer extremely low-fee services to people outside of the traditional financial system. Marc Andreessen

Nano, as a global payment system anyone can use from anywhere at any time, can be a powerful catalyst to extend the benefits of the modern economic system to virtually everyone on the planet.

Micropayments have never been feasible, despite 20 years of attempts, because it is not cost-effective to run small payments (think $1 and below, down to pennies or fractions of a penny) through the existing credit/debit and banking systems. The fee structure of those systems makes that nonviable. Marc Andreessen

With Nano, that's trivially easy. It is divisible down to 30 decimal places and is feeless. It's a revolution in unimaginably small value transfer as you can send its smallest unit to anyone in the world for free and instantly. It enables use cases that could not have existed beforehand and thus is easily one of the areas that will be hardest to predict.

content monetization like pay per article, per hour, per video, per access, per alert
fight spam on email systems or social networks

This idea first came to my attention in a news article a few months ago. A random spectator at a televised sports event held up a placard with a QR code and the text “Send me Bitcoin!” He received $25,000 in Bitcoin in the first 24 hours, all from people he had never met. This was the first time in history that you could see someone holding up a sign, in person or on TV or in a photo, and then send them money with two clicks on your smartphone: take the photo of the QR code on the sign, and click to send the money. Think about the implications for protest movements. Today protesters want to get on TV so people learn about their cause. Tomorrow they’ll want to get on TV because that’s how they’ll raise money, by literally holding up signs that let people anywhere in the world who sympathize with them send them money on the spot. Bitcoin is a financial technology dream come true for even the most hardened anticapitalist political organizer. Marc Andreessen