The Most Undervalued Cryptocurrency in 2021

Disclaimer: This is not financial advice, cryptocurrencies are inherently risky and volatile, and I could be wrong about all of this. But if you’re investing in Dogecoin for the lols, you might as well read this.

TL;DR: The most undervalued cryptocurrency in 2021 is nanocurrency.

With all the hype around cryptocurrencies this year, it can feel impossible to keep up and find the undervalued gems. Look no further than eco-friendly Nanocurrency, with the best user experience in crypto by a mile with near-instant and feeless transactions. Nano tops the list for the most undervalued cryptocurrency of 2021.

Nano proved this yesterday with 100% gains amidst a sea of red tickers in the Top 100 coins in response to Elon’s tweet about hunting for the most eco-friendly bitcoin alternative.

As of today, its market capitalization (total value of the network, or market cap for short) is around $2 billion, compared to $60 billion for Dogecoin and $1 trillion for bitcoin, giving it tons of upside potential.

Nano’s supporters argue that it does both Bitcoin’s and Doge’s jobs better than either of them combined. It needs neither fees, inflation, or custodians to use. In short, Nano is a true peer to peer electronic cash system. And with fully issued, hard-capped supply, there’s no inflation or devaluation. Ever.

You can buy Nanocurrency at major exchanges like Kraken, Binance, Bitcoin Suisse, KuCoin, and many others. Find out more at reddit.com/r/nanocurrency.

How should you look for value in cryptocurrencies?

Hint: market cap, inflation, utility, distribution, availability, community, and the key question: why now?

Market cap

When looking for value in crypto, you must avoid the critical mistake of looking only at the price per coin, because each network has issued different numbers of total coins. Doge at $0.45 might look cheap, but it’s actually quite expensive for this reason because there are billions of dogecoins already issued.

If Dogecoin goes to a dollar today, for example, the market cap would be ~$130 billion. If the Nano network grew to the same value, one nano would be worth almost $1,000. That’s a ~60x upside with Nano vs ~2x with Doge. And if nano grew to Bitcoin’s size, that would be almost $10,000 per nano, or 500x upside.

Inflation (scarcity)

Inflation rate is the number of new coins created (“mined”) every year as a percentage of the total outstanding supply. Inflation acts like a leak in a bucket you’re trying to fill with water. The more inflation, the bigger the leak, and the harder it is to fill up. Less inflation = more scarce = more valuable. Basically, inflation means your holdings lose value over time (like the dollar), gold, or even bitcoin (which has another 120 years of inflation left).

Doge has huge inflation by adding 5 billion new tokens per year to the supply, so you’d need people to buy $2.5 billion worth at current prices just to keep the price steady at $0.45.

Compare that to Nanocurrency, where adding the same $2.5B would probably 3x the market cap because it has a fully issued supply of 134 million nano, with no inflation, and no one has the power to create any more of it. This makes it the most scarce cryptocurrency in existence (*Note: ethereum claims it will be deflationary, and may be, but this depends on it remaining competitive vs other low fee platforms and is not guaranteed).

Nano can do this better than other coins because the community developers built a unique security model (called “ORV”) that doesn’t rely on fees or miners to keep your money safe and decentralized.

Utility

Why should we care about any cryptocurrency in the first place? It ought to be useful as money, is why. Lots of meme tokens are popular right now for the lols. But for the long term, you want to look for something that can do all the jobs you need money to do (and NOT the ones you don’t).

Nano is really good at being money. You can send and receive any amount, large or small, in a fraction of a second, to anyone with a nano address globally (free to set up and nobody to deny you an account), without paying a fee. As long as you control the private key (essentially a long password), you can take and store your money anywhere.

In fact, Nano has all the key characteristics of money covered:

-Durable: no one has been able to hack the network to destroy it or make more nano. The Open Representative Voting security model has also proven robust against all attacks to date over the last four years. The biggest chink in this armor is the nonprofit Nano Foundation’s outsized influence over new code commits (run by Nano founder Colin LeMahieu) and its poor resistance to spam. Like bitcoin, decentralized node operators still choose what node software to run, but the community would like to see this become more fully decentralized over time, and spam resistance is hopefully coming in v22/v23 upgrades in the next few months.

-Portable: like all cryptocurrencies, you can take it anywhere you’ve got an internet connection and a mobile phone or laptop, it weighs nothing, and occupies no additional space.

-Divisible: the smallest fraction of a nano is 1 raw. 1 nano is 10³⁰ raw, so it’s infinitely more divisible than the US dollar (1 cent) and practically much more divisible than bitcoin (bitcoin fees get in the way of microtransactions without annoying workarounds or middlemen).

-Uniformity (Fungible): 1 nano = 1 nano = 1 nano, no need to get out the scales to measure. Also notable is that nano can never be “tainted” the same way bitcoin can via UTXOs, although neither have privacy built-in at the protocol level and both public ledgers are extremely traceable

-Limited Supply: provably scarce fixed supply, 100% issued, 0 inflation. The theoretical limit of a perfect store of value. WAY better than bitcoin’s 120 more years of inflation.

-Acceptability: Admittedly accepted at fewer places currently (we’re early here), but it’s growing fast. If PayPal can take doge, eventually it’ll take Nano.

-Uncensorable (not on the Fed’s list, shockingly): Unlike bitcoin, which now has some miners seeking to censor transactions, nano transactions are uncensorable.

Nano supporters argue that it is better at being money and digital gold than bitcoin. Since there are never any fees, anyone can use it without a custodian, down to an average person holding only a tiny fraction of a nano. This is unlike bitcoin, whose fees only keep increasing with use and drive all but the most wealthy to require a custodian (e.g. a censorable, trusted middleman) to use.

And the much-touted Lightning Network for bitcoin, meant to make transactions affordable and fast, has key flaws that appear unsolvable. It still costs money to open or close a lightning channel, and if all transactions move to Lightning network, then what will secure the bitcoin network after inflation is gone?

Distribution

Was the currency fairly distributed? How much supply is controlled by a central party, and how long has it been trading on open markets so it can settle into the hands of longtime hodlers?

Bitcoin has had the longest period to trade around the world and as such is widely distributed (good). Contrast with $SHIB, yet another dog coin, which airdropped half its supply to Vitalik Buterin only for him to (justifiably) dump a boatload of it this week and donate $1B to Indian COVID relief efforts to remind people to steer clear of scams.

Nano had one of the fairest initial distributions in all of crypto. Initial funds were given away for free to community members who “mined” Captcha’s, so there was no ICO (“Initial Coin Offering”) and the SEC is unlikely to view it as a security as a result. And even if you think that process was compromised by bots, nano has been traded on the open market for 4 years now, alleviating any fears of latent rug pulls.

The developer fund (gifted to the nonprofit Nano foundation) was 7 million nano at the outset, and now has declined to around .2% of the total supply (301,265 nanos). No central party controls a significant sum, with the exception of user funds stored on large exchanges like Binance and Kraken and the 4 million nano yet to be sold off by the custodian of bankrupt exchange Bitgrail that was hacked in 2017/18.

Availability

Is the coin widely available on cryptocurrency and other retail exchanges? If not, is it likely to be added in the future? Nano is in the sweet spot here, where it has traction at major trusted US exchanges with fiat gateways (Kraken and Binance), but is not yet listed on Coinbase, Gemini, PayPal, Robinhood, or Venmo — those shifts would give it a major distribution (and likely a price) bump.

Community

Is there a strong tribe committed to the protocol to defend against forks stealing share in the future? Code is easy to replicate, community and adoption is harder. Is there a culture of seeking real world adoption, helping newcomers, and hodling and spending vs trading for quick profits? The community must see the coin as a store of value for them to treat it that way.

Bitcoin is the oldest and largest community so far, but Nano’s 90,000-member Reddit community has grown substantially over the last 5 years, and is a solid foundation that you shouldn’t ignore. It is extremely helpful to newcomers, with lots of ongoing development and third-party community development efforts. Once Nano is adopted, it is hard to think of what might be a compelling reason to switch again (vs bitcoin, where the UX, wait times, and fees are a significant pain point).

Why now? A few big reasons.

1. Elon now cares about the environmental impact of crypto, and everyone knows that Nano is the most eco-friendly cryptocurrency in existence. The market voted with its dollars yesterday in response to that tweet, with Nano up 50% while most others dropped 10%. And, love him or hate him, you can bet Elon noticed. You should notice too.

2. Nano developers appear to have a near-term solution to the network spam problem (see below), one of the most persistent critiques of Nano.

3. The largest exchange that traded Nano in 2018 (BitGrail) was catastrophically hacked, resulting in 10% of the global nano supply (14 million nano) being stolen. Similar to Mt. Gox for bitcoin, this suppressed Nano prices for the next few years as they were sold off until things began to turn around. The community (and price) resumed its prior growth trajectory this year, with the subreddit growing from 50K to 90K subscribers and counting.

The five key bets for Nano to gain and maintain adoption

1. Ongoing Nano software development will solve the spam issue. The biggest critique of nano is that because its transactions are feeless, it is susceptible to spamming that could shut down the network. Recently the network was attacked, and it’s been running in “safe” mode for the last few months since. It’s still operating, funds are all safe, most transactions settling as normal but many caught up in a long backlog, between hours to days. The Nano developers believe they have an answer to this that they are diligently implementing; if so, it will solve a key trilemma in cryptocurrency: scalability, cost per transaction, and decentralization/security.

2. Nano can be digital gold and a global currency even without smart contracts. If you believe you need smart contracts embedded in any currency for it to be viable, then nano isn’t for you. If you believe, however, in the principle of doing one thing and doing it well, then this is a smart tradeoff nano is making to keep the protocol lean and scalable so it can be pure peer to peer digital cash for the whole world.

3. Nano is sufficiently decentralized/secure to be resistant against state-level attack. The Open Representative Voting model has proven robust to date, but to our knowledge has not been attacked by state-level actors. I need more CS researchers to weigh in here, but for the last four years it’s been great for me.

4. Its fundamental characteristics make it an order of magnitude better than bitcoin for store of value and user experience, allowing it to overcome bitcoin’s first mover advantage over time. Well, perhaps this isn’t as big a bit with the recent success of doge, which has a worse user experience, inflation schedule, and fee schedule. But if you believe in fundamentals and first mover advantage, then bitcoin’s fees ($50 per transaction and climbing) and clunky user experience (how can I actually use it?) mean there’s still room for a competitor to take over.

5. Once Nano gains global adoption as digital gold, nothing else will rise to unseat it. You need an order of magnitude better outcome to get people to overcome switching costs. Bitcoin was better than gold in this way, but still has major pain points leaving room for a competitor — namely, that it failed to scale and its energy use and transaction fees are off the charts.

With nano operating feelessly and instantly at scale, it’s the theoretical limit of a perfect store of value and medium of exchange. It’s hard to imagine what else could be improved about Nano once it’s adopted, but this is still a bet you’re taking.

Thanks for reading, and if you’ve gotten this far, ping me on twitter @nanobythebay to share your thoughts or feedback.