The prefix "nano" is gaining an increasing presence in public consciousness, from invocations of the nanometre (nm) as a unit of measurement for our burgeoning silicon technology's tininess (as in Intel's latest 32nm processors), to the hubristically named iPod nano, which is a bit smaller than the others. The prominence of this word in our culture is set to rocket over the coming decades as more tightly defined "nanotechnology" becomes available – for example, Nokia is hoping to release a nanotech phone that it calls the Morph in 2015.

A commonly accepted definition of nanotechnology is that it deals with devices smaller than 100nm in size. A nanometre is one billionth of a metre. A single atom is between a tenth to half a nanometre across; a million or more of them stacked on top of one another would equal the thickness of a piece of paper. Nanotech machines will use individual atoms and molecules as mechanical moving parts, and will enable us to take apart and rebuild just about anything atom by atom.

If this sounds like science fiction, consider that you're carrying trillions of proofs of concept around inside you that could only be viewed with an electron microscope; every time your DNA is transcribed into RNA, or your muscle cells use fuel from food for movement, or your immune system fights off an infection, the work is done by nanomachines – devices built out of atoms and molecules which do mechanical work.

In his book, Engines of Creation, K Eric Drexler reminded readers that every manmade and natural object around us is an arrangement of (mostly very common) atoms and molecules. The ability to arrange those molecules more regularly will allow us to build materials many times stronger and lighter than those used in engineering today. This could bring a space elevator within reach, allowing us to explore the solar system and exploit the resources of the planets and asteroids cheaply. In the body, nanomachines could fight disease, or even aging, one atom at a time, restoring them to the configurations characteristic of healthy tissue.

An advanced nanotechnology would be capable of repairing the damage we have done to our environment, capturing carbon out of the air and salting it away under the earth, or using it to build the light, strong, diamond-like materials the nanotech-enabled human-scale technology will depend on. Ultimately, the most basic and useful elements we will need (carbon, oxygen, hydrogen, nitrogen, etc) can be harvested out of the air and dirt, and assembled into useful configurations with barely an hour of work. Nanotechnology has the potential to build a post-scarcity material economy – with the same implications we are so awkwardly working through in the post-scarcity information economy.

Drexler didn't shy away from confronting the negative possibilities of uncontrolled nanotech development in his book, and he and other scientists, such as those at the Centre for Responsible Nanotechnology, attempt to raise public awareness of the coming developments, which will inevitably grow out of research into molecular biology and computing (specifically, artificial intelligence and computer-aided design).

There are many terrifying possibilities for nanotechnology; military nanomachines could infiltrate human bodies and systematically tear them apart using the same principles medical nanomachines will use to repair them. An uncontrolled nanomachine designed to replicate itself could lead to the "grey goo" scenario that once panicked Prince Charles. Monopolistic practices on the part of the corporation or government that first produces a workable nanotechnology could hoard its benefits for one segment of the population, denying the rest of the world the massively increased prosperity it offers.

The solutions will have to complement one another if this, the biggest technological leap forward since the Industrial Revolution, is to benefit everyone. The most important is collaboration and diplomacy; the democracies that lead the world in scientific research need to collaborate in development and come to agreements that will share benefits and severely restrict weaponisation. Nanotech treaties will have far greater import for the survival of mankind, and of Earth as an ecosystem, than any nuclear treaty. Even "rogue" states need to be included in these efforts, simply because the new technology will be so desirable that if they are not included, they will push forward with their own, more dangerous and less controlled research.

The other aspect of preparation is education. The electorate need to be adequately informed to understand the debate that will take place and to put pressure on their leaders to choose the right paths. This means that formal science education in schools needs continued support from the ministers setting curriculums, and higher education and research needs support and funding so that we continue to have scientists and engineers capable of contributing to research and to public debate.

We need a forum for discussing the implications and direction of technological change in a way that is open and comprehensible to the public, and whose conclusions and advice ministers take seriously and do not dismiss on ideological grounds. Drexler proposes that such a forum needs the credibility of due process present in a court of law, and the scientific reliability that stems from peer review. Most of all, we need politicians with the courage to resist the temptation to short-termism that comes with limited terms in office, who realise that the debates arising in the coming years will see them legislating the shape of the future.