Now that we have a basic understanding of the functionality of blockchains and of their shortcomings, let us take a look at block-lattices and how they overcome these shortcomings.

To understand the architecture of a block-lattice, just imagine a row of parallel blockchains. Each of the chains belongs to one account on the network and is thus called an account chain. Only the owner of the account himself can update his account chain and append new blocks to it.

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An account chain is created by broadcasting an open block. All subsequent blocks refer to the previous block on the same account chain. This design allows the network participants to update their account chains asynchronously of the other chains.

In contrast to a traditional blockchain system, the blocks in a block-lattice system do not contain thousands of bundled transactions. Instead, every transaction consists of a send block on the sender’s account chain and a corresponding receive block on the receiver’s account chain. This separation of transactions into two parts, combined with the fact that each network participant can alter his own chain allow the sender to make transactions even when the receiver is offline.

To make a transaction, the sender creates a send block which contains the address of the receiving account, the number of coins to be sent and a reference to the last block on his account chain. He then adds the block to his chain and broadcasts it to the network. Once the network agrees on the transaction’s validity, the coins are deducted from the sender’s balance and the transaction is settled. This entire process usually takes less than 3 seconds.

To receive the funds, the owner of the receiving account now simply creates a corresponding receive block and appends it to his own account chain. Once he broadcasts the block to the network, the funds are added to his balance.

The Nano protocol uses a consensus technique called delegated Proof-of-Stake (dPoS) to prevent users from double-spending their coins. According to dPoS, every account owner appoints a representative to verify new blocks on his behalf. If one of the network participants tries to double-spend his coins by broadcasting two blocks that refer to the same preceding block, the representatives vote on which block to keep and which one to discard. Their voting weight is proportional to the number of coins that other accounts have delegated to them. A block is considered settled once it has been verified by representatives with a combined voting weight of more than 50%. This way, only one of the conflicting blocks is kept and double-spending is prevented. Since the account chains are independent from another, the rest of the accounts can continue to make transactions during the voting process.

The dPoS-architecture allows for feeless and near-instantaneous transactions and a much higher transaction throughput, as it removes the costs and time associated with the block mining. On August 17, 2018, the Nano beta network reached a maximum transaction throughput of 756 transactions per second, compared to Bitcoin’s 7 transactions per second.

We at NOS are confident that next-gen payment cryptocurrencies like Nano or Nollar have the potential to replace traditional payment cryptocurrencies and meet the technical requirements to compete with the traditional financial institutions involved in the process of moving money around the world.