Liquidity and validation in Nano

Lately I'm often asked about liquidity in Nano.

Liquidity matters on two levels:

• High net-worth individuals or big businesses investing

• Businesses needing to swap to fiat

Big investors

For big investors depth of the market matters. They need liquidity to execute large transactions without significantly affecting the price, including potentially being able to sell Nano.

This is largely a chicken and egg situation. There is a large group of people who know about Nano, see value in it, and hold a bit of it. There are many developers integrating Nano into services, and even more considering doing so.

What Nano seems to miss is that one big, public investor or usecase. BCH has Kim Dotcom and Roger Ver, BSV has Calvin Ayre, BTC has many (Michael Saylor comes to mind), and many other chains have venture capital backing since the start.

Nano didn't start with VCs, and while it often feels like Kim and Roger could be Nano supporters just as easily as BCH supporters, switching is always hard psychologically.

In many of my articles and threads on Nano as the hardest store of value no one argues with the reasoning. Instead they argue about current price action and price history. When that argument gets removed there is very little argument against Nano.

To an extent this is what we saw when Elon Musk announced that Tesla was looking into a sustainable crypto alternative to use for payments. Nano's price shot up, despite Nano not explicitly being mentioned and despite its low market cap.

One big player buying in and mentioning how Nano's proposition seems to make sense, one serious integration, would be the final straw that validates Nano for lots of people.

It feels like everyone in crypto knows Nano. In private DMs large crypto Twitter accounts acknowledge this, saying it works well and they hold a little bit of it just in case.

It feels like no one dares to be the first to support it. It feels like after that first "trailblazer", everyone will be claiming how they'd known about Nano for a long time. Most people are followers, rather than leaders.

Taking this back to liquidity, Nano's current liquidity being low is something that is not fundamental to the protocol. It's dependent on market action. As Nano grows, spreads on exchanges decrease.

In many ways, comparing Nano to other crypto and especially to Bitcoin you would expect lower spreads and higher liquidity for Nano at any given market cap. Nano is fundamentally the cheapest and fastest asset to move, out of all crypto.

Exchange integrations will likely improve as Nano becomes more popular. If there is an exchange with low liquidity or high spreads, you could instantly send Nano there. It would take literal seconds, and be feeless or come with a very small fee levied by the exchange.

If there is an arbitrage opportunity, nothing transfers value faster than Nano. For traders it makes far more sense to have an asset they can quickly move to any exchange to arbitrage with, rather than assets that are slower and more expensive to move.

Nano currently isn't on all exchanges, which again is a function of recognition and market cap. Coinbase shareholders would force Coinbase to integrate Nano if Starbucks integrated Nano for payments.

Business integrations

It's already easy to set up a system where people pay in Nano and merchants convert to USD or a fiat of their choice in the backend. Having set that up myself I can confirm that it's not difficult.

For small businesses there is plenty of liquidity for this. Even taking into account exchange fees, it's easy to accept Nano, convert it and withdraw fiat for <1% total costs.

As more businesses do so, as more people start using Nano or wanting to buy Nano for investment purposes, this level of spread and costs decreases further.

This is once again a chicken and egg situation. In the long run, you would expect businesses to be very interested because it allows them to cut costs. In the short run, it takes time and effort to integrate Nano, and there are not that many people holding and using Nano.

Bigger businesses

As transaction sizes increase, spreads become higher. Selling $100 Nano every minute has low slippage. Selling $100,000 Nano once an hour has more slippage.

This is where Nano's scalability and lack of fees play an important role. Businesses, even bigger businesses, can move Nano that they receive instantly, feelessly. It allows to sell in small increments, rather than waiting to batch transactions to reduce total fees paid.

With more business acceptance of Nano and businesses wanting to sell Nano on exchanges also comes more people buying Nano on these same exchanges.

Current liquidity might be problematic for $10,000 sells (or buys) every minute, but with increased business acceptance comes increased usage, trading and investing from other parties.

I can articulate the benefits of Nano and its fundamentals as both a store of value and medium of exchange forever. Realistically though, it means far more coming from an outsider, a big investor or a business integrating Nano and truly understanding its benefits.

Until that happens, we keep building, keep growing the community, keep growing the number of people who know about Nano and hold a small bit of it, so that when the time comes Nano is ready for the limelight.