Nano uses "proof of stake" instead of proof of work to decide the order of transactions, and who receives block rewards.
The main problem with PoS is that it's essentially the same as Federal Reserve bonds: all the new money goes towards people with extra money to freeze. This is part of why inequality has spiraled out of control since the Nixon Shock. Proof of work literally burns most of the profits because of difficulty adjustment.
A more specific problem with Nano (formerly RaiBlocks) is that the entire supply was centrally issued, with a pinky promise from this private organization that they only issued coins by CAPTCHA. If they were lying, then they could have issued 51% of the supply to themselves for permanent control. The only way we'd be able to detect it is if the price kept going down for years.
I like it for making a quick crappy version of something, so then they'll tell me the double secret requirements, and then I write the real version.