I used it with DD.... sort of. I used it wrong and didn't actually get the physical effect of the gas - as I found out after the birth, when my placenta had to be extracted with forceps and the MW kept telling me "suck more gas", and I was all "Ohhhh, this is what they meant!". :p Psychologically, though, I did feel more in control while I was holding the tube, knowing I could suck on it if I wanted... it kinda gave me something to do, and also something to resist ("I can get through this next contraction without it").
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I'm planning to do Hypnobabies this time, waterbirthing and so on, and obviously I'd prefer to go all-natural; but our birthing centre offers nitrous, and I won't feel bad about using it if I need to. It doesn't cross the placental barrier; it's user-controlled, not controlled by a nurse or anything; it wears off very fast (I think it exits the body in something like 7 seconds - or is it 7 breaths?); and as far as medical pain relief goes, I don't think it has anywhere NEAR the implications of an epi or even pethadine or whatever.
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That said, yes, it does alter your mental state - when I was using it properly I definitely had that "Wow, this is agony, but I don't care" thing going on, which was a rather unusual sensation! (Given the alternative, though, I was happy with it...) I can't imagine using it for several hours at a go or anything, which is why I'm planning to use it only if necessary and as a last resort. Your "security blanket" definition is a good one!
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And yeah, learn from me - if you do use it, keep taking breaths of the gas. Don't stop as soon as you "feel funny". You're supposed to, that's the point. :p (I mean, obviously, stop if you feel sick or whatever - but I was so out of it with labour-land and lack of sleep that I kept thinking "Ooh, that feels a bit odd" and stopping. Silly me.)