Bancor Protocol — What Is It’s Purpose?
“Cryptocurrency currencies take the concept of money, and they take it native into computers, where everything is settled with computers and doesn’t require external institutions or trusted third parties to validate things.” — Naval Ravikant
Ever since the success of Bitcoin was followed by Ethereum, new crypto coins are being launched into the market regularly. Each new cryptocurrency adds new features and makes some improvements over existing platforms.
New coins also attempt to remove the inefficiencies found in previous coins.
For example, Ethereum added additional layers through smart contracts, something that was not available in previous crypto like Bitcoin and Litecoin. Proof of Staking is another interesting concept that was implemented to reduce energy consumption of mining operations.
As the number of different cryptocurrencies with unique features grew, crypto enthusiasts realized the need for a platform that would make it easier to exchange these coins and provide greater liquidity to the market.
That is when The Bancor Protocol (BNT) was born.
What Does Bancor Do?
The development team behind the Bancor Protocol is looking to provide support for the liquidity problem that exists in the cryptocurrency market right now.
Liquidity is an issue for the thousands of new and old tokens that were launched in the market over the years.
Although they serve genuine decentralized purposes, these tokens failed to attract enough attention and trading volume in the market to remain liquid.
A token’s liquidity is determined by the consistent presence of buyers and sellers in the market. A token with high liquidity is one that can be easily purchased or sold at any particular moment in time.
The Tokens which have reduced or no liquidity are the ones that get no buyers or sellers in the market.
Was There a Need For The Bancor Protocol?
Illiquidity was never much of an issue for major crypto coins like Bitcoin or Ethereum because there are always buyers and sellers looking to trade these coins. However, it is definitely an issue for smaller crypto coins that failed to get off the ground.
The Bancor Protocol team pointed out that a majority of tokens are difficult to exchange at the digital currency listing sites. These tokens have become excluded from the internet of value.
Bancor’s ecosystem aims to integrate these tokens by helping to establish their liquidity.
Developers envision a future where we will have millions of tokens in the market that will be useful and effective within their ecosystems but not worth much at the listing exchanges.
The platform uses Smart Tokens to convert between different ERC-20 tokens on the network internally. These conversions are executed through the blockchain and completely outside of digital currency exchanges.
Bancor Smart Tokens process conversions internally by maintaining reserves of other ERC20 tokens within their Smart Contracts.
The platform can convert tokens back and forth between those reserves at user request.
Bancor Token (BNT)
The Bancor platform has its own native token which can be traded on any of the listed exchanges. BNT was the first Smart Token created on the Bancor Network.
It is held as a reserve by all other Smart Tokens created on the platform.
The interconnectivity of BNT to other tokens on listed exchanges significantly reduces the number of transactions required to get the end token.
Where is the Token Right Now?
The development team behind the Bancor Protocol has been working very hard to turn their vision into a reality. They have already presented their project at Coinfest in Amsterdam, LAUNCH in San Francisco and EDCON in Paris.
Many more events are being placed around the world.
You can buy BNT coins directly through Bancor’s smart contract by converting it from any other supported ERC-20 tokens on the Bancor app.
You can also buy it from one of the exchanges where it is listed. The coin is currently listed on the following exchanges: Bittrex, Binance, Gate.io, OKEx, HitBTC, Liqui, Upbit, LATOKEN, COSS, AEX, and Tidex.
BNT has also been integrated with some popular wallets such as MyEtherWallet, Parity, and imToken where you can store your coins offline.
In The End
The Bancor Protocol was created to bring liquidity to niche tokens so that they can be easily exchanged in the global markets. BNT makes it easier to buy and sell tokens that have low trading volumes.
This helps them become established more easily.
The crypto markets will progress to a future where we have a large number of locally-effective tokens.
Bancor will be in a central position to exchange those currencies.
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