The last 5 years have been extremely important for the launch of cryptocurrency projects and Bancor is the proof of this. Bancor was created as a blockchain network that works as a cryptocurrency conversion platform. Unlike popular exchanges, Bancor allows its platform to be used to trade between different tokens, such as ETH for EOS, or vice versa. Thus, there is no need for third parties at all.
The platform has its own token that works as an intermediary token for exchanges. The biggest peculiarity of this token is that it is both an ERC-20 token and an EOS token.
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Disclaimer: this post should not be considered investment advice. This is only for educational purposes only. Never invest more than what you are able to lose and always ask for information to your professional financial advisors. We are not financial advisors.
What is Bancor?
The Bancor protocol is an initiative of the Bprotocol Foundation, a non-profit organization based in Zug, Switzerland. It allows anyone to create a new type of cryptocurrency called Smart Token (Smart Token), which can store (and exchange) other cryptocurrencies.
This allows the smart contracts of these tokens to serve as their own market makers (market makers, entities that provide the necessary liquidity so that participants can buy and sell at any time no matter how much they need to buy or sell), thus removing the need for seconds in cryptocurrency exchanges. Smart tokens are always liquid at any price.
The Bancor platform allows the exchange between different tokens is not expensive. Usually, you would have to go to cryptocurrency exchanges, which charge fees for each transaction, and sometimes, you have to make multiple exchanges to get a certain cryptocurrency, which makes the process even more expensive.
BNT Token: What is it?
BNT is the designated token of the platform and there is a total supply of 73,605,657 BNT. It should be noted that its supply does not depend on mining, but the tokens will be created as needed.
The token represents the value of the tokens included in the smart contract and is used as a means for transactions.
BNT is both an ERC-20 token and an EOS token. It actually works on the Ethereum blockchain, however a mirror image EOS-based token is created to mimic it.
ETH is required to buy BNT, however, it is not necessary to convert anything to BNT to trade. Transactions can be made directly between the desired currencies.
Bancor Features
- Each Bancor transaction is executed directly in a smart contract. A match between buyer and seller is not necessary for the operation to take place.
- At Bancor, trade volume doesn’t matter, there are always tokens available to buy. To do this, it uses an automated pricing mechanism from Bancor that increases the price of a token and its supply with each purchase of the same.
- The price for buying and selling will be the same thanks to the algorithmic price calculation of the Bancor formula.
Ultimately, we can see that using the Bancor platform could be much more beneficial for users instead of investing in traditional exchange platforms. Bancor not only makes you save on fees, but the time will also be much less making the change on the platform.
