. What is Bancor Coin? Here is the Crypto Currency BNT Token in All Details – In this article, What is Bancor Coin? We will answer the question and try to present details about the project.
What is Bancor Coin?
Bancor is a blockchain protocol that allows users to directly exchange between different tokens rather than trade in cryptocurrency markets.
The project offers a network that tries to bring liquidity to most tokens that we will discuss soon and do not have a consistent supply / demand on the exchanges. This network is built on smart contracts and a new class of cryptocurrencies that the team calls “Smart tokens”.
What Problem Is Bancor Aiming To Solve?
Bancor wants to support the illiquidity currently existing in the cryptocurrency market. The lack of liquidity is not too much of an issue for top cryptocurrencies like Bitcoin or Ethereum because there are always buyers and sellers willing to exchange these coins. However, for thousands of other tokens that could serve legitimate decentralized purposes but didn’t get enough attention to be liquid in the market, this is definitely a problem.
The liquidity of a token is determined by the consistent presence of buyers and sellers. A high liquidity token is one that you can easily acquire or sell at any time. The opposite is true for tokens with low liquidity.
The Bancor team argues that since most tokens are difficult to trade, they are left out of the value internet. Its protocols aim to integrate these tokens, helping them build their liquidity.
The team envisions a future that is highly influential locally, but includes millions of tokens that can be traded globally.
Smart Tokens and Bancor Protocol
Bancor’s protocol uses smart contracts to create Smart tokens that serve as an alternative mechanism for trading. A key feature of the protocol is that it does not require a token exchange with a second party, as is the case with cryptocurrency exchanges. Instead, it uses Smart tokens to convert between different ERC-20 tokens internally. These conversions take place through the blockchain protocol and entirely outside of cryptocurrency exchanges.
Smart tokens internally process token conversions, keeping reserves of other ERC20 tokens in their Smart Contracts. They can then recycle back and forth between these reserves as users demand.
You can think of smart tokens as the bank that holds money. They hold reserves similar to a central bank holding foreign currency reserves and converting between them.
The Bancor protocol supports all tokens that follow Ethereum’s ERC-20 standard. Every Smart token created is ERC-20 compatible and therefore compatible with all other ERC-20 tokens.
What is Bancor Network Token (BNT)?
The Bancor protocol has its own local currency BNT. BNT is the first Smart token in the Bancor Network and is held as a backup by all other Smart tokens. This link allows BNT to significantly reduce the number of conversions required to reach the final token.
Bancor brings liquidity to tokens (as with cryptocurrency exchanges) by eliminating the need for buyers and sellers to match for an exchange to occur. Instead, you can convert at any time directly through smart contracts in the network.
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