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What Is Bancor (BNT) All About?

Bancor is a cross-chain cryptocurrency conversion platform, which employs blockchain protocol to allow users to directly convert between different tokens. Users do not have to exchange their tokens on a cryptocurrency market. Currently, the network allows conversions between Ethereum and EOS tokens with others in the works, without the need of third parties and middleman. Bancor Network Token or BNT is used as the intermediary token on Bancor to initiate various exchanges. BNT is both an EOS and an ERC-20 token.

This guide will explain what Bancor is all about, the purpose it is designed for, the team behind it, the way it works, and the various uses and applications.

What Is Bancor Designed For?

There is high illiquidity plaguing the cryptocurrency market when it comes to less popular coins and tokens. Bancor is designed to address this issue for the thousands of other tokens that serve legitimate decentralized purposes, but are unable to attract the necessary attention in the crypto market to be called liquid.

The project is working towards bringing liquidity to a majority of crypto tokens and coins, which otherwise lack consistency in their demand and supply on exchanges. The entire Bancor Network is built on smart contracts that employ a new class of cryptocurrencies called “Smart Tokens.”

The consistent presence of buyers and sellers determines the liquidity of a token. Tokens that can be sold or purchased at any given time, such as ETH and BTC are called highly liquid cryptos. The opposite is said for tokens that do not have an active market base. The Bancor team envisions a future where millions of tokens would have a platform to be traded globally.

Who Is The Team Behind Bancor?

Eyal Hertzog launched Bancor in 2017. The project received tremendous support from Tim Draper, a billionaire venture capitalist. It is important to understand that at the beginning the team was creating a decentralized liquidity network instead of a decentralized exchange.

The concept brought a completely new take on cryptocurrency trade. The concept is powerful enough to trade in general by leveraging the power of Smart Contracts.

How Does Bancor Work?

Smart Tokens are created on the Bancor platform by using smart contracts. Bancor works by using these Smart Tokens as an alternative to conventional trading. The protocol does not call for an exchange of tokens with another party. This is a key selling point of Bancor as opposed to other cryptocurrency exchanges.

Smart Tokens are employed by Bancor to initiate conversion between different ERC-20 tokens in an internal fashion. The conversions can take place through Bancor blockchain protocol while remaining completely outside the purview of crypto exchanges.

Smart tokens are quick to process token conversions internally by holding on to reserves of other ERC-20 tokens. Sophisticated algorithm mechanisms calculate the value of reserves to be maintained at all times. This is similar to how a central bank holds foreign fiat currency reserves for conversion.

What Are Current and Future Applications of Bancor?

BNT is the native token on Bancor protocol and the first-ever Smart Token on the network. It is the token that is used as a reserve for all other tokens. This high connectivity allows BNT to mitigate unnecessary conversions to arrive at the end token. The token cannot be mined and is created whenever required to initiate token exchanges.

BNT essentially represents the value of cryptocurrencies held in Smart Contracts. They are used as a medium for the token-to-token trade. BNT makes it easy to convert all supported tokens into EOS and ETH, which can then be sold on exchanges, such as Coinbase for fiat currency.

There are numerous use cases of Bancor in the real-world.

The protocol helps in enhancing transparency among various cryptocurrencies by effectively removing the need for buying and selling an equivalent amount of cryptocurrency, via third party sources.

Bancor can be used to maximize profit by saving a participant from manipulation. It offers the best equivalent currency value through Smart Tokens. The rate gets calculated based on an unbiased collection of algorithms and formulas. This allows Bancor to be used as the go-to exchange for getting a fair value for illiquid cryptos.

Bancor is made perpetual, which means that participants do not have to worry about losing their crypto assets. This perpetuity is maintained by implanting a Constant Reserve Ratio (CRR).

It is important to understand that Bancor is much more than a mere coin. The platform has a clear vision of increasing liquidity and accessibility of the crypto market. The platform is working towards increasing mobility and accelerating the transition of crypto adoption.

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