Why is the Bancor Protocol amazing?

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You might be wondering what the Bancor Protocol is, and well, why I think it’s amazing, so let me tell you that you’ve landed on the right post. If you have not read our previous post on Bancor, make sure to check it out.

 

What is the Bancor Protocol?

 

A smart-contract-based token conversion standard, enabling a single party to convert any token to another, without requiring a second party to exchange with. It achieves this through the use of reserve-tokens, which provide liquidity through autonomous algorithmic price discovery, regardless of trade volume.

– The Bancor Team

 

To make it easy, Bancor is a platform which allows users to convert different tokens (called “SmartTokens” in the protocol) in the Ethereum Network. These SmartTokens can be traded as the user feels, just like a normal currency, and can even be used as crypto-token reserves.

 

What does Bancor introduce?

 

  • Issue tokens backed by reserves with stabilized prices: It allows people to issue tokens that have a reserve, similar to how fiat currencies have central banks with foreign exchange reserves. This way, the value of a currency is stabilized, while trading should not make the price volatile. 
  • Launch token baskets: Bancor allows to launch different currency tokens in an easy way, such as exchange traded funds. 
  • Marketplace of token exchanges: It is possible that the platform can add liquidity to the exchange market of tokens. Something important to point out is that trading with reserves will not incur any fees, other than the Ethereum transaction costs (gas). 

 

How can users interact with Bancor?

 

Sometimes, it can be difficult to interact with platforms, but Bancor has made sure that it is a simple but life-changing platform to use. So how do you use it? Bancor has launched an app and users can interact with it and can launch tokens using chatbots. Thanks to an app, every user is able to access the platform anywhere and anytime. Every single one of use owns a smartphone, so having the platform developed on an application is amazing.

 

What does the value of the Bancor token depend on?

 

The value of the Bancor Token will thus depend on both the value of ETH and the value of the SmartTokens that Bancor is used to back. It would work as in the following:

 

  • If the price of ETH increases at a greater rate than that of Bancor’s, it is then cheaper to obtain ETH through the smart contract until Bancor’s supply decreases in rate.
  • If it is the alternate way, (the market price of Bancor increases at a greater rate in respect with that of ETH, it is less costly to buy Bancor through smart contracts until the price of ETH goes up. 
  • Conversely, when the market price of a SmartToken with Bancor as a reserve goes up faster than Bancor’s, it becomes cheaper to get SmartTokens through the smart contract until the supply of SmartTokens goes up (or the price of Bancor goes up).
  • The effect of the SmartToken market price on that of the reserve token’s market price is relatively smaller than that of the reserved token’s on the SmartTokens’.

 

 

If you want to know more about Bancor’s latest news, make sure to check out their blog. It is very intuitive and explanatory. 

By the way, remember that Bancor Protocol’s fundraiser will begin on June 12th, 14:00 GMT. The conversion rate is of 100 BNT (Bancor Tokens) for every 1 ETH. The CoinNoob community strongly advises you not to miss it out! If you want more information about Bancor, watch the next video, it is very interesting and you will find yourself starting to love the Bancor platform.

 

And as always…

Stay Awesome!!

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