Bancor is a cryptocurrency conversion platform. Bancor is cross-chain meaning that it is possible to convert between EOS and Ethereum tokens. These exchanges can take place without the need for a counterparty to the trade. The Bancor Network Token (BNT) is an EOS and an ERC-20 token.
What is Bancor
Bancor addresses one of the key problems with the majority of cryptocurrencies which is liquidity. Liquidity is the number of buyer and sellers who are actively exchanging a particular cryptocurrency. For major cryptocurrencies like Bitcoin and Ethereum liquidity isn’t an issue as there are many buyers and sellers. However, there are thousands of other cryptocurrencies where the market is far less liquidity. Typically, when a person wants to buy or sell a cryptocurrency the use a cryptocurrency exchange. Bancor provides an alternative to this which aims to provide greater liquidity.
Bancor does this through the use of smart contracts. The Bancor Protocol uses smart contracts in order to create what are called Smart Tokens. The important thing to note is that the protocol does not necessitate that there is a buyer and seller for a particular cryptocurrency. Instead the smart tokens are uses to convert ERC-20 tokens within the Bancor system.
The smart contract maintains a reserve of ERC20 tokens within its smart contract. As user require a particular ERC20 token it can draw on these reserves. In addition to a smart token being able to any of the tokens in its reserves, it can also be converted into a token connected token. This series of linkage makes it easy to quickly convert between different ERC-20 tokens. In essence solving the liquidity problem of ERC-20 that are thinly trade on exchanges, by note requiring a counterparty to a trade.
As an example, if you want to exchange token A for token B. You will first select the two tokens through the Bancor web application. Once you select “convert” the Bancor protocol will begin by converting token A into a Smart Token which has reserves of token A. From there that Smart Token will be liquidated in exchange or another Smart Token that has token B in its reserves. You will now receive the token B that you requested.
This brings us to Bancor Network Token (BNT). BNT is the native cryptocurrency of the Bancor protocol. This is the first smart token on the Bancor Network. BNT is held in reserve by all other ERC-20 tokens on the Bancor network. BNT is both an EOS and ERC-20 token allow for cross chain conversions.
Where to buy Bancor
Why buy Bancor
As already outlined liquidity is a major problem for the majority of cryptocurrencies. In fact, outside of the major cryptocurrencies the market is relatively illiquid. This can make it difficult for people to buy and sell cryptocurrencies at the price they believe represents true value.
In relatively thinly traded markets, there is not always going to be a counterparty to trade on a cryptocurrency. This is unlikely to change in the near future. This means that there is likely to be continuing demand for the solution that Bancor offers. On top of this Bancor facilitates movement between cryptocurrencies at a cost lower than that charged by exchanges.
How to sell Bancor
In order to sell your Bancor you first need to convert it into a cryptocurrency which is directly exchangeable for fiat currency. To do this you can use any of the exchanges listed above or the Bancor application itself. The steps involve are as follows:
- Exchange your Bancor Network Token for BTC or ETH
- Shift your BTC or ETH to a platform that converts into fiat currency like LocalBitcoins, CoinMama or Coinbase
- Transfer your fiat currency to your bank account