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
How to Buy BANCOR
In order to purchase BANCOR tokens, you first need to purchase ETH. Once you purchase ETH, you can then exchange it for BANCOR. For this example, we will explain how to purchase ETH on Coinbase, one of the most popular cryptocurrency exchanges.
Use the link here or click the image above to get $10 in Bitcoin when you purchase or sell your first $100.Register on Coinbase
Step 1: Create a Coinbase account
Select the “sign up” tab and complete the form by entering the requested information, including:
- Your name (exactly as it appears on your photo identification)
- Email address
Step 2: Verify your account
- Issue your phone number
- Upload an image of your photo ID
- Verify your credit or debit card, or your bank account information
Step 3: Select the “Buy/Sell” option on the menu, once our account is verified
After verification, select the “Buy/Sell” option on the menu
- Choose “Ethereum”
- Input how much you would like to purchase
- Select the “Buy” button
Step 4: Confirm your purchase
- Select the “Confirm Buy” button
Step 5: Open an account on an exchange that accepts Bancor
For the purposes of this example, we are going to use the Binance exchangeRegister on Binance
Step 6: Register your Binance account
- Enter your email address and a strong password
- Select “Register”
- You’ll receive an email to confirm your account
Step 7: Login to your Binance account
Step 8: Transfer ETH from Coinbase to Binance
- Under the “Wallet” tab, select “Deposits”
- Copy the ETH deposit address you are provided with
- Log back into Coinbase
- Select “Accounts”
- Click “Send”
- Enter your ETH deposit address
- Input the amount of ETH you want to transfer
- Select “Continue”
Step 9: Exchange ETH for Bancor
- When your ETH has arrived in your Binance account, you can exchange it for BANCOR tokens
- Select ETH currency
- Search for BANCOR in the search box and select it
Select whether you want to “Limit” order (you can choose the amount of BANCOR you want to purchase) or “Market” buy, which will autofill your order at the best price
Step 10: Select the “Buy” button
- Once you have chosen the amount of BANCOR you would like to purchase, select the “Buy button”
- Your BANCOR order will be immediately filled; your ETH will be transferred into BANCOR
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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
Bancor provides what is in many ways a superior solution to that on offer by cryptocurrency exchanges. With Bancor it is possible to trade between cryptocurrencies and even across chains without even needing another party to that trade. All of this is achieved quickly and at lower cost compared to alternative solutions.
Bancor provides a means of exchange that doesn’t even really exist in the traditional world of finance. This makes it not only a promising cryptocurrency, it is an exciting example of the way decentralised cryptocurrencies can upend the existing financial paradigm.
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