What is Bancor?
The Bancor Protocol is a standard for a new generation of cryptocurrencies called Smart Tokens. These smart tokens enable start ups and other businesses to launch their own cryptocurrencies. This is huge.
In our view, this basically means Bancor would be the kickstarter of cryptocurrencies. And everything is set in Smart contracts, through smart tokens, which allow for a continuous liquidity and asynchronous price discovery for tokens through their Smart Contracts; aka “Smart Tokens”.
The Bprotocol Foundation was established in 2017 in order to promote the development and adoption of the Bancor protocol, a standard for the creation of intrinsically tradable tokens. These smart tokens benefit from network effect and algorithmic pricing, enabling the long tail of user-generated tokens to emerge and democratizing value creation.
The Bancor protocal and token creation allows for instant liquidity using blockchain-based smart contracts. While hundreds of cryptocurrencies have emerged in recent years, generating new credit as a function of their utility, many low volume tokens often struggle to achieve liquidity. The Bancor Protocol aims to solve this liquidity challenge faced by new cryptocurrencies by enabling tokens to hold one or more other tokens in a reserve.
In their own words
We created Bancor with the goal of introducing a new type of standard for cryptocurrencies that would enable token creators, who generate real value, with an instantly viable token,” said Bancor CEO Guy Benartzi. “With the Bancor Protocol, new coins enjoy continuous liquidity, allowing cryptocurrency development to flourish in local communities and on a much broader scale.
Bancor introduces a new relationship between tokens and their reserves, called a Constant Reserve Ratio (CRR), which always remains fixed, above 0% and up to 100%.
Read more about the bancor protocol here.
Video: Explaining the Concept
Bancor uses smart contracts to create tokens with the ability to hold one or more tokens in reserve. These tokens may represent fiat and/or national currencies or other types of assets. This creates a new type of ecosystem that is essentially a decentralized asset exchange where instant liquidity is achieved regardless of a token’s market cap or status. In addition, the Bancor protocol enables the creation of decentralized ETFs or Exchange Traded Funds.
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