Bancor (BNT) was named after named after a famous economic proposal made by John M. Keynes at the end of World War 2 at the Bretton Woods conference. He suggested a super national currency that would help facilitate trade among nations. Keynes believed that using an international reserve currency could help protect smaller or deficit nations from constantly being in debt to stronger currencies Keynes's proposal actually inspired Bancor (BNT) to think if there was a way to utilize this concept with smart-contracts to achieve the same objective of facilitating the ability for different currencies to trade with each other.
Essentially you can pick up the Bancor protocol as a new standard for cryptocurrencies, one that enables any token to hold one or more additional tokens in reserve. Essentially creating relationships between those tokens and allowing conversion between tokens and new kinds of economic models. With Bancor, conversion is done directly with a smart-contract so there's no need to be matched with another party and anyone can always exchange their token to another. It allows currency that is hardly ever traded to have a market price and liquidity. This is something that's not possible in today's exchanges.
Bancor works on smart-contract blockchains and supports any standard token. These may represent fiat currencies like Dollars or Euros, cryptocurrencies like Bitcoin and Ethereum, and tokens that were issued in crowd sales like Augur and Golem Token which represents assets, like go.d The way that Bancor tokens work is that you can buy them at any time by sending any one of the reserve currencies to the smart-contract which will then automatically issue you the token based on the reserve ratio.
When you want to pull money out of the reserve, simply send the token back to the smart-contract, thereby destroying that token and pulling out money from the reserve based on the ration between the token and the reserve.
The algorithm calculates the conversion rate between the documents while preserving a constant ratio between the reserves value and the Bancor token market capitalization. This ensures that reserves are never drained out.
Bancor's network token will serve as kind of a connective tissue linking all of the user-generated tokens to each other. The beauty of Bancor is that the more people that use it as their reserve currency, the more value it captures. It essentially encapsulates the network effect of every Bancor compatible token.
Just like the internet enabled new types of content models like the blogosphere, Bancor is really excited about enabling the long-tail of user-generated currencies. Bancor (BNT) envisions a world with even millions of tokens that are highly effective locally and yet tradeable globally. Because the Bancor protocol is a building block for a new type of monetary system on blockchain, we're only beginning to discover the different use cases, from decentralized ETFs to community currencies, a new type of autonomous decentralized exchange and we're really excited to hear what other ideas the community comes up with.
Bancor (BNT) applies a unique reserve method for cryptocurrencies. It enables immediate liquidity to millions. The internet empowered anyone, anywhere to access information. Blockchain is a revolutionary technology built on top of the internet, allowing the movement of value directly and securely between participants.
Bitcoin was the first implementation of the blockchain technology. Digital money can be transferred instantly with no intermediary of any sort such as a bank. It is based on a trustless mathematical algorithm known as cryptography. Ethereum took the digital money a huge step forward by attaching a smart-contract program to the digital coins.
The smart-contract defines the rules coins conform too, Ethereum provides the ability to mint an infinite number of additional different coins. Every newly created coin has its own smart-contract. We call them tokens. Communities can now build their own independent economy using tokens they create. On the Ethereum network, there are over 2,000 active tokens. New communities and tokens are added daily, millions are expected to be created in the near future. In order to participate in the new global economy, they must have liquidity across communities.
Bancor protocol is the new emerging standard that provides global liquidity for tokens. It defines a constant reserve method where tokens are backed by other liquid tokens. Bancor calls them smart-tokens. Smart-tokens provide immediate liquidity to millions of coins whether listed on an exchange or not. The Bancor token is the first smart-token that is using this protocol.
It has immediate liquidity because it uses Ether as it's own reserve token. Smart-tokens that choose the Bancor token as their reserve enjoy a network effect. With each token that joins the network, the Bancor token appreciates in value along with all of the other Bancor backed tokens.
In the words of Professor Bernard Lietaer, a world expert on money systems that co-designed the Euro, Bancor is a paradigm shift. It provides convertibility and liquidity to a complimentary counterparty and its risks. Bancor is also a breakthrough that gives us a means to eradicate poverty within one generation. CoinJolt investors generated a 400% return with Bancor (BNT).
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