Bancor Review: Introduction to the Protocol and BNT - Coindoo

Bancor Review: Introduction to the Protocol and BNT

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Dec 7, 2018
3 min reading time
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What is Bancor?

Bancor is a blockchain system and protocol designed to help users swap smart tokens (i.e. tokens built on smart contract blockchains) without needing an exchange.

This eliminates the process of matching with a counterparty, spreads, deposits or withdrawals, and registrations. Instead, Bancor’s network makes the conversion process by using a smart contract, and a new breed of cryptocurrencies called Smart Tokens.

Bancor was developed by the Bprotocol Foundation, which is led by Eyal Hertzog, Guy Banartzi, Guido Schmitz-Krummacher, and Bernard Lietaer.

How does it work?

The Bancor Protocol keeps one or more other tokens in reserve, allowing any party to promptly acquisition or liquidate the smart token in exchange for any of its reserve tokens, directly through the smart token’s contract, at a continuously calculated price, based on a formula that balances buy and sell volumes.

Bancor had a historic crowdsale which ended on June 12. It set an industry record by collecting nearly $153 million in Ether.

Ultimately, the Bancor Protocol enables anyone to create a token and start a crowdsale. It greatly expands the use cases of smart contract-based blockchains such as Ethereum and the currencies which run on it.

It also can be used to develop complementary currencies, crypto ETFs, and highly-liquid cryptocurrencies, project and protocol tokens.

Bancor Features

Bancor protocol was created to enhance the efficiency and usability of tokens issued by smart contract blockchains. The technologies it implements is both sophisticated and unique to the space.

Bancor’s mechanism for generating automatic liquidity essentially makes it a decentralized banker which is driven by an algorithm. The platform’s most notable features include:

Continuous Liquidity: Smart tokens can be bought or liquidated by anyone, anytime, by using their smart contract.

Backwards Compatibility: Bancor allows liquidity and asynchronous price discovery for any existing token that uses the ERC-20 standard.

No Spread: The smart token calculates the prices, which means buys and sells are constantly updated to the same current price.

No Exchange Needed: You do not have to deposit your money in an exchange to be able to convert them into smart tokens.

Reduced Volatility: Reserves make smart tokens more stable, resulting in lower volatility across cryptocurrency markets.

Predictable Price Slippage: Price slippage “is pre-calculated relative to transaction size and incorporated into current price.”

What is the Bancor Network Token?

The Bancor Network Token is the platform’s native token and an essential component of the ecosystem. The token will hold only one reserve in Ether. Other smart tokens use Bancor as their reserve when using their connection with the Bancor Network.

The smart tokens are employed using smart contracts, which will at first be deployed on the Ethereum network. Bancor Network Tokens can be swapped with ERC-20 and EIP228. Over time, the protocol will be developed to include more standards with the purpose of increasing its flexibility, blockchain compatibility, and security for smart tokens.

Where can you buy BNT?

BNT can be purchased on a number of exchanges, including Binance, HitBTC, Upbit, Poloniex, Bittrex, but the highest trading volume and pair options are at Bancor Network.

The process of buying BNT on Bancor is by first purchasing other ERC-20 tokens and then trade them for BNT. BNT is currently priced at $0.651057, ranking 91st on CoinMarketCap, with a market capitalization of $39,979,048.

Where can you store BNT?

Being an ERC-20 token, BNT can be stored in any ERC-20-compatible wallet.


Bancor Protocol aims to make use of the advantages of smart contracts and enable anyone to launch cryptocurrencies on smart contract-based blockchains.

Image Source: Blog Bancor

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* The information in this article and the links provided are for general information purposes only and should not constitute any financial or investment advice. We advise you to do your own research or consult a professional before making financial decisions. Please acknowledge that we are not responsible for any loss caused by any information present on this website.
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