A Beginner´s Guide to Buying, Selling, Using, and Mining Bancor:
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Cryptocurrencies are on a mission to prove to the world that they aren’t just another fad that will whimper away like the Dutch tulip bulb craze of the 17th century. They have faced significant scrutiny in recent days, with high profile CEOs attacking cryptocurrencies like Bitcoin—most notably Jamie Dimon of JPMorgan Chase.
A large part of this criticism revolves around the rapid price run up many crypto coins have experienced. This has led to their bubble-like state, according to some. The mainstream acceptance of cryptocurrencies primarily depends on their usability in everyday life. As a result, many coin and token creators are working hard to adapt their products accordingly.
One coin that stands out in this area is Bancor. This blockchain based platform establishes decentralized networks for smart contract based tokens to enable continuous convertibility between them. Thus Bancor is much more than a cryptocoin that could evolve into a speculative bubble. Rather, it is a growing token that has intrinsic value outside of its price fluctuations.
Bancor is defined as a blockchain—a transparent database which stores a record of all transactions on a platform. By default, the database or ledger is decentralized. It operates independently of a central authority who controls its processes. This allows users to verify the transactions that occur.
Bancor’s definition is not limited to its status as a blockchain, however. Bancor, or specifically Bancor Network Tokens (BNT) are the first ever Smart Tokens. Smart Tokens, which were created by Bancor, are standard Ethereum ERC20 smart contract-based tokens that implement Bancor’s decentralized networks and protocol.
Further defined, Smart Tokens are coins that store balances of other tokens, called Connectors. They have an ingrained conversion mechanism, meaning anyone can immediately buy or sell the Smart Token for one of its corresponding Connectors. This is executed at a price determined by a formula which balances trading volumes.
The process allows Smart Tokens to act as their own market makers and provide liquidity to other cryptocurrencies. This eliminates the need for another party in cryptocurrency trades, fostering more transparent and direct interaction.
Further information on Bancor’s protocol and the cryptocoin (BNT) can be found online on its Reddit page. Here users will find all sorts of discussions and tips, as well as a running list of all projects resolved to using the Bancor protocol.
Because BNT is based upon Bancor’s proprietary protocol, it offers a wider array of options than other cryptocurrencies. To be sure, it can be bought the traditional way like other cryptocurrencies. In this case, a user must create a crypto wallet—a blockchain bank account that stores crypto coins—and register an account with an exchange.
Next, they must fund the account with cash or with a credit card, and from there, cryptocoins can be traded. BNT only trades on certain exchanges, so users need to find an exchange where BNT transactions can be placed.
The faster way is to buy BNT directly through Bancor. In this case, users must download the appropriate wallets and fund them appropriately. Then, buy and sell orders can be entered with ease.
To exchange BNT for USD, GBP, or other fiat currencies, users have two options. First, they can follow the reverse traditional method described above and convert their BNT into a coin like Bitcoin or Ethereum. From there, BTC or ETH can be turned in a fiat currency of choice.
Second, BNT traders can use Bancor’s website to sell BNT. After selling BNT, the proceeds will settle in their wallets and can be exchanged for fiat currencies. To complete the cashout, all one has to do is transfer the money to a bank account and withdraw the cash from an ATM.
As with all other cryptocoins, Bancor can be used as an investment vehicle. Because it’s price and value are derived from buyer and seller supply and demand, BNT has the potential to make a large profit for investors. To invest in BNT, users can link their wallets to Bancor’s system or to a cryptocurrency exchange and purchase BNT.
As a decentralized blockchain coin free from a central authority, BNT is also subject to different risks than other investments. For example, BNT isn’t held captive to price fluctuations and exchange rate manipulations that occur because of central bank monetary policy. In some ways, BNT and other crypto coins act as hedges against fiat currency manipulation.
Another option altogether is to use BNT to buy token changers. Token changers have a built-in fee that is charged every time a transaction dips into the token changer’s reserve balance. The result is that the token changer increases in value every transaction, functioning similar to a dividend. BNT users can therefore use their tokens to purchase additional income via token changers.
When someone mines a cryptocurrency, they verify transactions that take place on a decentralized ledger and then add them to the blockchain. Miners validate pools of transactions—blocks—and join them with the existing blocks. Cryptocurrency mining adds a level of transparency and openness that fiat currencies don’t enjoy.
Miners are rewarded with crypto coins when they solve a block. They can use what are called mining calculators to determine the difficulty of a set of tasks. Calculators also assess a miner’s ability to complete tasks and show whether or not a specific block will be profitable.
Currently, there is no way to mine BNT, since the tokens are Smart Tokens and function differently than normal cryptocurrencies.
Bancor cannot be mined, so participants must use investment and / or trading strategies to enlarge their holdings. As a digital coin, BNT’s market cap determined by its price fluctuation on the open market. Potential investors will calculate profitability based on valuation and trading measures, not by mining tasks.
At present, Bancor is unable to scale, which puts it in good company. All blockchain based digital coins struggle with this issue, and many solutions have been put forth, all of which have different advantages and disadvantages. Potential Bancor investors shouldn’t be worried long term, however, as Bancor’s team has already shown their competency with the implementation of Bancor protocol. With many bright minds working on scalability, the future is bright.
Bancor Network Tokens are a potential investment vehicle whose owners may see significant price appreciation. Owners can also use their BNT to purchase products that provide income off of recurring fees. Their ability to function as Smart Tokens and provide liquidity to cryptocurrency trading is an essential addition to the blockchain industry, one that proves that blockchain technology is more than the next fad.