Market Mad House

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Is Bancor a Cryptocurrency with some Trillion-Dollar Features?

Bancor; or the Bancor Network Token (BNT), has at least two features that might make it worth trillions of dollars in coming decades. Those features give Bancor the potential to be among the most disruptive cryptocurrencies around.

The first trillion-dollar feature is the Bancor Protocol which enables a person to store other cryptocurrencies in BNT. This feature also allows the BNT token to convert one cryptocurrency to another.

That means a person can convert Stox (STX) into Ethereum (ETH) through the Bancor Protocol. Any cryptocurrency can be made convertible by adding it to the Bancor Network. If that was not enough, Bancor (BNT) can be used as a “relay token” between cryptocurrencies with different blockchain operating systems; such as Golem (GNT) and Qtum (QTUM) or Gnosis (GNO) and (Ether ETH).

Another Trillion Dollar Feature to Bancor: ERC20 Compatibility

The ability to convert Ethereum (ETH) is potentially a trillion dollar feature in itself; because the ERC20 protocol is the most popular method for the creation of cryptocurrencies and utility tokens.

AminCad estimated that Ethereum-based tokens made up around 91.2% of the altcoin market capitalization in a 12 January 2018 Medium post. The market cap of Ethereum-based tokens rose from 73.8% to 91.2 % between 2 July 2017 and 12 January 2018.

To add icing to the cake, there are vast numbers of decentralized applications (Dapps) and smart contracts running on Ethereum out there. Etherscan estimated that there were 49,755 ERC20 token contracts in existence on 19 March 2018.

Bancor Assures Liquidity

The other trillion-dollar feature Bancor (BNT) offers is continuous liquidity. In plain English, that means you will always have access to your money if you use Bancor.

“While developing the Bancor protocol we began to realize that what we are creating is essentially a new type of currency — one that is natively liquid,” Bancor Product Architect Eyal Hertzog wrote for Medium.

Anybody that has ever had a check bounce understands the importance of this feature and liquidity. Checks bounce because there is not enough money in the account, in other words, a lack of liquidity.

Bancor preserves liquidity because each Smart Token contains a reserve of cryptocurrency that guarantees its value, Hertzog revealed. If it works as advertised, algorithms in token would use precise mathematics to ensure that there is always enough cryptocurrency to back the implied value of the token available.

Persons or institutions using Bancor can guarantee payment. Bancor guarantees liquidity because the other cryptocurrencies are stored inside it. That means Bancor token is really a smart contract, or DApp , designed to pay out a specific amount of cryptocurrency at a given time.

The Bancor team has even designed a formula for monitoring liquidity called the Constant Reserve Ratio (CRR). A person should be able to use CRR to determine the exact value of his or her Bancor.

Bancor as the Basis of Smart Investments

The description of Bancor as a “Smart Token” is accurate. That also means there will be a vast number of potential uses for Bancor Tokens. An obvious use for Bancor Smart Tokens would be as collateral for loans.

Another will be as the basis of Smart Bonds, Smart Annuities, or Smart Insurance Policies. A Smart Bond would contain Bancor programmed to pay cryptocurrency interest at specific times to guarantee a return. A Smart Annuity would work in the same way.

A Smart Insurance Policy would start paying out if it were notified of an event such as a person’s death. A fascinating product would be a Smart Life Insurance Policy that would use artificial intelligence (AI) to monitor the media or obituaries for news of the insured person’s death. The policy would then pay the beneficiary in Bancor.

The creation of a vast class of Smart Investments is an obvious potential side effect of Bancor. An obvious way to get people to buy such Smart Investments would be to modify Bancor to contain fiat currencies such as the dollar or the Pound.

Bancor’s value would obviously increase greatly if national cryptocurrencies start circulating. Having the ability to pay out in real money would convince ordinary people to invest in Bancor or “Smart Investments.”

A Cryptocurrency “designed” by John Maynard Keynes

The most-fascinating aspect of Bancor is that it was partially designed by two of the greatest economists in history; John Maynard Keynes and E.F. Schumacher.

The basic idea for Bancor is based on a proposal for an international trade balancing currency that Keynes and Schumacher made during World War II. Keynes and Schumacher wanted to preserve the liquidity of the world’s money by creating a supranational currency based on a basket of other currencies. They hoped the currency called Bancor would form the basis of an international clearing house for payments between nations.

The Bancor was the official British proposal for a new international monetary system made at the Bretton Woods Conference in 1944. It remained a theory because the United States, the most powerful allied nation, forced the adoption of the U.S. dollar as the world’s reserve currency. Interest in the Bancor was revived in 2009 when   Zhou Xiaochuan; the governor of the People’s Bank of China, suggested that such a reserve currency would have prevented the great meltdown of 2008.

The Bancor Protocol is a global standard for Smart Tokens based on Keynes’ proposal, the website for the Bprotocol Foundation states. The Foundation is the organization behind the Protocol and Bancor.

Giving Everybody Liquidity

The foundation’s goal is to create a global ecosystem of Smart Tokens that will allow everybody on Earth to have access to money with liquidity. Liquidity crises such as inflation are the cause of many of the world’s economic problems.

A major flaw in the current monetary system is that vast numbers of people have no access to money with liquidity because of where they live. A prime example of this is the people of Venezuela; many of whom have been reduced to barter by hyperinflation, The Miami Herald reported.

Something like Bancor would give every resident of Venezuela who owned a smartphone access to a smart token app. If the government paper money became worthless, the Venezuelans would simply start using the Bancor app for transactions and the economy would keep functioning.

How Bancor can kill Paper Money

The potential disruption this can create is vast. One obvious effect would be to make the government printing press worthless.

Citizens would be in a position to simply ignore whatever toilet paper their leaders were trying to foist upon them as “money.” Another would be to greatly increase international trade because average people would be able to bypass government controls at the touch of an app.

Effects of this might be the collapse of political systems or economic chaos. One obvious development will be that many countries would no longer have a national currency. Instead, each citizen would use whatever money best served his or her needs.

Is Bancor the Ultimate Monetary Disruptor?

The greatest side effect something like Bancor would have is to effectively kill paper money in large areas of the world. Paper money is nothing but a payment technology if a better technology comes along people will dump paper currencies.

The ultimate monetary disruptor would be a Bancor that contains U.S. dollars, Euros, Pounds, or another major fiat currency. Why would the residents of a small country use their local currency if they could store all their funds as dollars or pounds?

Is Bancor a Good Investment?

Obviously, Bancor’s potential as the ultimate monetary disruptor is purely theoretical. Shrewd people will want to know if it is a good investment in the real world?

The answer is yes, the Bancor Network Token (BNT) is a pretty good cryptocurrency for investors right now. Bancor offered a Coin Price of $3.09, a Market Capitalization of $125.433 million, and a Market Volume of $7.721 million on 21 March 2019, Coin Market Cap data indicates. There was also a healthy circulating supply of 40.605 million BNT and a Total Supply of 74.245 billion BNT on the same day.

One feature of Bancor that a lot of people will dislike is the lack of a maximum supply. That means Bancor can be susceptible to inflation, but it also ensures a large supply of the currency.

If you are looking for a cryptocurrency capable of phenomenal growth Bancor might be it. Only time; and Mr. Market, will tell if Bancor can live up to its theoretical potential, but that potential is vast.