Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche


Liquidity is Cryptocurrency’s Killer App at Bancor

I think Bancor (BNT) is potentiallyone of the most disruptive cryptocurrencies because it is an on-chain liquidity protocol.

Liquidity is the ease at which you can convert an asset such as a cryptocurrency into spendable cash. I think liquidity is the most important aspect of a currency and one of cryptocurrency’s great weakness.

Bitcoin (BTC); for instance, is not liquid because you cannot go down to your local supermarket and purchase food with it. Therefore, Bitcoin is useless to 90% of the population.

The goal at Bancor is to make cryptocurrencies liquid by making conversion of one cryptocurrency to another fast. The plan is for the Bancor Network Token (BNT) to provide liquidity by giving users access to Bancor’s Liquidity network.

Providing Liquidity

Furthermore, Bancor could offer liquidity in fiat currencies because the Bancor Network offers conversions to stablecoins including Tether (USDT), and USD Coin (USDC). Stablecoins make payments in fiat currency through an algorithm or digital robot that releases funds from a bank account.

Bancor’s Liquidity Network offered $541.896 million in Total Liquidity on 15 February 2021. Bancor had a 24-Hour Market Volume of $61.55 million on 15 February 2021.

Bancor is trying to increase the use of the Bancor Liquidity Network by offering BNT liquidity mining. Liquidity miners earn rewards by providing liquidity to the Bancor Network. By February 11, 2021, Bancor reported paying out $23 million in BNT liquidity rewards.

The Bancor Liquidity Network now provides liquidity for hundreds of cryptocurrencies. The Bancor Network Token (BNT) is an ERC20 cryptocurrency that serves as a unit of measure and conversion on the Bancor network.

Another Bancor network, BancorX provides liquidity for cryptocurrencies built with EOS. BancorX supports both Ethereum and EOS cryptocurrencies. Bancor allows users to convert any token on the EOS liquidity network with the Bancor widget.

Liquidity is Cryptocurrency’s Killer App

I think liquidity is cryptocurrency’s killer app because practical liquidity will enable ordinary to use cryptocurrency in their daily lives.

For example, an easy to access liquidity network could allow a person to exchange Bitcoin for US dollars or Pound Sterling in seconds. Thus, a person could use Bitcoin at the supermarket or the gas station.

The ultimate expansion of the Liquidity Network will come when digital fiat currencies such as China’s Digital Currency Electronic Payment (DCEP); or digital yuan, joins the network. Hence, the network will provide liquidity to both fiat and cryptocurrencies.

Therefore, Ethereum (ETH) could provide liquidity to a fiat currency such as the Swiss Franc, and the Swiss Franc could provide liquidity to Ethereum. Interestingly, the People’s Bank of China has established a joint digital clearing house for digital yuan with SWIFT.

Will the Digital Yuan become the World’s Reserve Currency?

SWIFT is the global Society for Worldwide Interbank Financial Telecommunication. SWIFT is the payments processing network that connects the world’s banks.

Banks use SWIFT because of its enormous capacity. SWIFT claims to process 5.86 million transactions (file messages) on 13 February 2021. In the first 13 days of February, 2021 SWIFT processed 396 million file messages.

In the first few weeks of 2021, SWIFT processed 1.19 billion file messages. SWIFT claims the number of payments it processes grew by 16.64% between 13 February 2020 and 13 February 2021. Moreover, SWIFT claims its network was available 99.99% of the time in 2021.

Thus, banks all over the world are gearing up to accept and transmit the Digital Yuan. Hence, the Digital Yuan could provide liquidity for other currencies.

That’s important because a currency that provides liquidity for other currencies is a reserve currency. The reserve currency is the currency that most of the world’s banks and international corporations accept.

Currently, the US Dollar is the reserve currency. However, I think executives at SWIFT and the People’s Bank of China (PBOC) fear the dollar will soon lose its position as the reserve currency. Therefore, they are trying to position the Digital Yuan as a replacement.

Is the Bancor Network Token a digital reserve currency?

Interestingly, I think they designed the Bancor Network Token (BNT) as a digital reserve currency.

To explain, bancor was the name the great economists John Maynard Keynes and E. F. Schumacher gave to an international reserve currency they designed during World War II. In depth, Keynes’ bancor was a unit of account issued by a global trading platform called the International Clearing Union.

However, the technology to power the International Clearing Union did not exist in the 1940s. Remember, Alan Turing and others were only inventing the first true electronic computers during World War II.

Notably, the American delegation at the 1944 Bretton Woods Conference used its influence to kill Keynes’ Bancor proposal. Instead, the Conference adopted a scheme proposed by US presidential advisor and alleged Soviet spy Harry Dexter White.* That scheme failed in the early 1970s when US President Richard M. Nixon (R-California) abandoned the gold standard.

I do not know if they intend the Bancor Network Token (BNT) as a reserve currency. However, I think the name Bancor is no coincidence.

Is Bancor a Good Cryptocurrency?

Naturally, speculators will wonder if the Bancor Network Token (BNT) is a good cryptocurrency.

The BNT was CoinMarketCap’s 98th most valuable cryptocurrency on 15 February 2021. Bancor had a Market Capitalization of $435.024 million and a 24-Hour Market Volume of $110.343 million on that date, CoinMarketCap estimates. CoinMarketCap gave the BNT a Coin Price of $3.41 on 15 February 2021.

CoinMarketCap based those numbers on a Circulating Supply of 127.028 million BNT. The Total Supply of BNT was 127.028 million on 14 February 2021.

The Bancor Network Token (BNT) is vulnerable to inflation because it has no maximum supply. The BNT has many attractive attributes. In particular, it is Ethereum compatible, which means you can pair it with many ERC-20 cryptocurrencies. In fact, CoinMarketCap listed 93 verified BNT pairs and 37 unverified BNT pairs on 14 February 2021.

In the final analysis, I consider the Bancor Network Token (BNT) an interesting cryptocurrency speculators need to investigate. Speculators and investors need to examine Bancor because it shows how a digital reserve currency could operate. Thus, Bancor could be our future.