The Bancor Protocol is a new type of cryptocurrency that implements a “smart token” to enable a built-in price discovery and a liquidity mechanism. The protocol will also allow anyone to create their own user-generated cryptocurrency through their smartphone.
The Bancor Protocol uses smart tokens and blockchain technology to realise a super-national currency system, similar to one that was first conceptualised by John Maynard Keynes in the early 1940s. Essentially, modern day blockchain technology is going to power an early 20th-century ideology that was proposed by one of the most well-known economists in history.
The concept of Bancor that was developed by Keynes and the name was inspired by the French word “banque” simply meaning “Bank Gold”. Keynes’ Bancor was proposed to be a “unit of account” intended for international trade rather than as a currency. This is where it both differs and draws similarities with the Bancor Protocol. The original Bancor units would have been used to trade underlying assets, which is in a way very similar to how Bancor Protocol’s smart tokens are able to hold other cryptocurrencies in their reserve. Demand for these tokens in Bancor’s reserves, will increase demand for the Bancor Token. The two concepts differ due to Keynes’ Bancor being intended for international trade between countries, where as the Bancor Protocol will be able to serve the same purpose but will be able to be utilised by everyone. By ‘everyone’ we mean everyone from small businesses to large companies, bankers, banks derivative markets and everything in between.
For too long now the digital currencies have been constrained to just those with elite level programming skills until now. The bancor protocol is going to change this forever.
This is because the Bancor Protocol provides a platform through which anybody can generate a branded currency of their own through their smartphone. The platform will allow you to make a digital currency for your own purpose or community and it is going to be as simple as making and distributing a blog.
This is not dissimilar to how Wix gives you the capacity to build your own website which was previously a task constrained to web-developers.
The ability to create liquidity is perhaps the most significant factor that will power Bancors success. This is because its liquidity mechanisms may allow for a fairer transfer of wealth and value across international borders, and in doing so could facilitate a more equitable distribution of wealth amongst individuals.