Bancor (BNT) Blockchain Protocol Overview
In the cryptocurrency world, besides Bitcoin and Ethereum, the coins at the top of the charts are always changing. And in order to stay up to date, it’s important to learn about the projects the public is currently spending their money on. And the project that has been making a comeback the past year is something called Bancor.
What is Bancor (BNT)?
Bancor is a decentralized cryptocurrency trading protocol which allows users to exchange most cryptocurrency coins for almost any other coin on the market. It’s different from an exchange in that it’s open source and there are no barriers to entry. This means you won’t have to register to use Bancor like you do an exchange, and that there isn’t a company facilitating the trades. Rather, each individual trade is run through a software protocol known as a smart contract and is executed automatically. This is what is known in the cryptocurrency world as an automated market maker.
Bancor is unique in that it currently runs on both the Ethereum and EOS blockchains, allowing it to service a large portion of users. And the way in which the Bancor software is built allows for future blockchains to be easily built to be compatible with the network.
Who Invented Bancor?
Bancor is not a new project. The idea for the software protocol was first outlined in a whitepaper in February 2017. The whitepaper was written by Galia Benartzi, Eyal Hertzog, Guy Benartzi, and Yudi Levi, and they registered the Bancor project in Switzerland. The company ran an ICO in June 2017 which resulted in raising capital amounting to $153 million. During this ICO it sold its token named Bancor (BNT). The Bancor token is an ERC-20 token which cannot be mined. The project is currently run by a group of people by the name the Bancor Group, but anyone who owns Bancor tokens can vote on the future of the project and where they wish to see it go. The number of BNT you hold dictates the number of votes you will have when it comes to company decisions.
Next Steps For The Project
After the launch, which was considered a wild success, the creators went on to create a cryptocurrency wallet in 2018 that would automatically convert tokens using the Bancor Network. This made it easier than ever before for customers to convert one cryptocurrency to another. Next, they invented a blockchain project named Kenya, which would allow users to create digital cryptocurrencies for individual communities. This is done via an Ethereum side chain known as the POA Network. The cool thing about the POA network is that is verified by a group of notaries in the United States who are paid commission for maintaining the network This keeps transaction cost on the network low while maintaining high security.
By 2019, Bancor had switched to a method of automated market making that is also seen in projects like PancakeSwap and SushiSwap, where users can stake different coins in the Bancor system therefore adding more liquidity and allowing users to earn a small amount of Bancor for their efforts. As of the writing of this article, Bancor is still running at full speed processing hundreds of thousands of dollars’ worth of transactions and 78% of the coins available on the Bancor network are currently staked.
Bancor Hack
Business hasn’t always been sunshine and rainbows for the Bancor network, and in July of 2018 a wallet on the Bancor network was hacked. The hacker, or hackers, took over $23.5 million worth of Bancor, Ethereum and Pundi X coins. They didn’t quite get away with it, however, because the Bancor Network was able to freeze the status of its own funds, thus returning $10 million of the Bancor coins the hackers tried to steal. The remaining $12.5 million worth of Ethereum and $1 million of Pundi X coins have never been recovered.
This brought up many questions in the cryptocurrency community. First and foremost, whenever there is a hack, the security protocols of a network come under fire. But this hack was a double whammy for the Bancor company because of the way they were so quickly able to freeze funds before the hackers could withdraw the $10 million Bancor. As great as it was that they were able to stop the hack, if the network was truly decentralized, the company wouldn’t have been able to do this. And thus the creator of Litecoin, Charlie Lee, argues that they should stop calling themselves a decentralized network because they are clearly not full decentralized.
In response to these accusations by Charlie Lee, Bancor said that the ability of the company to freeze funds was necessary during the early years of the project while they were still establishing security and testing the system. They made a statement that after the first three years of operations, the BNT tokens would be upgraded in a way that wouldn’t allow the company behind Bancor to control them anymore. As of the writing of this article, there has been no update on the matter. But the Bancor system did undergo a major overhaul in 2020 in what is called Bancor V2.1. It is unclear if this upgrade lowered the company’s ability to influence the system, but what it did do was improve the user experience while on the platform.
Should You Buy Bancor?
Unlike a lot of the projects discussed on MintDice, this project is well established and has proven that it was a worth investment of that original ICO. As for buying the cryptocurrency now, well the decision is ultimately yours. Bancor does seem like a decent project, and hopefully they solved the security issued they faced which led to the hack three years ago. They also have several users and process lots of money through their platform. But honestly, if you want to get involved in their project, it’s probably best to stake cryptocurrency on their platform. This way you will earn the BNT token rather than outright buying the coin. Just be sure you know the risks and rewards involved with staking coins. And know that you are somewhat trusting the Bancor Group with your money (as mentioned above the project isn’t fully decentralized) but if you understand the risks, Bancor certainly isn’t the worst cryptocurrency on the market to put your money into.
