A lot of speculators consider Bancor the best infrastructure token. Correspondingly, Bancor had a Market Capitalization of $33.783 million and a 24-Hour Market Volume of $1.325 million on 23 January 2019.
However, the Bancor Network Token Coin Price was 54.4¢ on the same day. I guess the Coin Price is low because of the large supply of BNT tokens. For instance, there was a Circulating Supply of 62.319 million BNT and a Total Supply of 75.345 million BNT on January 22, 2019. In addition, Coinmarketcap named Bancor the 99th most valuable cryptocurrency on the same day.
Bancor has a low Coin Price and a high supply because it has no Maximum Supply. To explain, the Maximum Supply is an artificial limit on the number of the number of tokens that can ever be mined. The theory behind a Maximum Supply is to prevent inflation because the number of coins is finite.
Bancor the Best Infrastructure Token or is it?
Thus, Bancor could be vulnerable to inflation and hyperinflation because it is possible to create unlimited amounts of BNT tokens.
Notably, inflation and hyperinflation often occur when a government or central bank use the printing press to pay the bills. Thus, the money becomes increasingly worthless over time because the issuer has to print more cash to cover the bills.
Interestingly, Bancor could be designed to encourage inflation because the name is rooted in Keynesian economics. In fact, Bancor was the name Lord John Maynard Keynes gave to a global currency he proposed during World War II.
In detail, Bancors would be issued by an International Clearing Union and used for international trade. Fascinatingly, governments or corporations could buy Bancors with gold but could not use Bancors to buy gold.
Is the Bancor Network Lord Keynes’ revenge?
I think Keynes’ plan was to destroy gold as a medium of exchange by encouraging people to exchange it for Bancors.
However, we will never know because the United States rejected Keynes’ scheme at the Bretton Woods Conference in 1944. In particular, US representatives at Bretton Woods rejected Keynes plan because it weakened America’s position in a postwar world.
Since, the USA was building almost all the weapons the Allies needed in World War II, the British Empire had to go along with the Americans. Thus Bancor and the International Clearing Union became a historical footnote. Interestingly, Bancor was the official British proposal at Bretton Woods.
Therefore, the Bancor token could be an attempt to get people to exchange other currencies for cryptocurrencies. In addition, the Bancor could be an effort to force Keynesian economics on the world.
Crudely put, Keynesian Economics is the use of inflation spending and deficits to stimulate the economy by putting more money in circulation. To clarify, the thinking is money shortages cause many economic crises. Thus putting more money in circulation can stimulate the economy.
Under these circumstances, we can consider the Bancor Lord Keynes’ revenge. That is a private or semi-private attempt to use cryptocurrency to enable economic stimulus.
Is Bancor a Blue Print for a global currency?
In addition, the Bancor Network itself seems to function like Lord Keynes’ International Clearing Union. That is a centralized currency infrastructure that promotes trade and cash stimulus.
In fact, I can picture some sort of extra-national body; like a global central bank, taking over the Bancor Network at some point. Hence, Bancor could be a blueprint for a global currency.
Historically, most currencies began as private mediums of exchange governments eventually took over. For instance, paper money was first issued by private banks but finally nationalized. In addition, metal coins and electronic currency transfer were pioneered by private banks but eventually co-opted by central banks.
Not surprisingly, many central banks led by the People’s Bank of China (PBOC) are researching the possibility of national cryptocurrencies. Under those circumstances, I would not be surprised if some central bank; possibly the PBOC, is behind Bancor. In fact, the PBOC reportedly has over 40 cryptocurrency-related patent applications.
Can we really consider Bancor the Best Infrastructure token?
If these suspicions are correct, speculators could find Bancor the best infrastructure token.
To explain, a token used for international or cross-border tokens will have a high Market Capitalization. Thus speculators who buy and sell at the right times could make a lot of money from BNT. Conversely, speculators could also lose a lot of money on BNT transactions.
Therefore, we must explore the concept of infrastructure tokens. An infrastructure token is an altcoin used as the medium of exchange in a blockchain infrastructure platform. For example, Ethereum or Ether is the medium of exchange on the Ethereum Blockchain.
The Bancor is the medium of exchange for the Bancor Network. The Bancor Network is a blockchain platform designed to offer continuous on-chain liquidity between blockchain assets.
Simply put, that means you can instantly convert blockchain assets or cryptocurrencies traded on the Bancor Network into spendable cash. Thus, the Bancor Network could solve one of cryptocurrency’s biggest problems the lack of liquidity.
How Bancor’s Infrastructure is supposed to work
To explain, a currency must be liquid or spendable. For instance, you can take the currency down to the supermarket and buy food for your family with it.
Currently, most cryptocurrencies fail the liquidity test because you cannot spend them at the supermarket or the gas station. Hence, cryptocurrencies are useless for 95% of the human race.
Theoretically, a mechanism like Bancor’s Liquidity Network could instantly convert your cryptocurrency into spendable cash. Thus, the end game at Bancor is a Bancor Network app on your smartphone that will instantly convert whatever currency you have into spendable cash you can use wherever you are.
For example, if you are in India you can use the Bancor app to convert your Ethereum (ETH) into rupees. Hence, you could use the cryptocurrency to buy a ticket to the latest Bollywood blockbuster.
Is the Bancor Infrastructure Token working?
However, Bancor’s infrastructure is far from delivering on that promise.
For example, the main Bancor Network only converts Ethereum (ETH) compatible or ERC (Ethereum Request for Comment) tokens. In fact, the BNT Token is an ERC20 token.
Therefore, the Bancor Network cannot convert the world’s most popular and best-known cryptocurrency Bitcoin (BTC). Additionally, the fast-growing Bitcoin-based micropayment solution the Lightning Network cannot work with the Bancor Network.
In addition, many other popular cryptocurrencies including Ripple (XRP), Steem (STEEM), NEO, and Dash (DASH) will work with the Bancor Network. Like Bitcoin, these cryptocurrencies were built with a different blockchain infrastructure that is not compatible with the Ethereum blockchain.
Is Bancor the best infrastructure token because of EOS?
In fact, the BancorX Protocol, offers decentralized liquidity for tokens built with the EOS blockchain. Therefore, Bancor has a solution that can support transactions in two top of the top three cryptocurrencies.
Importantly, EOS’s developers claim to have solved the blockchain scalability problem. To explain, the blockchains used in first generation cryptocurrencies like Bitcoin and Ethereum can only process a few transactions a second (TPS).
For instance, Bitcoin can only process seven transactions a second and the Ethereum blockchain only processes between 15 and 20 TPS. Under those circumstances, a Bitcoin payment processor could crash if 10 people try to pay in BTC at once.
These blockchains are slow because all the encryption limits the amount of data they can process. However, EOS’s developers claim their blockchain can process 3,000 transactions a second.
Is EOS a Threat to the Bancor Network’s Security?
Hence, the Bancor Network could have a backdoor solution to the blockchain scalability problem by simply linking up with EOS. However, Bancor could build a huge hole into their system because an organization called Whiteblock claims EOS is not a blockchain.
To explain, EOS could be a sidechain rather than a blockchain. A sidechain is a security risk because it is a less-encrypted shortcut between blockchains. However, sidechains are theoretically faster than blockchain because they have less encryption.
Therefore, Bancor could make itself a target for hackers by linking up with EOS. To explain, hackers could use EOS as a backdoor to sneak into Bancor and steal tokens.
Thus, a bank or speculator who makes a lot of EOS and Ethereum (ETH) transactions can use Bancor to shift funds between the two. In addition, altcoins like DAI and PEG are “pegged” to fiat currencies like the US Dollar. Hence, those altcoins offer the potential of fast dollar conversion and they are part of the Bancor Network.
On the other hand, Bancor is taking some serious risks with its EOS adoption. However, the EOS risk at Bancor is purely theoretical at this point.
I think Bancor is one of the best speculative cryptocurrencies around because of its potential. Speculators looking for a crypto with a high-long term value should investigate Bancor. Conversely, everybody else should be leery of Bancorr; because its current value is theoretical.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.