I am seriously considering investing in Bancor, but I have this nagging question in my head that hasn't been answered yet:
How is Bancor's token any different than any other token? Are the following statements accurate:
1. You buy it with another ERC20 token. Now you have Bancor token.
2. You sell Bancor, use it or hodl.
3. Bancor's price goes up or down based on the buy and sell ratio of Bancor.
Bancor presumably answers the liquidity issue, but what makes Bancor liquid? Isn't it the same as what makes any token liquid, buys and sells?
Not fudding at all, I want to invest! Please help me understand.
So the BANCOR token will be the first of the smart tokens. What makes it liquid is the exact same thing that makes every other smart token liquid: namely that when you are buying/selling smart tokens to the smart tokens' contract, the contract itself is the entity that is selling/buying.
Up until Bancor, the only way to sell is if you can find a buyer who wants to buy what you're selling at the price you're selling it. With the Bancor protocol, the smart tokens' contract is always available to buy from and sell to.