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.
But is it actually buying my token or am I just trading my token for a Bancor token? Bancor tokens will have to be liquid themselves in order for me to buy/sell them. I'm having a problem identifying the difference unless I'm stuck with a token that has absolutely no liquidity itself in which case how does it help Bancor's token? I'm not seeing how this is any better than trading on an exchange and choosing any token/coin I want.