In a November 5th Twitter post, Bancor announced the launch of a new type of exchange which will facilitate instant cross-chain transactions between cryptocurrencies. The new exchange is called ‘BancorX,’ and it will enable seamless conversion for over 110 ERC-20 and EOS cryptocurrencies. As per the post –
“We are thrilled to announce that our Cross-Blockchain Decentralized Liquidity Network, #BancorX, has officially been pushed live — enabling automated token conversions between 110+ ERC20 and EOS-based token.”
Bancor – a crypto exchange disruptor
The new type of platform is said to act as a disruptor to the existing exchange paradigm, though it has yet to be comprehensively tested. It is different from a centralized exchange and also different from order matching on a decentralized exchange.
The capabilities of BancorX are inherently tied to the ability of the Bancor Network Token (BNT) to operate concurrently across both the EOS and Ethereum blockchains. This can serve to facilitate cross-chain transactions. The supply of BNT is kept constant because when it is moved from one blockchain, it is deleted from the other, preventing duplication. The process is simple in theory. A user might want to change an EOS token to an ERC-20 token. The EOS token is changed to BNT and BNT is transferred to the Ethereum blockchain and converted to the ERC-20 crypto asset.
This is done using smart contracts, and a failsafe has been included in the smart contracts to prevent token duplication. These automated smart contracts are also known as Relays. Smart contracts have always been a serious security vulnerability, and Bancor has already suffered a major setback with a loss of user funds most likely due to a smart contract breach.
The importance of blockchain interoperability
Interoperability between blockchains is a vital advance for the whole ecosystem. The seamless transaction between blockchains will hopefully serve to reduce some of the friction created between competing communities. There is growing hostility between blockchain communities instead of the initial collaborative ethos which started the entire movement. There is no need for this friction and utilizing the benefits of various blockchains will strengthen the entire network at the expense of the centralized structures which cryptocurrencies were designed to replace. As per Bancor –
“As BancorX goes live and the first BNTs flow from ETH to EOS and back again, Bancor will aim to remove friction, unify the user experience and ensure the system’s continued decentralization and utility. With real blockchain interoperability, the possibilities for token-powered applications proliferate dramatically. We are thrilled to introduce this new tool — and to see what you do with it.”
Digital Nomad with an interest in Zen and Blockchain technology.
Law graduate with 3 years experience as a consultant in the capital markets industry and 4 years experience freelancing on UpWork as a Creative Writer.