The Bancor team announced today it will delay “a few more days” activation of its main protocol smart contract. The Ethereum-based platform last week issued BNT “smart tokens” as an ICO in exchange for over 390,000 ETH.
In a post on Medium, Bancor’s developer team wrote that it wants to make the offering “safe and reliable”. It would provide 24 hours’ notice before activating the contract.
“It is important to remember that the Bancor protocol is the first of its kind, so we are taking extra precautions for everyone’s shared success. We take the mandate we’ve been given to protect and evolve the project very seriously.”
Bancor’s platform allows groups to create and deploy their own “smart token” currencies, which are themselves based on smart contracts.
It held its own crowdsale (a.k.a. initial coin offering or ICO) a week ago, selling 50 percent of its Bancor Network Tokens (BNT) and raising 396,720 ETH. That’s over $153 million — just beating The DAO’s previous record set last year.
Given the fiasco that resulted from The DAO, Bancor’s developers will be keen to avoid any other comparisons. Bancor claimed its own offering was plagued by “massive malicious attacks” on its network, which caused it to run hours overtime.
It’s not possible to trade the tokens until the main contract activates. Token holders met news of the activation delay with some frustration on forums like Reddit. However, others said the caution was a good idea and warned against rushing things.
What Bancor Is For
The Switzerland-based project’s vision for the future is one where every organization and cause issues its own currency, creating local and group value networks. Each becomes its own mini-economy, creating governance structures and credit-issuing policies.
Its statements often refer to the “long tail of value creation”, and “monetary diversity” based on a single reserve currency. The name itself comes from John Maynard Keynes’ 1940s proposal for a world reserve currency.
The project won the Best Public Blockchain award in March at the CoinAgenda conference in Puerto Rico.
“We are on the precipice of millions of user-generated currencies, of all shapes and sizes,” wrote Bancor chief business officer Galia Benartzi recently.
Millions of New Currencies – a Good Idea?
Many remain skeptical that creating a new currency for every new application or project is a good idea. Experts such as Cornell professor Emin Gün Sirer have called it “flawed”. Even if it worked economically — an unproven concept — the regulatory environment has not been determined yet.
Were regulators to suddenly determine that blockchain tokens represent company shares and ICOs are share offerings, they may target issuers and the exchanges that trade them.
Some applications may wish to have a currency specifically to use within their ecosystem. The Second Life economy has issued and traded with Linden dollars for the past 14 years without a blockchain. The theory goes that a blockchain token can be traded on various existing crypto exchanges, whereas centrally-issued currencies like Linden dollars can’t.
Easy Exchange Mechanism
Bancor’s plan is for a liquid platform for users to easily exchange these thousands (or millions) of tokens. Leveraging Ethereum’s smart contract technology, its currencies are “smart tokens” that can actually hold reserves in other tokens. It calls this concept “intrinsically tradeable” tokens.
According to the Bancor team’s comments, this means tokens would handle their own liquidity and price-discovery — letting holders buy and sell them without needing a matching second party to trade with (the existing exchange model).
It’s an ambitious project that will again test the abilities and performance of the Ethereum network. The market will decide whether it wants millions of new currencies — or prefers just a few.
How confident are you in Bancor’s vision? Let’s hear your thoughts.
Images via Bancor, Pixabay