Smart Token
Smart Token Key Points
- Smart Tokens are cryptocurrency tokens that have built-in convertibility directly through their smart contracts.
- They use a protocol called Bancor that allows them to hold one or more other tokens in reserve.
- They can be bought or liquidated (sold) at anytime, regardless of exchange listings or trade volume.
- Smart Tokens help to solve the liquidity problem that can exist in traditional cryptocurrency exchanges.
- They are programmable, meaning they can incorporate logic and rules within their design.
Smart Token Definition
A Smart Token is a type of cryptocurrency token that incorporates smart contract functionality. This means they are programmable and can automate certain functions such as managing and distributing tokens. Crucially, Smart Tokens use a protocol that allows them to hold one or more other tokens in reserve, which enables built-in convertibility directly through their smart contracts.
What is a Smart Token?
A Smart Token is a type of digital asset that is built on a blockchain and incorporates smart contract technology.
These tokens hold one or more other tokens in reserve, which allows them to be bought or sold at any time, directly through their smart contracts.
This built-in convertibility and liquidity is a major advantage over traditional cryptocurrency tokens.
Who Uses Smart Tokens?
Smart Tokens can be used by any individual or organization that operates within the cryptocurrency and blockchain space.
They are particularly useful for developers who want to create decentralized applications (dApps), as well as for traders and investors who require a high level of liquidity.
When Were Smart Tokens Introduced?
Smart Tokens were first introduced in 2017 by the Bancor Network, a decentralized liquidity network.
The Bancor protocol, which underlies all Smart Tokens, was also launched in this year.
Where are Smart Tokens Used?
Smart Tokens are used within the global blockchain and cryptocurrency ecosystem.
They can be implemented on any blockchain that supports smart contract technology, including Ethereum, EOS, and more.
Why are Smart Tokens Important?
Smart Tokens are important because they solve a significant problem within the cryptocurrency industry: liquidity.
By having built-in convertibility, they ensure that users can always buy or sell their tokens, regardless of trade volume.
This is a significant improvement over traditional exchanges, where low volume can make it difficult to buy or sell tokens.
How Do Smart Tokens Work?
Smart Tokens work by using smart contracts to automate the buying and selling process.
When a user wants to purchase a Smart Token, they send funds to the smart contract, which then issues the appropriate amount of tokens.
Conversely, when a user wants to sell a Smart Token, they send the tokens to the smart contract, which then sends back the reserve currency.
This process is fully automated and can be executed at any time.