Bancor vs Bitcoin?

You'll probably ever heard of Satoshi Nakamoto, the founder of Bitcoin. He is widely regarded as a pseudonym. Many people claim to be Satoshi nakamoto but the debate is not over yet. Tthe most important is the discovery of Bitcoin.

Bitcoin is a digital currency – the virtual equivalent of dollars, euros or pound sterling. It’s identified by the letters BTC, and was invented in 2008 by the enigmatic Nakamoto. There are no central banks controlling the supply of money. In addition, it’s a pseudonymous currency; in other words, funds are not linked with named individuals or entities, but rather bitcoin addresses.

Bitcoin has attracted some controversy due to its existence outside the institutional banking and governmental framework. However, big merchants now accept it as a valid payment method, and some economists have praised it as an exciting innovation.

Bitcoin is attractive to some users because of its anonymity, as well as its lack of government control.

The Bitcoin protocol – the rules that make Bitcoin work – say that only 21 million Bitcoins can ever be created by miners. However, these coins can be divided into smaller parts with the smallest divisible amount one hundred millionth of a Bitcoin. This is called a "Satoshi", after the founder.

To receive a Bitcoin, a user must have a Bitcoin address - a string of 27-34 letters and numbers - which acts as a kind of virtual post box. Since there is no register of these addresses, people can use them to protect their anonymity when making a transaction. These addresses are in turn stored in Bitcoin wallets, which are used to manage savings.

But there are a few weaknesses to Bitcoin:

a. Built in Deflation
Since the total number of bitcoins is capped at 21 million, it will cause deflation. Each bitcoin will be worth more and more as the total number of Bitcoins maxes out. This system is designed to reward early adopters.

b. No Buyer Protection
When goods are bought using Bitcoins, and the seller doesn’t send the promised goods, nothing can be done to reverse the transaction.

c. Risk of Unknown Technical Flaws
The Bitcoin system could contain unexploited flaws

Having said that, we view Bitcoin as "Gold" in the world of cryptocurrency due to its scarcity.

The Bancor Protocol is different from Bitcoin. Bancor is a platform to create cryptocurrencies with an easy to use interface and instant liquidity. Rather than stick to one cryptocurrency like Bitcoin, Bancor urges the use of personalized cryptocurrency for every local community & country.

The Bancor protocol enables built-in price discovery and a liquidity mechanism for tokens on smart contract blockchains. These “smart tokens” hold one or more other tokens in reserve, and enable any party to instantly purchase or liquidate the smart token in exchange for one of its reserve tokens, directly through the smart token’s contract, at a continuously
calculated price, according to a formula which balances buy and sell volumes.

Compare to Bitcoin, Bancor's Smart Tokens will far more stable in terms of fluctuation since the tokens hold reserve to protect it's value. And since Smart Tokens are created by each businesses, shops or communities, enabling "trust" for the users, seeing that the tokens are actually backed by real business or the community.

Here are advantages of Smart Tokens:

1. Continuous Liquidity​ - Since purchasing and liquidating is done through the smart
   contract, smart tokens are always liquid, irrespective of their trading volume.
2. No Extra Fees​ - The only mandatory fees applied by a smart token are the blockchain
   platform fees (gas) which are relatively low.
3. No Spread​ - Since the price calculation is done algorithmically by the smart token, the
   same price applies for purchasing and liquidating the smart tokens.
4. Predictable Price Slippage ​- Smart tokens allow pre-calculation of the precise price
   slippage, based on the transaction size, before it is executed.
5. Lower Volatility - ​A smart token with a 10% CRR (for example) is comparable to an
   exchange with 10% of the entire supply of a token in its order-book at all times, forming
   substantial market depth. In a typical crypto-exchange, the share of the supply in the
   market depth at any given moment is well below 1%. The higher the CRR, the lower the
   smart token’s price volatility. The lower the CRR, the more “new credit” is created relative
   to the original reserve amount

We can view Bancor as "US Dollar" in cryptocurrency world due to it's ability to act as global reserve with global liquidity.