Bancor Economy: Solution to Double Coincidence of Wants

Double Coincidence of Wants is a transaction that occurs between two people where they both willing to carry out the exchange of goods they are both happy to swap in order to acquire the item they do not have.

It means when a person require same thing which other people have to give him and also other person require the same thing as he have.

The phrase was first used by neoclassical economists.

However, such kinds of transactions are rare. As goods become more specialized, satisfying specific and highly differentiated wants and needs, the prospects of achieving a double coincidence of wants diminishes.

Fiat “paper” money, with almost no intrinsic value, helps to overcome this problem. People can pay you cash for your goods, which you can use to buy whatever you want. This cash is widely accepted. Therefore, we don’t have to worry about having the right goods and services to swap. This eliminates a significant transaction cost in barter economies.

This applies to Cryptocurrencies and Asset Exchange. Every currency that is exchanged requires two parties with opposite wants to “digitally meet” in real-time, thus requiring speculators and market makers to provide liquidity and facilitate transactions, taking fees along the way and leading to inefficiencies.

Thousands of new cryptocurrencies will be created in the next few years just like new blogs were created every day in the beginning of Web 2.0

The potential long tail could point to trillions of dollars in user-generated value when combining all small and niche currencies beyond the current largest currencies.

Bancor Protocol is a new economic breakthrough.

Money was invented to solve the “Double Coincidence of Wants” problem in barter, making trade asynchronous, more efficient and predictable. But Bancor wants to create “money for money”, making asset exchange more efficient and predictable as well.

There is no need for two opposite wants to exist at the same time in order for the cryptocurrency trading to function. There will be no significant transaction cost.

Cryptocurrency is the new economy but a few barriers still exist:

• High volatility
• Need an exchange to trade between cryptocurrencies
• Small cryptocurrencies with less traction end up dead in “liquidity problem”
• Not user-friendly
• No standard to make it easily used as a “medium of exchange” where a cryptocurrency should be accepted by all merchants regardless of their tokens supply & demand.

Bancor Protocol built as the standard for a new generation of cryptocurrencies, where it will be used as reserve or as network tokens by all if not most cryptocurrencies in the future.

We need only one standard to organize hundreds or maybe thousands of cryptocurrencies that will be created in the future. Without a standard platform then cryptocurrency will become a Wild Wild West where anyone with powerful capabilities can ruling those with less power.

“We cannot solve our problems with the same thinking we used when we created them.” -Albert Einstein