The online digital economy is evolving at maximum speed these days and so are the options to pay or get a discount online. One of these new developments are cryptocurrencies or online digital tokens. If you got here to benefit from an online discount or want to buy a promising digital token then you are at the right place!
In this article, I will explain the how to buy ERC20 tokens on Bancor in an easy and fast way. But before we do that I’ll first dive more into the meaning behind ERC20 tokens.
What is an ERC20 Token
ERC20 token is an Ethereum based digital token. This ERC20 token resides on the Ethereum Blockchain only and can be used to handle all kind transactions. Ethereum uses smart contracts to settle transactions and ERC20 is being used as ‘the standard’ to be compatible on the network.
Ethereum is currently ranked second on Coinmarketcap which makes it one of the biggest Blockchain projects in the world. As a matter of fact, during the ‘ICO-boom’ in 2017, Ethereum gained a lot of new coins which are all in fact ERC20 tokens. Good examples of ERC20 coins are Binance BNB, OmiseGo(OMG) or Basic Attention Token(BAT).
What can you do with ERC20 tokens
Ethereum makes it possible for companies to create their ERC20 compatible tokens very easy. With these newly created digital coins these companies can offer giveaways in their own digital tokens. In other words, now these companies are being able to have Blockchain marketing campaigns in the cryptocurrency space. A good example could be American Airlines offering discounts when you order tickets with their own digital tokens.
As I stated above, there are also other Blockchain projects like Ethereum who offer their own digital tokens. One of these projects is EOS which also uses smart contracts on their Blockchain network. EOS tokens aren’t compatible with ERC20 tokens of Ethereum which could be a potential problem. This is where online platforms like Bancor comes into play with the possibility to swap or sell those digital tokens.
What is the Bancor Exchange all about
Bancor can be best described as a decentralized exchange(DEX) which offers the possibility to buy or sell digital tokens. In the first place, this exchange is meant for Ethereum and EOS compatible tokens. By all means, they offer buying and selling digital tokens for both Blockchain networks.
The Bancor exchange differs from for example Binance in its decentralized way. Where Binance uses a central database server to ‘settle’ transactions, Bancor operates quite different. Next, I will list down some essential differences when it comes to trading on Bancor.
Bancor vs Binance The differences
When trading on a centralized exchange, buyers and sellers must be matched in order for a trade to be executed. Bancor(DEX) uses smart contracts to settle transactions. This means that there is no need for an existing seller(person) but instead a smart contract handles the transaction at any time.
Like I explained above the buyer and seller don’t need to be there at the same time. On the Bancor Network, tokens are always available for purchase regardless of trade volume. How will price be determined then? Bancor uses an automated pricing mechanism and recalculates price after every purchase.
Many centralized exchanges are facing problems with coins which have low liquidity. As a result there could be a high spread between supply and demand. On Bancor, the price for both selling and purchasing tokens is the same due to the algorithmic price calculation of the Bancor Formula.
No order book
Centralized exchanges like Binance uses an order book to track the potential buy and sell orders. Bancor uses smart contracts which eliminates this. All prices are calculated through an algorithm and reduces the data load needed for an order book.
How to Buy ERC20 tokens on Bancor
For buying ERC20 tokens on Bancor you have to go to their website first. To do this is a very easy step but make sure you go to this url: https://www.bancor.network/.
After the website has finished loading, you are on their landing page which shows all available tokens at current price rates.
Setting up your wallet first
This grid overview of tokens can be divided in three tabs; All tokens, Ethereum tokens and EOS tokens. At this stage you have two possibilities to convert or buy ERC20 tokens on Bancor. Moreover, it depends if you already own an Ethereum or EOS wallet. In this case, it’s not necessary to sign up at the Bancor platform and you can just select your wallet.
On the other hand, if you are brand new and don’t own any Ethereum or EOS you have to generate a wallet at the Bancor platform first. The wallet generated will be an Ethereum wallet by default.
To do this you have to do the sign up process which is pretty straightforward. One thing to mention is that you have three options:
|Good to know|
|If you don’t like the idea of the Bancor platform holding your Ethereum wallet, there is another option. MyCrypto comes with an open source tool that can generate an Ethereum wallet for you. It’s a client side tool and also focused on ERC20 tokens.|
Buy ERC20 tokens on Bancor
Now it’s time to buy your favorite ERC20 token on the Bancor platform. In this guide, I’ll explain how to buy digital tokens considering you already own ETH. If this isn’t the case, I will advise you to read the next chapter first, which covers buying ETH with credit card.
At this stage you have to click on convert in the upper menu. Next, a pop-up appears which asks you to give the amount of ETH and also which token you want to convert. In this example, I’m buying BNB with ETH and guide you through the process.
It’s very important to open the advanced settings and limit the transaction to a specific maximum price. By limiting it, you assure that it will only execute if the price you pay per unit is between the current rate and the rate limit you set.
Click next and a new screen appears. At this pop-up you have to confirm the transaction on the Ethereum Blockchain by giving your password.
Now you are at the end of the buying process which shows you a pop-up that the transaction is in process.
Congratulations! In a few minutes you are the owner of your new ERC20 token.
Buy ETH with credit card
If you are interested in a quick way in buying ERC20 tokens but don’t own any ETH yet, Bancor comes with an option to buy ETH with a credit card. To do this you have to click on ‘Deposit’ in the upper menu. Next, a new window appears which asks you to give your Ethereum address.
The picture above shows my Ethereum address which I need to copy and paste in the text box below. In this scenario, I signed up at the Bancor platform and generated an Ethereum wallet right away. It’s also possible that you signed in with your own Ethereum wallet. In this case, you have to give your Ethereum wallet address.
Next, fill in the amount of USD or EUR you want to spend and click ‘Proceed’ button. To proceed, you are redirected to the website of Simplex. Here you have to give your credit card info and personal credentials.
After you have given the requested credit card info and paying successfully, the amount of ETH will be available for you right away!
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