Tokens are created on an existing blockchain for a specific purpose. Tokens are primarily used to raise capital for new blockchain projects by companies and other organizations. Ethereum and Binance are two of the most popular blockchains for the creation of crypto tokens (Binance Smart Chain). ERC-20 and BEP-20 protocols are used to create the tokens. In crypto, coin and token are frequently used interchangeably, which is a mistake. In the context of a blockchain, a coin is an instance of a cryptocurrency.
However, a token is a cryptocurrency that is created on a blockchain that is not native to the coin. As an example, we can say that the Binance Smart Chain Token (BSC) is a token based on the BSC token. The BEP-20 token is built on the Binance Smart Chain. However, some dApps allow you to use it. Various other cryptocurrencies are also used for various purposes, some of which are used in the music and gaming industries and for the development of these services you need enterprise blockchain development company services. So, if you want to learn more about cryptocurrency services, seek the advice of professionals and well-known companies.
What is Token Standard?
A token is a type of cryptocurrency that is based on a certain blockchain. Companies can create tokens frequently as per their need. They can use these coins for specific reasons. The problem is that instead of creating their own blockchains, they just use existing ones to build those tokens. Here are some functions of crypto tokens:
- Safe processing of transactions.
- Acting as a safe deposit box for money.
- The purchase of assets via an internet marketplace.
- Voting on a decentralized app (dApp).
- Raising funds through crowdfunding.
As a reference, the BSC token development standard makes it simple for programmers to create new tokens based on the Ethereum network. All BSC tokens will be regulated by the same set of rules and attributes. Crypto token standards such as BEP-20, ERC-20, and TRC-20 are among the most popular. For example, a token standard may have rules that govern aspects such as:
- The total supply of the token.
- The creation and destruction of fresh tokens.
- The processes of transaction.
In order to eliminate fraud, technological errors, and other problems, these requirements are essential.
Multiple Type of Token Standards
One or more token standards may exist for each blockchain. Ethereum, for example, provides a variety of token standards that can be used for different purposes. When it comes to sophisticated token creation, the most prominent forms of token standards are:
- ERC-20 (Ethereum)
- TRC-20 (TRON blockchain)
- BEP-20 (Binance Smart Chain)
In this section, we’ll go through the distinctions between the various token standards and how to choose the best one for your project.
What is the BEP20 Token?
The BEP-20 standard is the most often used in the creation of crypto tokens. The Binance Smart Chain is faster, more efficient, and compatible with other blockchains. Many new tokens are being built there. For this reason, BEP-20 inherits all of the functionality of the ERC-20.
As the Binance Smart Chain is issuing, BSC tokens are immediate BEP-20-compliant. You must follow the specific procedures in order to use, transfer, approve, and manage BEP-20 tokens defined in Binance Chain. Be aware that BEP-20 is not the same as BEP-2. Binance has two distinct token specifications. BEP-2 is a Binance Chain token, while BEP-20 is a BSC standard token.
To run smart contracts and DApps on the Binance Smart Chain, all BEP-20 tokens are based on the Binance Smart Chain. BSC creates Smart Contracts to run decentralised apps.
Many people are unaware that BSC can process transactions faster and at a lower cost than ETH. It’s because of the compatibility with the latter. Binance Smart Chain allows you to transfer ERC20 coins at a lower cost and more efficiently.
BEP-20 can be used to send not only ERC-20 tokens but also Bitcoin, Ether, Litecoin, and USDT.
Additionally, the BEP-20 token system provides compatibility with BEP-2 & ERC-20 tokens. It supports the Binance Exchange, built-in functions and features of the BEP-20 standard. The exchange with BEP-2 tokens becomes simpler. Many wallets support it and cross-chain interoperability with other blockchain tokens.
What is ERC-20 Token?
One of the most widely utilized token standards of all time is ERC-20. In addition, it is one of the oldest and most widely accepted methods for producing tokens.
In the Ethereum community, ERC stands for “Ethernet Request for Comment.” The ERC-20 token standard governs the creation and operation of all tokens on the Ethereum blockchain. Ethereum smart contracts enable the purchase, sale, and trading of ERC-20 tokens on exchanges. The ERC-20 token standard includes a wide range of data, such as:
- The total number of tokens in circulation.
- Is there a way to transfer tokens?
- How do I get my tokens out of my account?
- The number of tokens in your account.
- How do you receive tokens?
An ERC20 token is very simple and inexpensive to create. ERC-20 token transactions are lightning-fast with efficient and quick confirmation. There is a low danger of contracts being broken on the Ethereum network. The power of Ethereum makes ERC-20 transactions quick, effective, and worldwide.
ERC-20 tokens have a global acceptance and vast reach. It means that you may expect more liquidity and revenue. The development of ERC20 tokens saves time and money. This technology generates tokens that are easy to use, safe to store and come with their own wallets. When it comes to raising money for a crypto firm, it’s the most straightforward method.
You can create custom crypto tokens on the Ethereum network to use on both the BSC and TRON networks.
Standard Difference: BEP20 vs. ERC20
A token standard’s primary goal is to define the parameters known as functions in the blockchain world. Smart contracts, wallets, and marketplaces use the token standards to interact with a token’s value. Both ERC20 and BEP20 allow tokens to have six different functionalities. BEP20, a newer standard that extends ERC20, has four additional functions. As a result, BEP20 is considered a more precisely defined token.
Transaction Fees: BEP20 vs. ERC20
Due to BSC’s Proof of Staked Authority (PoSA) block validation process, BEP20-based transactions have significantly cheaper fees than ERC20 transactions. To verify a transaction, validating nodes use the PoSA mechanism to stake a predetermined number of BNB coins. Only the 21 nodes that have staked the most BNB have the power to validate other nodes in the network.