Blockchain and crypto technology has been on the up and up these past few years, giving the world a sneak peek at a future without physical money. In today’s digital age, it is no wonder that such innovations have gained increased attention and prominence amongst entrepreneurs and startups. They argue that blockchain and crypto offer a much higher degree of privacy, transparency, and security than what fiat money could ultimately supply. Not only that, but they also believe that such technologies open up countless business opportunities for interested individuals and starting corporations. For example, crypto token development services are now widely used by several people to develop a particular crypto token or raise substantial funds.
As its definite description, Crypto tokens are digital tokens that represent an investor’s stake in a particular organization, which could be utilized for economic purposes. Putting it simply, token holders can use crypto tokens to facilitate purchases or exchange them for other currencies. While it is common to misinterpret crypto tokens as being the same as crypto coins, they are definitely different. Coins, for one, are built using a separate blockchain and can only be used as means of payment. Tokens, meanwhile, can be used for a variety of reasons. This includes trading, to store value or hold, and use as a form of currency. That being said, crypto tokens may only be developed within the existing blockchain, nowhere else.
When we talk about crypto token creation, Ethereum and Binance Smart Chain (BSC) are the two most popular blockchain platforms today in the global marketplace. Furthermore, these two blockchains also have the best token standards for developing tokens, namely Ethereum’s ERC-20 and BSC’s BEP-20. Seeing as both are remarkable standards for token development, people often argue which is better for creating tokens. To steer you off of this impending confusion, let us comprehensively differentiate the two.
What is a Token Standard?
Before driving a solid wedge between the two most popular token standards mentioned above, let us first clearly define what really a “token standard” is. With every year that passes, more decentralized application (DApp) projects introduce their own tokens on blockchains – being the most popular among the flock, Ethereum and BSC. Now, in order for these said tokens to fit in with the underlying blockchain, they must first abide by its specific token standard: ERC-20 for Ethereum and BEP-20 for BSC.
Token standards define the set of rules for the issuance and implementation of brand new tokens. This commonly includes requirements such as defining the token’s minting and burning process, its total supply limit, and its complete transaction process. These standards are set in place to help avoid technical complications between existing tokens, issuance of particular tokens in disagreement with the principles of the blockchain, and fraud instances.
With that out of the way, let’s begin differentiating ERC-20 tokens from BEP-20 tokens.
With the positive momentum Ethereum is in right now, mainly due to the ever-increasing popularity of nonfungible tokens, or NFTs, it is more than likely that you already have interacted with ERC-20 tokens. As per countless testimonials from both industry experts and individual users, Ethereum’s ERC-20 tokens’ codes are extremely flexible that it allows a great number of use cases.
As excellent as the ERC-20 is doing right now, it is worth mentioning that it started without any grand ambitions at hand. According to Fabian Vogelsteller, a well-known Ethereum developer, the idea behind ERC-20 began as a simple proposal by some coders looking to make token production more intuitive. Six years later, it is now arguably the greatest foundation existing today that helps blockchain developers and programmers render their tokens interoperable across the entire Ethereum blockchain.
Here are some of the advantages of ERC-20 Standard Tokens:
- It is fast and seamless
- Token transaction confirmations are more efficient compared to other standards
- It connects the token with the whole blockchain efficiently
- Contract breaking risks are drastically mitigated
BEP-20 standard is the rapidly growing technical token standard from the blossoming blockchain, Binance Smart Chain, which was admittedly conceptualized to become a viable alternative to the market-dominant Ethereum chain. Despite now being competitors, it is worth noting that the BEP-20 token started as an extension of the ERC-20 standard, and now exists solely within the BSC. With that in mind, the BEP-20 token standard also supplies programmers and developers the same level of flexibility as what the ERC-20 token gives on Ethereum.
While the two token standards share various core functions, what separates the BEP-20 is its innate interoperability with the BEP-2, another token standard of Binance, albeit on the network’s previous blockchain iteration, the Binance Chain. The two Binance tokens are made compatible and to complement one another – either token can be swapped without any value deprecation, back and forth, using applications such as Binance Wallet and MetaMask. Notably, both BEP-20 and BEP-2 are fueled by BNB, Binance’s native token.
Here are some of the advantages of BEP-20 Standard Tokens:
- Can freely be swapped with BEP-2 tokens
- Is compatible with some ERC-20 tokens supported by BNB
- Crypto tokens made from other blockchain platforms could be pegged on the BEP-20 token
- Supported by several crypto wallet applications
Now that you are made aware of the difference between ERC-20 and BEP-20 standard tokens, we hope that your choice on which among the two better fits you is easier now than a while ago. If you want a wide variety of use cases and applications to where you may use your token, Ethereum’s ERC-20 token would undoubtedly find you well. On the other hand, BEP-20 tokens have much lower fees and execute transactions significantly faster compared to the latter. While the two essentially perform the same core function, each has its own separate advantages and exclusive functions that may make it more appealing. With all that being said, the choice of which is better ultimately falls to what your business particularly requires.