Blockchain Token Standards
Two of the most common currencies and the standards of the two biggest blockchains in the world have a lot in common. One of the main drivers behind the creation of Ethereum, and its subsequent popularity, is the efforts of its developers like Vitalik Buterin and Fabian Vogelsteller who seek to solve the scalability issues with Bitcoin, as well as make interaction with blockchain accessible and flexible.
The two largest blockchains in the world, Ethereum and Binance Smart Chain, have developed token standards to increase the efficiency of their chains and the programming process for builders. Now, on every development of blockchain, there are standard token types and programming schemes that help guide and facilitate the creation of smart contracts without having to rewrite an entire contract from scratch.
An ERC ( Ethereum Request for Comments ) or a BEP ( Binance Evolution Proposal ) are proposals that could become programming standards that ensure that new tokens perform basic functions like address retrieval, operability with different wallets, and more. They are basically projects to help build a token.
These standards come in place of hardcoded names like ERC-20, BEP-2, or BEP-20. Other proposals on different chains can also affect the function of a network, but technical improvements – such as EIP or BIP, Ethereum and Bitcoin Improvement Proposals, respectively – are not the same. The ERC or BEP standards are not software to install but rather a checklist when creating a smart contract.
Here in this article, we will describe two of the most common token patterns across all cryptocurrencies and Decentralized Finance (DeFi): ERC-20 and BEP-20. The latter is a compatible reproduction of the former, each with equal power in their respective chain.
What is the ERC-20 token
If you bought an NFT or traded a token on Ethereum, you likely interacted with an ERC-20 token. These tokens are the default for most tokens on the Ethereum network. They are easy to use (developers say!), and the flexibility of the code allows for many use cases.
The ERC-20 didn't start out as a grand theory. According to Vogelsteller, the idea was born from a simple proposal by some programmers who were looking to synthesize tasks and make token production intuitive. The development of the ERC-20 token, in 2015, is a foundation to help blockchain developers and programmers make their tokens interoperable across the entire Ethereum chain.
One of the most critical aspects of the ERC-20 is flexibility. It allows tokens and other software to integrate the same pattern to facilitate faster more effective and global transactions. Following these ERC-20 standards keeps protocols aligned on basic functions, ensuring the ability to capitalize on the openness available in Ethereum.
The ERC-20 is listed as having six main features that it maintains uniforms. In “code speak” they are effectively known: balanceOf , totalSupply, transfer, transferFrom, approved and subsidy. For the layman, these actions allow viewing account token balances, viewing total token provisioning details, showing how a user submits a token, and enabling automated submission on behalf of the owner, and much more.
The pattern can be used to develop a variety of different tokens. From the creation of the most common stablecoins to non-fungible tokens and DeFi assets, ERC-20 is a mainstay of all cryptocurrencies.
The original ERC-20 is an important milestone in the history of cryptocurrency and blockchain. It has helped a multitude of users to realize huge potential in Ethereum and has opened the door for more networks and blockchains to do the same. Young and emerging developers can focus their energy on creating new protocols.
A nod to the incredible flexibility of the ERC-20 is the ease with which the pattern and outline can be replicated on a new blockchain like the Binance Smart Chain…
What is the BEP-20
Binance Smart Chain was originally conceived as an alternative to Ethereum, and the compatibility runs deep. The development of the BEP-20 token emerged as an extension of the ERC-20 standard for Binance Smart Chain.
The BEP-20 gives Binance Smart Chain developers and programmers the same flexibility as Ethereum's ERC-20. It offers a programmer-friendly outline to help launch tokens of all varieties on Binance Smart Chain. The same functions as transfer, balance and subsidy are possible.
Like its ERC-20 counterpart, the BEP-20 opens the door to other software and services. However, unlike the ERC-20, the BEP-20 is also interoperable with its fellow Binance BEP-2. Binance's two standards BEP-2 and BEP-20, for Binance Chain and Binance Smart Chain respectively, are powered by BNB.
The two Binance tokens are compatible and complementary to each other. BEP-20 and BEP-2 tokens can be exchanged equally. The BEP-20 and the BSC network in general act as the most decentralized network in the Binance ecosystem.
One important thing to remember is that ERC-20 and BEP-20 tokens are not exactly exchanged anywhere. Users will need a proper asset bridge to ensure tokens are exchanged correctly. Currently, many wallets and exchanges – such as Trust Wallet, MetaMask, and Binance Wallet – allow equal exchanges directly on their platforms.
Always make sure you are making the proper trade or you could lose your funds. Not all platforms are interoperable. Coinbase is notably incompatible with BEP-20 tokens. Any BEP-20 tokens sent to a Coinbase wallet will be held until further notice.
The default first tokens, but not the last ones
ERC-20 is still the most popular token standard in DeFi. The monumental proposal shows that almost everything in cryptocurrencies and DeFi should be open for discussion and debate. ERC-20 was the first and is just the beginning of many token standards.
As Ethereum and Binance push for more deflationary mechanisms on their respective networks, we are sure to see more innovation. Both networks have recently implemented new token metrics that will accelerate changes to separate networks where the downstream effects of these implementations have yet to be seen. These token patterns are probably just the beginning.
The abilities of the development of Ethereum, Binance, and blockchain, in general, go far beyond the token features seen in the ERC-20 and BEP-20. Each of them has proven to be extremely valuable and they are default patterns at this point. Simplicity was bold, but so was flexibility.
Fortunately, we continue to see new standards introduced and we see that new blockchain standards can mimic the ERC-20 story and usher in new use cases. However, it is impossible to ignore the usefulness of the ERC-20 and BEP-20 until that happens.