As a new crypto investor, it might be confusing to identify the difference between tokens. Since we at PrivacySwap aim to educate everyone about the fundamentals of crypto, we drafted this content to explain ERC-20, BEP-20, and everything you need to know about them.
ERC-20 and BEP-20 tokens are digital coins that are built on the existing blockchain. Unlike other cryptocurrencies, they support token development. Most blockchains have a specific token standard that is used when developing tokens. These standards provide a common set of rules for the token’s creation. But how are they different?
The ERC-20 is a Token Standard that implements an API for tokens within Smart Contracts. This token standard proposes a standard for Fungible Tokens, which have the property of being precisely the same (in type and value) as another Token. For example, an ERC-20 Token functions similarly to ETH in that one Token is and will always be equal to all other Tokens.
It allows you to transfer tokens from one account to another and get an account’s current token balance and the total supply of the token available on the network. Aside from this, it also has various other functions, such as approving that a certain amount of token from an account is spent by a third-party account.
Suppose a Smart Contract implements the following methods and events. In that case, it is referred to as an ERC-20 Token Contract, and it will be responsible for keeping track of the produced tokens on Ethereum once deployed.
Further, DEV’s icoclone distinguished ERC-20 advantages as follows:
Advantages of ERC-20 token standard
- Transactions involving ERC20 tokens are quick and easy.
- Token Transaction confirmation is faster.
- The possibility of contract violation is lowered.
- The ERC20 feature implementation efficiently connects the token.
BEP-20 is a Binance Smart Chain token standard that extends ERC-20, the most common Ethereum token standard. BEP 20 can be considered as a framework for tokens, defining how they can be used, who can spend them, and other guidelines for their use. Further, it is interoperable with Binance Chain’s BEP-2 and Ethereum’s ERC-20 due to their similarities.
In addition, BEP-20 was designed as a technical standard for Binance Smart Chain to provide a flexible structure for developers to create a variety of tokens. These could be anything from stock in a company to money in a bank vault.
As BNB powers the BEP-20 tokens, validators receive BNB as a fee for confirming transactions, providing an incentive to include the transactions on the blockchain. Alongside that, With the innovation of the Binance Smart Chain, transacting BEP-20 is almost instant without congesting the chain.
Because of the dual-chain architecture of BSC, a strong emphasis was placed on cross-chain compatibility when developing the software. This means that BEP-2 tokens can be exchanged for their BEP-20 equivalents in the same manner. The most straightforward technique is probably to use the Binance Chain Wallet extension. However, more options will become available as time goes on.
Moreover, BEP-20’s advantages are listed as follows.
Advantages of BEP-20 token standard
- BNB-backed and compatible with both BEP2 and ERC20 platforms.
- Tokens generated utilizing the BEP20 standard and used within the Binance Smart Chain network are supported.
- BEP-20 can be exchanged for a BEP2 token.
- Many crypto wallets currently support BEP20 tokens.
- Other blockchain networks’ cryptocurrencies are tied to the BEP20 token.
Though PrivacySwap is a platform that bears the BEP-20 token standard, it is still worth sharing the difference between the two. It is hard to decipher both information at first. Still, with the proper education and daily engagement with the ecosystem, soon, you will fully understand the difference between the two token standards. In addition, PrivacySwap wants to enlighten you about the difference to quickly identify which one is to use whenever engaging with our platform.
Moreover, we are still glad to announce that we continually conduct our FREE DeFi classes, with the next one happening on 25th August, . We are also getting a step closer to the release of our PrivacyCards. Further, last week, we had the official launch of our Hack the Vault game that will undoubtedly change the world of DeFi.
Interested? Let us know!