ERC-20 began as a simple proposal that has become the standard outline for token launches across blockchain.

Blockchain Token Standards

Two of the most common coins and the standards of the two largest blockchains in the world have a lot in common. One of the main drivers for the creation of Ethereum, and its subsequent popularity is the efforts by its developers like Vitalik Buterin and Fabian Vogelsteller who seek to solve the scalability problems 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 across blockchains, standard token types and programming outlines exist that help guide and facilitate smart contract creation without having to rewrite an entire contract from zero.

An ERC (Ethereum Request for Comments) or a BEP (Binance Evolution Proposal) are proposals that can become programming standards that ensure new tokens perform basic functions like address retrieval, operability with different wallets, and more. They’re basically blueprints to help build a token.

These standards come in the place of coded names like ERC-20, BEP-2, or BEP-20. Other proposals across different chains can also affect the function of a network, but technical improvements—like an EIP or BIP, Ethereum, and Bitcoin Improvement Proposals, respectively—are not the same. The ERC or BEP standards are not software for installing but more a checklist when creating a smart contract.

Here in this article, we will outline two of the most common token standards in all of crypto and Decentralized Finance (DeFi): ERC-20 and BEP-20. The latter is very much a compatible reproduction of the first, each with equal power on its respective chain.

What is ERC-20 Token

If you have bought an NFT or traded a token on Ethereum, you’ve more than likely interacted with an ERC-20 token. These tokens are the standard for most tokens on the Ethereum network. They are easy to use, and the flexibility of the code allows for a great many use cases.

The ERC-20 did not start as a grand theory. According to Vogelsteller, the idea was birthed out of a simple proposal by a few coders looking to synthesize tasks and make token production intuitive. The ERC-20, created in 2015, is a foundation to help blockchain developers and programmers make their tokens interoperable across the Ethereum chain.

One of the most critical aspects of the ERC-20 is flexibility. It allows tokens and other software to integrate the same standard to facilitate faster, effective, and global transactions. Following these ERC-20 standards keeps protocols aligned on basic functions while granting the ability to capitalize on the openness available on Ethereum.

The ERC-20 is listed as having six key features that its keeps in uniform. In “code speak” they are known effectively: balanceOf, totalSupply, transfer, transferFrom, approve, and allowance. For the laymen out there, these actions allow for the viewing of account token balances, viewing total token supply details, showing how a user sends a token, and allowing automated sending on behalf of the owner, plus more.

The standard can be used for developing a variety of different tokens. From the creation of the most common stablecoins to Non-Fungible Tokens and DeFi assets, the ERC-20 is one of the backbones of all cryptocurrencies.

The original ERC-20 is a major milestone in the history of cryptocurrency and blockchain. It helped a myriad of users realize enormous potential on Ethereum and opened the doors to more networks and blockchains to do the same. Young, emerging developers and can focus their energy on building new protocols.

A nod to the incredible flexibility of the ERC-20 is how easily the standard and outline can be replicated on a new blockchain like Binance Smart Chain.

What is the BEP-20

The Binance Smart Chain was originally envisioned as an alternative to Ethereum, and the compatibility runs deep. The BEP-20 token emerged as an extension of the ERC-20 standard for the Binance Smart Chain.

The BEP-20 gives developers and programmers on Binance Smart Chain the same flexibility as the ERC-20 on Ethereum. It affords a programmer-friendly outline to help launch tokens of all varieties on the Binance Smart Chain. The same functions like transfer, balance, and allowance are possible.

Like its ERC-20 counterpart, the BEP-20 opens the doors to other software and services. However, unlike the ERC-20, the BEP-20 is also interoperable with its Binance companion BEP-2. The two Binance standards BEP-2 and BEP-20, for Binance Chain and Binance Smart Chain are both fuelled by BNB.

The two Binance tokens are compatible and complementary to each other. BEP-20 and BEP-2 tokens can be swapped equally. BEP-20, and the BSC network in general, act as the more decentralized network in the Binance ecosystem.

Something important to remember is that ERC-20 and BEP-20 tokens are not exactly be swapped anywhere. Users will need a proper asset bridge to ensure the tokens swap correctly. Nowadays, many wallets and exchanges—like Trust Wallet, MetaMask, and Binance Wallet—allow equal swaps directly on their platforms.

Always make sure you are making the proper swap, 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 trapped until further notice.

The First Standard Tokens, But Not the Last

The ERC-20 is still the most popular token standard in DeFi. The monumental proposal shows that almost everything in crypto and DeFi should be open for discussion and debate. The ERC-20 was the first, and it is just the beginning of many token standards.

As bother Ethereum and Binance push for more deflationary mechanisms within their respective network, we are sure to see more innovations. Both networks have recently implemented new token metrics that will accelerate changes on the separate networks where the downstream effects of these implementations have been yet to be seen. These token standards are likely only the beginning.

The abilities of Ethereum, Binance, and blockchain, in general, go far beyond the token capabilities seen in the ERC-20 and BEP-20. They have each proven to be enormously valuable and are standards of standards at this time. The simplicity was bold, but so was the flexibility.

Hopefully, we continue to see new standards put forward and see that new blockchain standards can mimic the history of ERC-20 and usher in new uses cases. Nevertheless, the usefulness of ERC-20 and BEP-20 are impossible to ignore until that happens.