If you’ve been on Quidax, you’ve probably seen things like “Binance Coin (BEP20), Chainlink (ERC20), and PancakeSwap (BEP20).
You’re probably wondering why some coins have the “ERC20” tag and some are “BEP20.” Are there any differences in the coin values? Which will be better for you to use? Who wins in the BEP20 vs. ERC20 battle?
Well, have no fear; Quidax is here. BEP20 and ERC20 are basically token standards. This article will break down everything you need to know about ERC20 and BEP20 token standards and how you can use them. Let’s get into it.
What is a Token Standard?
A token is a cryptocurrency that is built on an existing blockchain. These coins are usually built by companies that want to use them for specific purposes. But, instead of building their own blockchains, they simply find existing chains to build on.
Some of the functions of crypto tokens can include:
- Processing transactions
- Acting as a store of value
- Buying assets on an online platform
- Voting on a decentralized application (dApp)
- Crowdfunding and raising money
Take QDX for example. QDX is the native token for Quidax. Since Quidax doesn’t have its own blockchain, we launched QDX on the Binance Smart Chain instead.
Every year, hundreds of dApps launch their tokens on different blockchains – like Ethereum and the Binance Smart Chain. But, for these tokens to work perfectly with the blockchains, they need to follow specific guidelines. These guidelines are what we call token standards.
A token standard can include rules guiding aspects such as:
- The token’s total supply
- The process of making and destroying new tokens
- The token’s transaction processes, etc.
These standards help to avoid fraud, technical failures, and other issues.
The ERC20 Token Standard
The ERC20 token standard is a set of rules that guides projects looking to build on the Ethereum blockchain. You need to follow the ERC20 token standard if you want to create a smart contract on the Ethereum blockchain. Then, you can use these smart contracts to create your own token.
The Ethereum blockchain is the most popular blockchain for developing dApps, and the ERC20 token standard is the most popular token standard on the chain.
Core Features of the ERC20 Token Standard
Every ERC20 token has several important features. The main elements are:
- totalSupply: A feature that shows the total supply of the ERC20 token
- balanceOf: This feature shows the number of tokens held in a specific wallet
- Transfer: The feature enables tokens to be transferred from one user to the other
- transferFrom: This function automates transfers by approved people or contracts. So, you don’t have to make some payments manually
- approve: Limits the number of tokens that a smart contract can withdraw from your balance.
- name: This is used to attach a name to a token (for instance, “Tether”)
- symbol: This is used to attach symbols to tokens (for instance, “USDT”)
- decimal: Sets the number of decimal places that a token can be divided into
Some of the most popular ERC20 tokens include USDT, Chainlink (LINK), Aave (AAVE), and many more.
The BEP20 Token Standard
The BEP20 token standard serves pretty much the same function as the ERC20 token standard, but it applies to tokens built on the Binance Smart Chain (BSC).
Built by Binance, the BSC has become pretty popular recently. More developers have moved to this blockchain because of some issues with Ethereum – such as delayed transactions and increasing costs. If these developers want to create tokens on the BSC, they need to follow the BEP20 token standard.
Core Features of the BEP20 Token Standard
Interestingly, the BEP20 token standard was built in line with ERC20. So, they both have similar features. Every feature available on the ERC20 token standard also applies to BEP20.
But, note that while the last three features listed above (name, symbol, and balance) are optional for ERC20 tokens, they are mandatory for BEP20 tokens.
There is also getOwner – a feature that shows the owner of a BEP20 token.
Some of the most popular BEP20 tokens include Binance Coin (BNB), PancakeSwap (CAKE), and the Quidax Token (QDX).
BEP20 and ERC20
BEP20 tokens are also great because they can be compatible with the ERC20 tokens standard. Remember; Binance built the BEP20 token standard to be like ERC20.
Fun Fact: Binance Coin (BNB) was originally built on the Ethereum blockchain before finally moving to the BSC.
One of the most useful things about BEP20 is the creation of pegged coins. These are basically BEP20 equivalents of other coins built on other blockchains. With pegged coins, you can send a token to the Binance Smart Chain, receive its equivalent BEP20 tokens in your wallet, and withdraw the tokens back to their original blockchain.
The biggest benefit of pegged coins is that they are more cost-effective. You don’t have to pay those high Ethereum gas fees when making transfers, so you benefit.
Technical Differences Between BEP20 Tokens and ERC20 Tokens
- Cheaper Gas Fees for BEP20 Tokens
If you open your Quidax app, you’ll find that a lot of coins are BEP20 tokens, while some are also ERC20.
The primary difference between both chains is in gas fees. When you make a transaction using an ERC20 token, you pay gas fees in Ethereum. But, if you’re transacting with a BEP20 token, your gas fees are paid in BNB.
Because Ethereum gas fees are usually high, it is more affordable to bypass those high fees with BNB. Remember when we changed our USDT to BEP20? We did that because of transaction costs. Instead of paying between $40 to $200 for a single USDT transaction, you can now do that for less than $2.
2. Stronger Requirements
Like we pointed out, the BEP20 token standard has more requirements than the ERC20 standard. This shows that BEP20 tokens are held to higher standards than ERC20 tokens. In a way, they’re more trustworthy.
3. Faster Transactions on BEP20 Tokens
BEP20 transactions are executed in about 3 seconds. For ERC20, this process takes about 15 seconds.
4. Higher Security for ERC20 Token Transactions
ERC20 tokens are seen as more secure than BEP20 tokens because it takes longer for their transactions to be verified. So, the chances of fraudulent transactions going through are much slimmer on ERC20 tokens.
- Token standards are rules that a token has to abide by for it to list on a blockchain
- Every blockchain has its token standard
- ERC20 is the most popular token standard because of the Ethereum blockchain’s popularity. But, the Binance Smart Chain is also growing – as is the BEP20 standard.
- The BEP20 token standard was modeled after ERC20
- Transactions using BEP20 tokens are faster and cheaper than ERC20 tokens
- But, ERC20 tokens are seen as more secure than BEP20 tokens
- It’s possible to have BEP20 equivalents of ERC20 tokens