The crypto industry consists of various types of coins and tokens. In fact, there are currently over 20,000 cryptocurrencies, which can be quite difficult to keep track of.
But crypto tokens can be classified into smaller groups such as ERC-20, BEP-20, and TRC-20. But what is the difference between these types of tokens and how are they similar?
What is an ERC-20 token?
ERC-20 (short for Ethereum Requests for Comment) is the standard used to create tokens on the Ethereum blockchain. If you are somewhat familiar with cryptocurrencies, you have probably heard of Ethereum or Ether. This is one of the most valuable cryptocurrencies on the market, second in popularity after Bitcoin.
But Ethereum is not just a cryptocurrency. It is the native asset of a blockchain that bears the same name. The Ethereum blockchain is currently the most popular in the world, with more than 500,000 active addresses and almost 40,000 daily users.
People use the Ethereum blockchain to create and use decentralized applications (DApps), create and trade NFTs, and create cryptocurrency tokens. Because Ethereum uses the proof-of-stake consensus mechanism, users can also become validators or stake their funds in pools for rewards.
Most of the fungible crypto tokens created on the Ethereum blockchain are ERC-20 tokens. For example, if a group of developers created a decentralized platform for borrowing and lending cryptocurrency, they could develop an ERC-20 token for the governance mechanism. This would allow holders of that token to participate in the platform’s decision-making process.
All tokens created on the Ethereum blockchain are simply known as tokens. However, Ether itself is known as a currency because it is the native asset of the entire blockchain.
Popular examples of ERC-20 tokens include Tether (USDT), Shiba Inu (SHIB), Dai (DAI), Basic Attention Token (BAT), Chainlink (LINK), and UniSwap (UNI).
You should also be aware that there are a few additional types of token standards on the Ethereum blockchain, including ERC-721, ERC-1155, ERC-777, and ERC-4626. These are not as well known as ERC-20 tokens, but they still have some important uses on the blockchain, as listed below.
- ERC-721: a standard used for non-fungible or NFT tokens.
- ERC-1155: a standard used to efficiently transfer NFTs in a single transfer.
- ERC-777: a standard for fungible tokens that provides additional functionality, such as emergency recovery.
- ERC-4626: a standard for performing vaults that represents ERC-20 token shares and allows for easier unification of technical parameters.
What is a BEP-20 token?
BEP-20 (short for Binance Smart Chain Evolution Proposal) is the standard used to develop tokens on the BNB Smart Chain. The BNB smart chain was once known as the Binance smart chain. This name may sound familiar, as Binance is one of the largest cryptocurrency exchanges in the world.
However, Binance changed the name of the Binance Smart Chain ecosystem to BNB Chain to distance itself from the network and to remind users that it is decentralized and community-run.
The BNB Chain ecosystem consists of two main chains: BNB Beacon Chain and BNB Smart Chain. While BNB Beacon Chain is used for staking and governance, BNB Smart Chain can be used to develop DApps, create NFTs, and of course develop native tokens for projects. It is the BNB smart chain on which the BEP-20 tokens exist.
As you may have already guessed, BNB Smart Chain is quite similar to Ethereum in its applications, although the latter is currently more popular than the former. However, BNB Smart Chain is still a big player in the crypto and DeFi game, processing more than 2.6 million transactions daily.
While BEP-20 is the most common standard token on the BNB Smart Chain, you should also be aware of BEP-721, a standard used for NFTs within the ecosystem. Examples of popular BEP-20 tokens include Binance Coin (BNB), PancakeSwap (CAKE), Binance USD (BUSD), and THORChain (RUNE).
What is a TRC-20 token?
TRC-20 (short for TRON Request for Comment) is a standard token on the TRON blockchain. The TRON blockchain is another example of a platform where people can create DeFi projects, DApps, NFTs, and tokens. There are also various services on this blockchain, such as the JustSwap exchange, which you can use in your cryptocurrency trading.
The native cryptocurrency of the TRON blockchain is TRON (TRX), which is also a TRC-20 token. However, because it is a crypto with its own blockchain, it is often considered a currency. Examples of TRC-20 tokens include BitTorrent (BTTC), JUST (JustSwap’s native token), Klever (KLV), and Centric Cash (CNS).
Since the TRON blockchain is not used as often as the BNB smart chain and the Ethereum blockchain, you may not have heard of these assets before. But know that this is still a popular and up-and-coming blockchain that may increase in prevalence in the coming years.
Like the two blockchains discussed earlier here, TRON has a standard for NFTs known as TRC-721. However, the network also has another standard token known as TRC-10, which plays a role in token production.
Unlike TRC-20, TRC-10 tokens do not rely on the Tron Virtual Machine (TVM). In fact, TRC-10 tokens are the most common on the TRON blockchain, as they are very easy to create. These tokens are commonly used as ICO tokens for TRON-based projects.
Tokens that exist on multiple chains
There are many cryptographic tokens that come in the form of various standards. Take Tether (USDT), for example, a popular stablecoin. Tether exists on the Ethereum, TRON, and BNB Smart Chain. This means that Tether comes in the form of all three token standards and is compatible with all three chains.
This is also the case for USD Coin (USDC), a stablecoin that shares many similarities with Tether. USDC comes in the form of ERC-20, BEP-20, and TRC-20.
But it’s not just stablecoins that can exist on multiple blockchains. Shiba Inu, a token originally developed on the Ethereum blockchain, is also supported by the BNB Smart Chain. Other examples of Ethereum and BNB Smart Chain compatible assets are Uniswap (UNI) and Basic Attention Token (BAT).
Token standards play an integral role in the crypto industry
Although the different token standards out there can seem a bit confusing, keep in mind that each type plays an important role in its native ecosystem.
Whether used for fungible tokens, non-fungible tokens, or in functionality, it forms a crucial cog within the complex machine that is blockchain technology.