ERC20 vs. BEP-20: What’s the Difference?

Blockchain technology has undoubtedly changed the financial industry. Now, financial institutions can launch their tokens on private and public blockchain networks. This can be done to create a digital currency through an initial coin offering (ICO) or even develop a customer rewards program. 

To create a token, you must first know the available token standards. The most popular standards are ERC-20 and BEP-20. Both have unique features, use cases, and pros and cons. 

In this guide, we’ll explain the difference between ERC-20 and BEP-20 on several levels, including transaction speed, security features, and compatibility with digital asset infrastructure. These comparisons will make an informed decision for your next digital asset infrastructure. 

What Is a Token Standard?

A token standard is a set of rules that dictates how a token should behave on a blockchain network. Token standards contain rigid conditions and functions that govern the creation and deployment of smart contracts.

Smart contracts are autonomous programs that run automatically on a blockchain network. Essentially, they’re the fuel that drives tokens. For example, you can use a smart contract to automatically execute perpetual futures, which are derivatives that allow continuous betting without an expiration date. 

Token standards contain application-level specifications, such as:

• Defined parameters
• Name registries
• Library package formats

 

They allow developers to create uniform applications on blockchain networks that perform basic functions. 

Token standards are very similar to software development kits (SDKs). Developers can use token standards to create cohesive tokens for any decentralized application (dApp). Because they’re different from one another, token standards can impact a business’s or investor’s strategy in the digital asset market.

For example, your token standard will influence your digital asset infrastructure, whether you’re siding with Ethereum or Binance. Choosing AlphaPoint takes the frustration out of vetting token standards, meaning you can rely on white-label technology to develop custom tokens for your business. 

Why Different Token Standards Exist

Not all blockchains are the same. Each blockchain has its own set of token standards that dictate the development of tokens on that network. 

Ethereum and Binance have two of the most popular token standards available: ERC-20 and BEP-20. Each token standard is designed to meet the platform’s unique functionalities while maximizing security and efficiency. 

For example, the Binance Smart Chain (BSC) is typically faster than the Ethereum network. However, it’s much newer than Ethereum and has a smaller developer community. 

For this reason, a business may choose the Ethereum network over BSC since it has a committed developer community and plenty of use cases. 

The availability of different token standards means developers can choose the one that works best for their project and avoid a monopoly. 

What Are the Main Types of Crypto Token Standards?

Several different crypto token standards are available to support a wide range of projects. The most well-known token standards are:

• ERC-20: This token standard allows for the development of fungible assets on the Ethereum blockchain. Short for the Ethereum Request for Comment number 20, it sets how users can transfer tokens and integrate with other Ethereum applications. 
• BEP-20: This token standard sets the precedent for how all tokens are supposed to behave on the BSC. It determines how tokens can be spent and who can spend them. 
• ERC-721: This is a technical framework that defines the interfaces and rules for deploying non-fungible tokens (NFTs) on the Ethereum blockchain. 

 

Countless other Ethereum and BSC token standards are available, but this guide will focus solely on ERC-20 and BEP-20. 

What Are ERC-20 Token Standards?

The ERC-20 token standard contains vital information for token development projects on the Ethereum network. Here is everything you need to know about this framework.

What Does an ERC-20 Contain?

ERC-20 contains specific functions and events commenced by a smart contract. Mandatory functions include:

• “TotalSupply”
• “BalanceOf”
• “Transfer”
• “TransferFrom”
• “Approve”
• “Allowance”

 

As you can see, these functions specify how a token is spent and transferred. This framework also contains optional functions, such as:

• Decimals
• Symbols
• Names

 

Conforming to these standards helps developers ensure their tokens work with compatible wallets and incorporate with the rest of the Ethereum ecosystem. 

How Does ERC-20 Work?

The ERC-20 token standard is essentially a set of guidelines. By following these guidelines, developers can make sure their tokens are compatible with dApps in the Ethereum ecosystem.

These rules primarily focus on data access and token transfer between user accounts. Tokens following this format can be traded on Ethereum’s decentralized exchange. 

How To Create an ERC-20 Token

To begin creating an ERC-20 token, here are three preliminary requirements you must meet:

1. First, you’ll need to develop a deep understanding of the Ethereum blockchain and the Solidity programming language in order to program a smart contract for Ethereum. 
2. Second, you’ll need access to key token development tools, such as Remix, Truffle, and Ganache. These tools will help you test and deploy your smart contact.
3. Finally, you need to have an Ethereum wallet ready to launch your smart contract and store your tokens. 

 

Once you’ve met these requirements, you can start developing your ERC-20 token by following the steps below.

1. Write the smart contract code using Solidity, and test your work using a development tool like Remix. 
2. Use Truffle of Ganache to upload your smart contract to the Ethereum network. 
3. Begin interacting with your contract using a wallet to create and manage tokens. 

 

What Are BEP-20 Token Standards?

The BEP-20 token standard is a compilation of rules required of tokens on the BSC network. Let’s look at how this token standard works and its core functions.

What Does a BEP-20 Contain?

BEP-20 tokens were designed to be a better alternative to Ethereum token standards, so they share several similarities. In fact, the BEP-20 token standard has many of the same functions as the ERC-20 standard.

However, there are some noticeable differences. For example, the BEP-20 token standard features a wider range of parameters, such as:

• “Blacklist”: This parameter helps in banning malicious BEP-20 addresses. 

• “Can Mint”: This parameter sets the inflationary standard for BEP-20 tokens. Specifically, it sets conditions for whether you can mint new tokens to increase supply. 

• “Can Burn”: This parameter sets the deflationary standard for BEP-20 tokens. Conversely, you can use it to burn tokens to reduce supply.

• “Can Pause”: This parameter is a security feature that’s invaluable during a malicious network attack. Once initiated, users can pause all BEP-20 token operations. However, only the token’s creator or proxy can enable this parameter. 

 

How Does BEP-20 Work?

BEP-20 is the token standard for all apps on the BSC, a dynamic blockchain network that runs an alternative to Ethereum. This token standard outlines the specifications and rules for creating BEP-20 tokens. 

Following this token standard ensures seamless usage, storage, and transfer of tokens on the Binance Smart Chain. 

How To Create a BEP-20 Token

Here are the steps for creating a BEP-20 token from scratch:

1. First, select a blockchain platform that supports BEP-20 tokens—Binance Chain is the go-to. 
2. Create an account on the platform and complete the Know Your Customer (KYC) verification process.
3. Design your token’s specifications, including its name, total supply, and decimal places. 
4. Write the smart contract for the token. 
5. Deploy the smart contract on the Binance Smart Chain. You can use the Binance Exchange, Remix, or any other smart contract development platform. 
6. Mint your tokens to begin distributing them to Binance users and supporters. 

 

Where To Store BEP-20 and ERC-20 Tokens Securely?

You can store BEP-20 and ERC-20 tokens using hardware and software wallets. Here are some security considerations for storing your unique tokens:

• BEP-20: Developers and users can easily store BEP-20 tokens using a software wallet from Ledger. Ledger provides secure hot and cold wallets for easy token storage. For example, the Ledger hardware wallet stores private keys and signs transactions offline, making it resistant to malicious attacks and cyber threats.                                                                                                                                                                                                    

• ERC-20: Users can securely store ERC-20 tokens via their Ethereum account using a Trezor device. Security features include PIN protection, passphrases, and a protected home screen. 

 

You can securely test your tokens before deployment by choosing the right custody solution. 

How to Exchange and Purchase ERC-20 and BEP-20 Tokens

You can exchange both ERC-20 and BEP-20 tokens with the help of a cryptocurrency exchange that supports both tokens. Here are some well-known exchanges that allow users to purchase and exchange both tokens:

• Binance: Binance is the largest cryptocurrency exchange in the world. You can easily purchase and exchange ERC-20 and BEP-20 tokens on this platform.
• Uniswap: This decentralized exchange (DEX) is built on the Ethereum network. It supports all ERC-20 tokens, and some BEP-20 tokens have been bridged to this network. 
• PancakeSwap: This DEX is built on the Binance Smart Chain and naturally supports BEP-20 tokens and some ERC-20 tokens. 

 

Before choosing an exchange, it’s important to ensure the platform supports the specific tokens you want to purchase and trade. You should also be mindful of any transaction fees. 

BEP-20 and ERC-20: Which One Is Better?

So far, we’ve covered the basics of BEP-20 and ERC-20 token standards. Now let’s see how they compare to one another.

Core Purposes

Both tokens have very similar purposes. Ethereum’s ERC-20 token standard formalizes all protocols and rules for tokens on its Ethereum blockchain. Similarly, the BEP-20 token standard defines a set of rules for tokens on the Binance Smart Chain.

Blockchain Networks

Ethereum is a decentralized blockchain powered by smart contract functionality. It houses the widely popular cryptocurrency Ether, which has the second-highest market capitalization behind Bitcoin. 

The ERC-20 token standard guides developers in creating dApps and tokens on the Ethereum blockchain. Binance Smart Chain is a subsidiary of Binance, a popular cryptocurrency exchange. Binance designed its blockchain to compete directly with Ethereum. 

As the most popular blockchain network, Ethereum offers developers wider community support and flexibility. However, developers can face network congestion, slowing down their applications. 

As a result, Binance’s solution is often faster and more efficient. The caveat is that Binance Smart Chain doesn’t have the same level of community engagement as Ethereum. 

Transferring Tokens

ERC-20 tokens rely on gas fees to streamline token transfers. When users execute a transfer, they pay fees to the network for processing. During periods of high congestion, gas fees can get expensive, resulting in slow and costly transfers.

On the other hand, BEP-20’s transfer fees are usually lower than ERC-20’s gas fees. So BEP-20 tokens are more ideal for minimizing transfer costs. 

Token Creation

Both token standards support developers in creating custom tokens. However, ERC-20 tokens offer developers more resources and tools, thanks to Ethereum’s vibrant and established development community. 

So developers wanting a low barrier to entry into token creation would likely prefer Ethereum’s network.

Scalability

Binance Smart Chain offers high speeds and low fees, making it a more scalable blockchain than Ethereum. 

In fact, BSC is best suited for fast-growing tokens and dApps that require cost-effectiveness and faster transactions. 

On the contrary, Ethereum transfer costs can be a problem for growing financial startups. 

Transaction Speed

The Binance Smart Chain is the faster blockchain. It can process up to 100 transactions per second, compared to Ethereum’s 20-30.

However, ETH 2.0 will reportedly be able to process 20,000 to 100,000 transactions per second, a remarkable 999,900% increase. 

If you value speed above any other feature, BSC is the perfect token choice. That’s at least until Ethereum manages to improve. 

Transaction Security

Both ERC-20 and BEP-20 tokens are highly secure blockchain networks. Nonetheless, a token’s overall security will depend on its smart contract. 

ERC-20 and BEP-20 tokens are built using blockchain technology, making them nearly susceptible to financial manipulation. 

Compatibility

Decentralized exchanges like Uniswap, SushiSwap, and Balancer widely support ERC-20 tokens. BEP-20 tokens are compatible with decentralized exchanges that support the Binance blockchain. 

Ultimately, ERC-20 tokens will have wider interoperability options because of the popularity of the Ethereum blockchain. 

Frequently Asked Questions (FAQs)

Here are some of the common questions about ERC-20 and BEP-20 tokens:

Can BEP-20 Tokens be Sent to ERC-20?

This can’t happen directly. You must convert a BEP-20 token into an ERC-20 token before you can send it to an ERC-20 address. 

ERC-20 vs BEP-20: Which is More Secure?

Both token standards are incredibly secure, meaning the overall security of the token will depend on the implementation of its smart contract. 

Where Can I Store BEP-20 and ERC-20 Tokens?

You can store both tokens securely using either a hardware or software wallet. 

Are BEP-20 and ERC-20 Tokens Profitable?

Both tokens have the potential to be profitable. However, BEP-20 tokens offer lower fees, providing users with an affordable way of conducting transactions. 

Streamline Token Creation With AlphaPoint

The ERC-20 and BEP-20 token standards dictate how developers can create tokens for the Ethereum and Binance Smart Chain networks. By following these tokenization standards closely, developers can create secure tokens from scratch. 

With AlphaPoint’s white-label software solutions, you can rapidly deploy robust smart contracts for token issuance. Our experienced team handles smart contract development and token issuance so your business can focus on what it does best: handling your core operations. 

With AlphaPoint, businesses also have access to a wide array of token pairings for exchange operators who want to serve a global user base. 

To discover the full potential of AlphaPoint’s technology, request a demo today.