Tokens are an intrinsic part of the world of cryptocurrencies. Tokens are essentially crypto coins developed with the help of an already existing blockchain. Many blockchains do not support the development of tokens, and those which support have a specific token standard based on which the tokens are built.
There are various tokens available in the cryptocurrency market, of which ERC20 and BEP20 are among the most popular ones. These tokens share numerous similarities and dissimilarities. The standard of development of these tokens determines the principal characteristics of the tokens. For example, the standard of development of tokens decides by what means token transfer happens, transaction validation method, by what means a user can redeem the token data, and more. If you are looking forward to investing in ERC20 and BEP20 tokens, follow this article till the end to know more about the key features, advantages, and the token standard.
What are ERC20 and BEP20 tokens?
ERC is short for Ethereum request for comment, and the ERC20 token is derived from Ethereum blockchain, the standard of its development. The ERC20 was launched in the year 2015. Users strictly follow the ERC20 token standard if they are aiming to develop and publish a smart contract. These smart contracts are generally used to tokenize the assets which can be purchased by the traders or to generate tokens on the Ethereum blockchain.
There are some critical functions of the ERC20 token standard, which include –
- The token standard helps provide detailed information about the overall token supply.
- The transaction validation process is efficient, and the token standard of ERC20 has considerably minimized the risk of dropping the contract halfway.
The BEP20 token might not be as famous as ERC20, but it is continuously growing with the Binance Smart Chain as its native standard blockchain. BEP20 tokens are compatible with ERC20. These tokens are fall in the same line of ERC20 and are known as an extension of ERC20. The BEP20 tokens are backed by BNB and are supported by the majority of the crypto wallet platforms.
The principal advantage of BEP20 is that tokens that belong to different blockchains can be pegged to BEP20, which is popularly known as Peggy coins. They also permit the functions like allowance, transfer, and balance. A few of the most sought-after BEP20 tokens are Binance Coin (BNB), Quidax Token (QDX), and Pancakeswap (CAKE).
The critical differences between BEP20 tokens and ERC20 tokens
Since the BEP20 was developed as an extension to ERC20, it automatically inherits the properties of ERC20. However, there are certain key differences between these two token standards.
The fundamental difference between ERC20 and BEP20 lies in their gas fees. The gas fees of BEP20 tokens are cheaper compared to ERC20 tokens. The chief difference between these coins is observed in gas fees. When a user carries out a transaction using ERC20 tokens, the gas fees have to be paid in Ethereum, which is relatively high. On the other hand, in a transaction using BEP20 tokens, the gas fees are settled by BNB. Because of this significant difference, the amount of available BEP20 tickets is limited. Users are provided with the option to circumvent the Ethereum gas fees with BNB, which reduces the price manifold.
Another significant difference between ERC20 and BEP20 tokens is their transaction speed. BEP20 transactions happen in not more than three seconds which most users find convenient. For ERC20, the traction duration is about 15 seconds which, when compared to BEP20, is five times longer and a notable difference.
Before investing or trading in the cryptocurrency market, knowing the risk factors and the amount of security offered is vital. As we have pointed out earlier, the fee and transaction time is less, but when it comes to security, ERC20 tokens provide more protection. This is because the time required for the transactions to get verified is more for BEP20 tokens, which can increase the probability of fraudulent transactions.
Both BEP20 and ERC20 are popular today, though ERC20 enjoys greater attention due to the popularity of the Ethereum blockchain. But with the growing popularity of the Binance blockchain, along with the speed and affordability of BEP20, it is sure to catch up with ERC20 anytime soon.