Difference between BEP-2, BEP-20 and ERC-20 standards

By definition, tokens are cryptomonnaies which are built using the existing blockchain. While many blockchains support the development of tokens, they all have a particular token standard by which a token is developed. For example, the development of ERC-20 tokens is a standard of Ethereum Blockchain while BEP-2 and BEP-20 are respectively the token norms of Binance Chain and Binance Smart Chain. These standards define a common list of rules such as the process for transferring a token, how transactions will be approved, how users can access token data, and what the total token supply will be. In a nutshell, these standards provide all the necessary information about a token.

In this article I talk about the differences between the BEP-2, BEP-20 and ERC-20 standards. These token standards are the most popular. But before getting to the heart of the matter, let's talk a bit about tokens.

Let's go

What is a token standard?

Tokens are digital units within of a blockchain platform, often application-specific, which are used for purposes such as:

• make transactions
• Value storage
• Acquisition of digital assets, such as game credits
• Access governance/voting rights for the associated platform or application

Every year, hundreds of new projects decentralized applications (DApp) issue their own tokens on blockchains such as Ethereum and Binance Smart Chain. For these tokens to be compatible with the underlying blockchain, they must meet the platform's token standards.

Token standards define the rules for issuing and implementing new tokens. Standards usually include requirements to specify the following :

• The total supply limit of the token
• The Token Minting Process
• token burning process
• The process for transacting with the token

The standards are designed to help avoid fraud, technical incompatibilities between tokens and the issuance of tokens that do not comply with blockchain principles. For example, the rules for total supply and support for the creation of new tokens contain a potential depreciation of the value of the token.

What are the most important aspects of token development?

There are 5 of these aspects:

Token Compatibility

Whether developing ERC20 tokens or developing BEP tokens, the tokens must be designed to comply with the ERC20 or BEP-20 standards.

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Token Cap

The maximum number of tokens that can be generated must be predefined. This assures token buyers that the number of tokens is limited.

Token Strike

The token owner can define how users can mint tokens. They can also stop generating the tokens to inflate the value of the token.

Burn tokens

Tokens built to ERC-20 and BEP-20 standards can also be engraved. This reduces the token supply and inflates the value of the token.

Rights of token owners

A token owner can have governance rights. These rights can help him vote for token minting and burning.

List of tokens

The token development process also involves getting the tokens listed on exchanges.

Now let's take a look at these token standards one at a time.

What is BEP2?

BEP stands for Binance Smart Chain Evolution Proposal. BEP2 is the token standard used by the BNB platform. The standard provides specifications for issuing tokens on this blockchain. BEP2 token transactions are supported by many popular wallets, such as Trust Wallet, Ledger wallets, and Trezor Model T.

If you want to transact using BEP2 tokens, you will need to use BNB coins to pay for gas, i.e. transaction fees.

An advantage of BEP2 is the convenience of trading between different cryptocurrencies in the decentralized exchange (DEX) format. However, BEP2 does not support smart contracts, which many tokens and DApps rely on for their functionality. The address of tokens that follow this standard begin with " bnb136ns6lfw4zs5hg4n85vdthaad7hq5m4gtkgf23 ».

What is the BEP20 standard?

It is a native Binance Smart Chain (BSC) token standard. It acts as a model of how BEP-20 tokens can be used. Interestingly, this is a extension of the ERC-20 token standard and can be used to represent stocks or fiats. The new blockchain, BSC, was designed to be compatible with the ethereum virtual machine (EVM).

This Ethereum technology takes smart contracts into account. BEP20 is the token standard used by BSC, and is a general-purpose standard designed to be compatible with both Ethereum's BEP2 and ERC20.

BEP20 and BSC have opened up opportunities for users to access the large and rapidly growing number of DApps. A few months after its launch, BSC became Ethereum's main challenger for the development of tokenized DApps.

Similar to BEP2, transactions with BEP20 tokens require BNB coins to pay for gas. BEP20 is currently supported by eight wallets, including Arkane Wallet and Math Wallet; Trust Wallet, etc.

You can also transact between BEP2 and BEP20 using a “Bridge“. This cross-chain service was designed to facilitate interoperability between multiple blockchains, including Ethereum and TRON (TRX).

Benefits of BEP-20 standards

Here are the advantages that the BEP20 standards offer to the different tokens

• BEP-20 tokens are compatible with BEP-2 and ERC-20 platforms
• These are backed by BNB.
• It supports the function of tokens constructed using the BEP-20 standard for use within the BSC network.
• It can be traded with BEP-2, which is a native token of Binance Chain
• Many wallets support BEP-20 tokens
• Tokens from other blockchains can be pegged to the BEP-20 token. These are known as Peggy pieces.

What is the ERC-20 standard?

Basically, ERC stands for Ethereum Request for Comment. To create and issue a smart contract on the Ethereum blockchain, one must adhere to the ERC-20 token standard. These smart contracts are then used for the development of Ethereum coins or the tokenization of assets that can be purchased by investors.

Some of the very popular Ethereum tokens are Maker (MKR), Basic Attention Token (BAT), and more.

Functions of the ERC-20 token standard:

• It provides details of the total token supply.
• It provides the owner's account balance.
• Defines how a specific number of tokens can be transferred to a specific address.
• Defines how an individual can withdraw tokens from an account.
• It also defines how a set number of tokens can be sent from the spender to the owner.

What are the benefits of the ERC20 token system?

• ERC20 token transactions are smooth and fast
• Transaction confirmation is effective
• The risk of breach of contract is reduced
• The implementation of the ERC20 function effectively connects the web client and the token.

BEP20 versus ERC20

Since BEP20 was designed after ERC20, it's understandable that they share many similarities, such as these functions:

Function "totalSupply” – This function returns the total number of tokens in a smart contract.

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Function "balanceOf” – Provides information about the number of tokens available in a user's address.

Last name - Adds a human-readable name to the token you create.

Symbol - Creates the stock symbol for your token.

Decimal – Sets the divisibility of your token. Therefore, it defines the number of decimal places it can be divided into.

Transfer - Enables token transfer between BSC users. This specifically requires that the invoking party also be the owner of the token.

The “transferFrom” function – Used to automate transfers by approved people or approved smart contracts. In this case, you can allow subscriptions or other parties to automatically deduct payments from a wallet or account.

Approve - A feature that limits the amount or number of tokens withdrawn from your balance by any smart contract.

Allocation - A function that verifies the unspent portion of a transaction after an authorized smart contract has spent a certain amount of your tokens.

BEP2 vs BEP20 vs ERC20: Which is better?

Given the growing popularity of smart contracts and DApps, BEP20 and ERC20 tokens are much more actively used than BEP2. BEP2 might be of interest to someone who wants to trade cryptocurrency using various coin pairs.

However, BEP2, given its lack of smart contract support, won't let you into the rich world of DApps. In this regard, the real confrontation is between BEP20 and ERC20.

BEP20 vs ERC20: standard specification requirements

The main purpose of a token standard is to specify parameters, called functions in the blockchain world, which are used by smart contracts, wallets, and marketplaces when interacting with the token.

Both ERC20 and BEP20 include six functions that can be specified for a token. These functions respectively serve the following purposes:

• Indicate the total supply of the token
• Viewing the token balance of an address on the network
• Define how tokens are sent to an address
• Define how tokens are sent from an address
• Specify if and how multiple withdrawals from an address are allowed
• Specify limits on the amounts an address can withdraw from another address

BEP20, as a new standard extending ERC20, has four additional functions which respectively specify the following information:

• The name of the token
• The token symbol
• The number of decimal places for a symbolic unit
• The address of the token owner

In this sense, BEP20 can be described as more precisely specified.

BEP20 vs ERC20: transaction fees (i.e. gas fees)

Compared to ERC-20, BEP-20-based transactions incur much lower fees, largely thanks to BSC's staked Proof of Authority (PoSA) block validation method. As part of the PoSA model, validating nodes stake a number of BNB coins to verify a transaction. The top 21 nodes with the largest BNB amounts receive validation rights.

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An average transaction using BEP-20 tokens will likely cost no more than a few cents in fees. In comparison, the average ERC20 token transfer fee is around $12. In short, when it comes to gas charges, BEP20 is the clear winner over ERC20.

BEP-20 vs ERC-20: block verification speed

The PoSA method also gives BEP20 transactions faster execution speeds compared to ERC-20 transactions. While individual transaction verification times vary, average block verification times on the underlying blockchains are around 3 seconds for BSC and almost 15 seconds for Ethereum. This means that a typical BEP-20 transaction is likely to execute 5 times faster than a similar ERC-20 transaction.

However, Ethereum's planned move from proof-of-work (PoW) to proof-of-stake (PoS) by the end of 2021 is expected to significantly reduce ERC20 transaction execution times.

BEP-20 vs. ERC-20: Token Variety

Ethereum is the largest smart contract network in the world, with nearly 3 DApps. The vast majority of them are based on the ERC000 standard. By comparison, BSC currently hosts just over 20 DApps, with the vast majority being BEP800-based. However, BSC's dramatic growth rate since its launch has led to an explosion in the number of BEP-20 projects.

If you prefer to invest in tokens from more established DApps, ERC-20 tokens can give you a wider choice. However, for new DApp projects, BEP-20 tokens are a good alternative.

BEP-20 vs ERC-20: platform security

While BEP20 tokens entail cheaper gas fees and faster execution times, BSC's PoSA validation model has been criticized for its potential security weaknesses. The main complaint is about the network's lower levels of decentralization when approving transactions.

BSC relies on only 21 selected validators for block verification. By comparison, Ethereum has over 70 validators spread across its network. The low number of validators on BSC can cause problems trust among potential users.

In essence, it can be argued that BEP20 tokens offer better gas fees and execution times at the expense of security and decentralization. For someone who is very security oriented, ERC20 tokens, comparatively speaking, can provide greater peace of mind.

Conclusion

For a typical person interested in DApps and tokens, the key point is that BEP-2, BEP20, and ERC20 refer to the token standards used by their respective blockchains. When your wallet offers to transfer tokens using these standards, it simply means that the transaction will be executed using the respective platform – BNB for BEP2, BSC for BEP-20 or Ethereum for ERC-20.

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BEP2, although a decent choice for cryptocurrency trading based on DEX, does not support smart contracts. BEP-20 and ERC-20 give you access to a rich variety of DApps and tokens based on smart contract technology. From a technical perspective, the BEP20 standard has more detailed token specification options compared to ERC-20, largely because BEP20 is based on and extends ERC-20.

The advantages of BEP20 over ERC-20 are lower fees and faster execution times. However, these advantages could diminish, or even disappear, when Ethereum moves to the PoS validation model later this year. The advantages of ERC20 over BEP20 are the wider choice of DApps/tokens available for this standard, as well as a more secure decentralized verification method.