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BEP20 vs. ERC20 - Understanding The Difference | OWNR Wallet

Understanding the Difference Between ERC20 and BEP20

Cryptocurrency holders are actively using BEP20 and ERC20 tokens: both of these types are suitable for frequent transactions and trading. However, there is a significant technical gap between these tokens that manifests in transaction fees and applicability. This guide explains what a token standard is, what they were created for, and how they differ.

What Is a Token Standard?

Every new token on a blockchain is created, issued, and deployed in accordance with a technological standard. The purpose of establishing these standards is to prevent network fraud. The standards guarantee compliance with the blockchain's concepts when tokens on the network are produced by developers.

Because of this, creators of new tokens need to specify the following:

  • Maximum supply

  • Token minting process

  • Burning process

  • Transactional process

On blockchains, each token should be created according to these regulations in order to be compatible with the network. Tokens generated by a single standard have common characteristics and adhere to the underlying network's validation procedure. The regulations also simplify the governance of each token on a particular blockchain.

A token standard is essential for any blockchain ecosystem: it ensures that all coins are functionally equivalent and usable in a variety of contexts. This ensures security, dependability, and compliance of all transactions involving digital tokens. It gives the blockchain network's development of decentralised apps a solid base.

Both standards are among most commonly used. They have some technological differences, which we will discuss below. For example, compared to Binance’s minimal transaction costs, the gas prices for operations with ERC20 tokens might be extremely high. 

What Is BEP20?

The standard for tokens called BEP20 was created for the Binance Smart Chain (BSC) network. Although it was modified to function with the BSC network and its native token, BNB, it is based on Ethereum's standard. It allows developers to leverage smart contracts together with a sophisticated governance framework and high throughput.

Coin holders can swap them without relying on centralized institutions thanks to BEP20 tokens' compatibility with DEXs. Holders who wish to send money or swap digital assets ASAP can do so easily with Binance, thanks to its reasonable commissions and quick transactions. Additionally, they can be utilized for a number of objectives, including fundraising, gaming and bonus systems.

Why do developers use the BEP20 standard?

Smart contracts and decentralized apps (dApps) are supported by the BSC network. At the same time, it is suitable for transferring ERC20 tokens because of ETH compliance. Additionally, Binance transactions are quicker and can transfer other tokens like USDT, BTC, Litecoin, and Ether. Also, block validation can be completed with a lower transaction price.

The Binance token system supports a wide range of wallets in addition to these features. It also promises interoperability with other coins on other blockchains across various chains. Many developers seeking to construct a fungible token now find the guidelines to be acceptable because of these qualities.

Top 10 BEP20 Tokens

According to CoinMarketCap, the top BNB chain tokens by market capitalization (as of June 2023) include:

  1. Tether (USDT)

  2. Binance Coin (BNB)

  3. USD Coin (USDC)

  4. Dogecoin (DOGE)

  5. Polkadot (DOT)

  6. Dai (DAI)

  7. True USD (TUSD)

  8. Pax Dollar (USDP)

  9. MultiversX (EGLD)

  10. Conflux (CFX)

What Is ERC20?

The technological standard called Ether lays out certain guidelines and requirements for minting tokens on the Ethereum network. Its name, Ethereum Request for Comment, refers to a tool made to assist developers in building unique assets (ERC20 tokens).

The standard also assures that individual tokens are compatible with one another so they can be used in a variety of applications. Ether offers a wide range of additional advantages, such as making it simple for developers to exchange and transfer tokens and giving consumers the confidence that their tokens comply with all relevant regulations.

ICOs and DeFi projects frequently employ ERC20 tokens. This standard makes it simpler for programmers to forecast how their tokens will behave in relation to one another and existing apps. As a result, programmers are now able to use these coins in dApps, smart contracts, and other applications.

Why is the ERC20 standard so popular?

This token standard was created to solve technological problems faced by Bitcoin network users. What exactly was improved?

  • Faster transaction speed. Creating slots for new validators takes place every 12 seconds, creating new blocks and sending them to other network nodes.

  • Efficient development service. According to some discussion forums, it takes 2 to 3 days to develop an Ethereum-based token in the $500 to $2,000 cost range.

  • Network compatibility. ERC20 tokens are compatible with other networks. Currently, token holders can use them on the Tron network and Binance Smart Chain.

  • Possible revenue increase. The Ethereum blockchain boasts wide reach and global acceptance due to continuous blockchain development. 

10 Major ERC20 Tokens

According to CoinCodex, the top 10 ERC20 coins in June 2023 are:

  1. Ethereum (ETH)

  2. Polygon (MATIC)    

  3. Binance USD (BUSD)

  4. Multi-Collateral Dai (DAI)

  5. Shiba Inu (SHIB)

  6. Wrapped Bitcoin (WBTC)

  7. UNUS SED LEO (LEO)

  8. Chainlink (LINK)

  9. Uniswap (UNI)

  10. TrueUSD (TUSD)

Comparison of BEP20 and ERC20 Tokens

Let us observe the technical peculiarities of BEP20 and ERC20 tokens for you to understand how exactly they differ.

Blockchain Network

ERC20 tokens are built on the Ethereum blockchain, whereas BEP20 tokens are built on the Binance Smart Chain.

Transaction Speed

In terms of transaction processing time, Binance transactions take 3 seconds, whereas Ethereum transactions require 15 seconds. The maximum transaction rate for BEP20 tokens is 1,400 per second. ERC20 tokens, in contrast, can manage up to 20 transactions per second.

Support for smart contract development

Statistics show that 1.45 million different smart contract projects were developed on Ethereum in the first quarter of 2022. The data shows a 24.7% rise from its Q4 2021 level, demonstrating continuous consumption growth. Binance does enable smart contracts, but it falls short of Ethereum in this regard. It depends on Ethereum and is centralized due to the PoSA consensus method.

Token Addresses

This is what unites both options. The address format for BEP20 and ERC20 coins begins with '0x' and is similar to that of Ethereum. Additionally, both addresses have 42 characters.

Consensus Algorithm

Binance's Proof of Staked Authority (PoSA) mechanism is used for its tokens. Ether coins operate using the Proof of Stake-based Ethereum consensus method.

Conclusion

The underlying blockchain technology of BEP20 and ERC20 is what distinguishes them from one another. With Ethereum’s token standard being around longer, its tokens are more generally recognized. However, BEP20 tokens are better suited for transactions that are more time-sensitive, since they offer quicker transaction times and cheaper costs.

Which one is a better solution? Choose Ethereum if you want your tokens to work with a broad range of wallets and exchanges and have superior network security. Choose Binance if you want quicker transactions and reduced transaction costs.

FAQ

Is BEP20 the same as ERC20?

Both are token standards, but they differ in their applicability. Binance is a more recent token standard that improves upon its ancestor by offering faster transaction processing and lower fees. It supports more advanced features such as the ability to create non-fungible tokens (NFTs) and the integration of other blockchain networks.

Can I send BEP20 to ERC20?

It’s not possible to send BEP20 and ERC20 tokens to another blockchain directly because networks support diverse token standards. If you try to send BEP20 tokens to another blockchain’s address or vice versa, the transaction will fail, and you may lose your tokens.

How do I swap ERC20 BNB to BEP20?

To send your coins to another blockchain, use a bridge. Simply connect your MetaMask wallet, select the amount of BNB you want to swap, and confirm the transaction. The coins will then be credited to your Binance Smart Chain wallet, or vice versa.

Why is ERC20 so expensive?

The more complex the smart contract, the higher the commission required, resulting in serious transaction expenses. Additionally, high demand can also drive up the gas fees.

Why is ERC20 popular?

This is a widely adopted token standard for creating coins on the Ethereum network, providing interoperability between diverse tokens and wallets. It also enables easy integration with decentralized applications and exchanges, making it a popular choice for fundraising and trading.

What wallet supports ERC20 and BEP20?

There are several wallets that support both kinds of tokens: MetaMask, Trust Wallet, Ledger, Trezor, and Binance Chain Wallet. These solutions provide users with easy access to both Ethereum and Binance Smart Chain networks, allowing them to manage and trade their tokens in a single interface.

DISCLAIMER: None of the authors, contributors, administrators, or editors connected to OWNR Wallet encourage readers to invest in ERC20 or BEP20 without proper research. This article is purely for educational purposes only.

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