Token Standards, What Are They?
With various blockchains on the crypto scene now, you certainly should have heard of “token standards” by now, or seen terms like ERC 20, ERC 777, BEP 20 and several others. Truth is, if you’re not a crypto expert or an intermediate at least, those terms could get you all confused.
To make it less complex for you, first you gotta understand that there are different blockchains e.g. Ethereum, Binance, NEO etc. These blockchains operate by different rules and standards including token standards. Hold up, don’t lose it just yet!
For instance the advent of the Ethereum blockchain introduced the concept of smart contracts standard, completely different from the Bitcoin blockchain. Smart contracts define the rules and regulations all transactions (e.g. trading, spending, creation of tokens etc.) must comply with on the underlying blockchain platform.
Since smart contracts, token standards became a necessity, especially for blockchains that incorporate smart contracts, to guide how tokens are created and deployed.
Token standards are regulations and rules defined by the blockchain platform that guide traders and users on how to create, trade and distribute tokens.
Common Token Standards
Let’s get you through some of the popular token standards, so when next you see those terms, your brains don’t go off:
First things first, what the heck is ERC? It’s an acronym for Ethereum Request for Comments and it is Ethereum’s application level standard which comprises all standards and protocols of operation on the Ethereum blockchain.
ERC-20 is Ethereum’s most used and popular standard for fungible tokens on its blockchain. It provides a list of rules and protocols that all tokens must adhere to. With ERC-20, activities like token transfer, details of total supply of token available on the network, and token balance are coordinated.
Fungible Tokens are tokens that are exchangeable with each other, divisible and are exactly the same across different platforms.
This is a non-fungible token (NFT) standard that guides activities of NFTs on the Ethereum blockchain. It facilitates the trading, transfer, ownership and management of NFTs on the platform.
NFTs are unique tokens that are not exchangeable and are used to represent specific assets on the blockchain. These tokens are individually differentiated by various attributes and are often used to represent assets like collectibles, lottery tickets, physical asset ownership etc.
This is a token standard similar to the ERC-20 but used on the Binance Smart Chain (BSC). This standard was developed in order to provide a flexible format for developers to launch a range of different tokens. The BEP-20 allows developers to create tokens that represent anything like fiat currency (e.g. stablecoins), physical assets or business shares.
Which will CDzExchange use?
In the first released version, the CDzExchange DeX platform will be incorporating the BEP-20 token standard on the Binance Smart Chain.
Why? You may ask. Binance Smart Chain provides very fast transactional capabilities with much lower fees compared to Ethereum. The average transaction fees on BSC cost just fractions of a dollar — for example you can send $300 worth of assets for roughly $0.01 which is magnitudes cheaper than Ethereum gas fees. Also,BSC has grown in popularity and overall, has a stronger infrastructure.
We’re currently testing our DeX platform on the BSC testnet. We’ll hit you up with more updates soon.