In the early stages of cryptocurrency, creating new tokens is not an easy task.
Developers who want to launch a cryptocurrency must create a new blockchain or use a fork of Bitcoin. This changed with the launch of Ethereum, which began using blockchain as a development platform. Then came the birth of a completely new token model called ERC20 , which acts as a blueprint for creating cryptocurrency tokens .
The more the cryptocurrency industry develops, the more new projects appear with their own blockchain technology. When it comes to Binance Smart Chain (BSC), its token standard is named BEP20. This article will tell you everything you need to know about BEP-20 and compare it to ERC-20.
BEP20 is a token standard created on BNB Smartchain , also known as Binance Smart Chain or simply BSC. BEP-20 is the BSC equivalent of ERC-20 , which is the token model used on the Ethereum blockchain. This means that the two token models are compatible with each other.
The BEP-20 token model allows users to create new tokens on the BNB Smart Chain easily. The process is simple and straightforward and does not require extensive programming experience. Developers don’t have to start from scratch, form a new blockchain , or be limited to just the Ethereum Token Standard .
Many people are already using BEP-20 to create utility tokens and launch all kinds of projects. The BEP20 token development is compatible with BSC-based smart contract technology , many of which are part of the growing decentralized finance (DeFi) space .
The BEP-20 token is also useful in the encryption process . Through tokenization , assets from traditional finance can be merged into the blockchain . Therefore, the BEP-20 token can become a digital asset that bridges traditional and digital finance. All transactions involving the BEP-20 token are settled in BNB, which is the native token of the Binance Chain.
Binance Chain — Binance’s original blockchain — also supports BEP-20 tokens . The two blockchains run parallel to each other. BEP-20 can access Binance’s DEX (decentralized exchange) platform and trade on Binance Chain.
BSC, or Binance Smart Chain, is Binance’s second blockchain . It was created in September 2020, after the decentralized finance (DeFi) sector went mainstream. Things like staking, decentralized lending, and other DeFi services have been available for years at that point. However, they never caught the attention of the broader cryptocurrency industry.
This eventually led Binance to launch BSC token generator as its own development platform. The idea is to attract users, talent, projects and so far it has worked quite well. Today, many people consider BSC to be Ethereum’s biggest rival because BEP-20 is considered a rival to the Ethereum Token Standard ERC-20.
BSC also allows users to create smart contracts , opening the door to dApps, DeFi, metaverse, etc.
BEP-20 has various parameters that support the performance of the token standard. Some standard parameters of BEP-20 include Blacklist, Can Mint, Can Burn, and Can Pause.
The Blacklist is the first of the four parameters. This parameter can help blacklist or ban malicious addresses associated with this token standard . Next is the Can Mint, which serves as the inflation parameter. Essentially, this is a specification regarding certain capabilities to mint more tokens and increase the supply of BEP-20 .
The third parameter is Can Burn, which is an additional parameter for Can Mint. Its purpose is to be a deflation device. It can specify the possibility of token reduction by burning the supply. This is often used by cryptocurrency tokens to reduce the supply and increase the price of the asset. The last parameter is Can Pause, which is an innovative and very useful parameter. Its purpose is to protect against malicious attacks. If attacked or if the platform goes down, users can suspend the operation of the BEP-20 token. However, this also makes this parameter centralized, which is often frowned upon in the cryptocurrency space.
Binance Smart Chain is filled with BEP-20 tokens , many of which are projects that were launched on BSC. However, there are also many projects that have their own chains with BEP-20 version coins and tokens .
An example is PancakeSwap, the native token of the largest BSC-based DEX and AMM. One of the biggest DEXs in the cryptocurrency market is PancakeSwap. Another good example is Autofarm. This is a very popular yield aggregator and another DEX built on BSC.
Users can get any of these or other BEP-20 tokens on the Binance exchange, Binance DEX or PancakeSwap.
As mentioned, BEP-20 serves the same purpose as ERC-20 . So, how are BEP-20 and ERC-20 different? Is it possible to declare one superior to the other?
The two token standards have many similarities, which is not surprising since BEP-20 is simply an alternative to create ERC20 token. Overall, both have similar functions, serving as token models or blueprints. They also have the same basic elements, including ownership, transfer, and token issuance.
With Binance introducing Binance Bridge, the two chains have even established a direct connection. This allows interoperability between them. Of course, migrating ERC-20 tokens to BSC will require a conversion to the BEP-20 token model. Once this transition takes place, these tokens can be used on Binance Chain or dApps running on BSC.
The conversion to make and use the bridge is free, so anyone can use it without financial penalty. The process of converting assets from one chain to assets on another chain is called Peg-in. This process is also reversible, meaning you can transfer tokens in both directions.
Overall, we can conclude that the two token models are not much different. They run on different networks but serve the same purpose. Tokens created from these standards can even be converted from one token to another. Thus, these two criteria can be considered twins.
Speaking of different cryptocurrency standards , we’d be remiss not to mention how BEP-20 differs from BEP-2. Both cryptocurrency standards exist within Binance’s broader ecosystem. However, Bep-2 is the token standard on Binance Chain, also known as BNB Beacon Chain. This is the initial chain of the exchange, used for governance. Meanwhile, Binance Smart Chain is used for development.
So how are these two cryptocurrency standards different? The answer is that they work the same. Not only that, they are also completely compatible with each other. Both chains have BNB as their native digital asset, and BNB powers both token models.
Although BSC operates as a separate chain for digital assets , it can be considered an extension of the Binance Chain. Both have the same dual-chain architecture, allowing them to communicate with each other. The two chains are interoperable and swapping BEP-20 tokens with BEP-2 tokens is a very simple matter.
Of course, that doesn’t mean you can use BEP-2 on BSC or BEP-20 on Binance Chain. Users still have to convert tokens to the appropriate model for the chain they want to run. But because both are used for different purposes, they often do not overlap. Users simply use whatever strings they need based on what they want to do. Those interested in DeFi, GameFi and dApps will visit BSC. Those wanting to use Binance DEX or Binance Chain will stick with BEP-2.
Of course, since the two chains are connected via Binance Bridge, there is also a lot of cross-chain liquidity. That makes it easier to Peg-in or Peg-out their crypto tokens and swap them seamlessly.
BEP-20 is a token model on the Binance Smart Chain and it is not much different from Ethereum’s ERC20 token development. In fact, the two are so similar that they are compatible. Some people consider the ecosystems of Binance and Ethereum to be competitors, and they also transfer that competition to token models. To some extent, this may be true, or maybe it was true at one time. However, with Web3 looking to connect the cryptocurrency industry, this no longer matters.
Building connections between chains and projects is beneficial for the future, so compatibility is key. As long as they can work together to build a creative environment to thrive, that’s what matters.
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