What is BEP-20 Token? If you are into cryptocurrency or Decentralized Finance ecosystem (Defi) you may have come across this crypto glossary (BEP-20 Token), a number of times. You have been wondering what it really does. If you’re on this article right now, you are definitely looking for the meaning of the BEP-20 Token, and why it is needed in the Decentralized finance (Defi) ecosystem.
In this article, we will focus on enlightening you on BEP-20 Token and all the necessary information that comes with it.
What is BEP-20 Token?
The BEP-20 was derived from the ERC-20 token on the Ethereum Blockchain technology. ERC-20 is considered the most popular standard token on the Ethereum Blockchain while BEP-20 is also considered the standard token on the smart chain of the Binance platform.
The BEP-20 primarily determines who can use the token itself, spend the token, and any other details or information of the token. Since the BEP-20 was an extension of the ERC-20 token, they have multiple similarities among them and also with BEP-2
The BEP-20 was built solely for Binance Smart Chain (BSC) and as a Technical Specification too. The primary goes of this token were to aid developers in building similar tokens with ease.
This token has made it possible to represent company shares, funds available at banks, etc. with the help of BnB, transferring this token has been made easy as transactions are formalized on the Binance Smart Chain (BSC) and incentivized by BnB.
Benefits of BEP-20 Tokens
- Due to the platform flexibility, it allows developers to use this token as a guide to create or develop similar tokens
- There are multiple ways to represent the finance industry using the BEP-20 tokens. You can use this token to represent cryptocurrency assets of your choice also with fiat currency, this token can be used to represent it.
- Different crypto can be attached on this token even from other blockchains without having any difficulties
- Token contracts are made on the smart chain
- The validators on the Binance Smart Chain platform gains transaction fee in BnB for their efforts in transferring the BEP-20 tokens.
- Binance Smart Chain and Binance Chain can be used by developers. Both works together in different ways, the Binance Smart Chain(BSC) provides speed while Binance Chain provides the platform for building DApps (Decentralize applications) without putting much pressure on the Binance network.
- With the help of the Binance Chain (BSC) Wallet extension, BEP-20 tokens can be swapped with BEP-2 tokens with ease. This process is called Cross-Chain Compatibility.
Comparison Between BEP-20 vs. ERC-20 tokens
- BEP-20 and ERC-20 are compatible with each other. This is because the BEP-20 token is an extension of the ERC-20 token.
- BEP-20 token standard is made for Binance Smart Chain while ERC-20 token is for the Ethereum Chain.
- ERC-20 token can be used as a blueprint for any generated token on Ethereum blockchain technology while BEP-20 is used for generating similar tokens on Binance Smart Chain (BSC)
- Multiple wallets and sites support the minting of ERC-20 while only small amounts of sites allow minting of BEP-20
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Comparison Between BEP-2 and BEP-20 tokens
- Both BEP-2 and BEP-20 are always present on the Binance network while the ERC-20 token is only on the Binance Chain
- BEP-2 allow tokens to be issued and implemented on the Binance Chain while BEP-20 tokens do the same on Binance Smart Chain
- Both tokens are used to represent different digital assets, with goods that can also be traded on the tokens
- Both tokens can be swapped as they are all present on the Binance network
Also, note that BEP-20 comes with multiple features because the token standard is dynamic. These are the few details we could lay out concerning BEP-20 tokens.
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