ERC-20 vs. BEP-20: A Simple Guide to Understanding the Differences

The crypto realm deals with various kinds of innovations among them are token standards such as Ethereum (ERC-20) and Binance Smart Chain (BEP-20). Token standards are frameworks or guidelines that are set to define how various tokens operate in their respective blockchain networks.

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‍What are ERC-20 and BEP-20 Tokens?

Token standards are a set of rules that encompass the behavior of a specific token that guides on the use and application of the token. These include interaction with wallets, both hot and cold wallets, other crypto exchanges, and smart contracts as well. 

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ERC20 token standards

ERC-20 are tokens specifically backed by the Ethereum blockchain, and the standards therein define the set of rules on how these tokens should operate in the Ethereum network. They allow seamless token transfer and tracking that further reveals other attributes such as allowing store of value or reward participation. 

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BEP20 token standards 

BEP-20 are tokens designed on the Binance Smart Chain (BSC) network.  It is a high-performing network developed by the leading crypto exchange, Binance. BEP-20 tokens offer similar characteristics to Ethereum’s ERC-20 but differ in transaction speeds and fees. Moreover, they offer new ways to participate in protocols dealing with decentralized finance (DeFi) and accessing yield farming. Additionally, they are considered a means of fundraising crypto projects through initial exchange offerings (IEOs) and initial coin offerings (ICOs). 

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Differences Between ERC-20 And BEP-20 Token Standards

Blockchain ecosystem and Cross-Chain compatibility

ERC-20 tokens are supported by various exchanges, digital wallets, and dApps. They are also only usable within the Ethereum network unless bridged to another blockchain network. 

BEP20 only operates on the Binance Smart Chain but was designed to be compatible with the Ethereum network based on the BSC network protocols; it is relatively faster and cost-friendly.  BEP-20 tokens are compatible with Ethereum as well as its Binance Smart Chain protocols, all favored by the Binance Bridge tool that allows token transfer among blockchains. 

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Transaction Fees and Speed

ERC20 has a major drawback based on its high transaction fees that is also referred to as gas fees. These fees are applied based on the number of participants and too much congestion equals high gas fees, especially during peak times. 

In contrast, BEP20 has lower fees, which makes it an attractive alternative, especially for users looking to perform a large number of transactions. BEP20 also has faster transaction speeds as compared to ERC20’s slow transactions, especially times with a lot of network activity.

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How to Buy and Trade ERC-20 and BEP-20 Tokens

Here are the steps to follow;

1. Choose a crypto exchange: for ERC-20, use HollaEx Pro or Coinbase and for BEP-20 use Binance.
2. Create an account: In the selected exchange, create an account and feed your identity information. 
3. Deposit funds: you'll need to deposit funds in fiat money or cryptocurrency
4. Purchase the tokens and trade: You'll need to search for the buy section in the crypto exchange or navigate to the trade option and select your derided token, either ERC-20 or BEP-20. You can now execute trades and enjoy the benefits of each token standard. 

You'll also need to ensure that the tokens are compatible with various wallets. ERC-20 is compatible with MetaMask whereas BEP-20 is compatible with Binance Chain Wallet or Trust Wallet. 

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Take away

ERC20 and BEP20 are major token standards that differ in root ecosystems. They differ in transaction fees and speed and their compatibility with other exchanges. It's crucial to identify what standards best suit your needs in making informed crypto investment decisions. 

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BONUS

ERC-721: Better known as the standard for NFTs (non-fungible tokens), ERC-721 defines tokens that are unique and cannot be replicated. Unlike fungible tokens like coins, where each unit is identical, every NFT is one-of-a-kind. This standard is widely used for digital art but also has practical applications in areas like ticketing, where owning an ERC-721 token can grant exclusive benefits, such as access to special features or content provided by the token's creator.

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