What are token standards?

These standards provide a common format for creating, transferring and managing tokens, ensuring their interoperability between different applications and services on the blockchain network. For example, token standards such as ERC-20, BEP-20, and TRC-20 define the rules for creating tokens on the Ethereum, Binance Smart Chain, and Tron blockchains, respectively. These standards may include features such as token transfers, balance accounting, total number of tokens issued, and others. As a result, token standards facilitate the development and use of various tokens in the blockchain ecosystem.

The token standard ensures interoperability between different projects created in accordance with this standard, allowing them to interact and function together. When a standard-based token is issued, it automatically becomes compatible with existing platforms and applications, including wallets. For example, ERC-20 tokens can be used with other products and services developed according to this standard.

This makes it possible to exchange ERC-20 tokens for other tokens that comply with this standard. Without such standards, trading various cryptocurrencies would become significantly more difficult. In this case, each token would require the creation of a separate wallet, instead of being able to use one wallet to manage a variety of cryptocurrencies.

In the programming world, having a connectable system allows developers to effectively use existing components to create new products. Likewise, in token creation, the use of token standards greatly simplifies the process of developing core functionality, freeing up more time for experimentation and innovation.

Token standards also make it easier for smart contracts to communicate by giving them the ability to effectively track created tokens. For example, smart contracts that implement token standards such as ERC-20 and BEP-20 include important features such as address lookup and display of token balances, allowing them to effectively track tokens. For example, to analyze the transaction history and other data of an ERC-20 token, developers can use the contract's Application Binary Interface (ABI).

In 2015, Fabian Vogelsteller introduced the ERC-20 token standard, which became the basis for the creation of various types of tokens, including virtual currencies, staking tokens, and virtual assets in DeFi. ERC-20 is a set of general rules that ensure the fungibility of assets developed in accordance with this standard. For example, if 1000 units of an ERC-20 token are created, each of them will have the same functionality.

The ERC-20 standard is used in the Ethereum blockchain. By the way, you can check the eth wallet and ERC-20 tokens in our Btrace solution.

Did you know that most non-fungible tokens (NFTs) on Ethereum are created according to one standard - ERC-721? These can be either unique collections of NFTs or the Proof of Attendance Protocol (POAP). Your NFT was likely created to this standard. But what's so special about NFTs? One of the key principles is the uniqueness of each ERC-721 token, which means that each token must have a unique tokenId. Unfortunately, the uniqueness of NFTs is also used for laundering illegal funds through cryptocurrencies, they wrote about this in this article.

ERC-721 functionality includes token transfer, current balance tracking, overall supply management and, of course, uniqueness.

With the development of token standards, a scheme has been developed that can meet the needs of the cryptocurrency industry for various types of tokens. The ERC-1155 standard is a multi-token standard that allows for the creation of a variety of digital assets, including utility tokens such as BNB, and NFTs.

In addition to other features, ERC-1155 offers token lot processing which includes:

The BEP-20 token standard is a specification for BNB Smart Chain (BSC). It was originally developed as a technical standard for this network. BEP-20 allows developers to create a variety of tokens, including pegged coins, utility tokens, stablecoins, and others. This standard also introduces features such as blacklisting, mining, and token burning suspension.

The TRC20 Token Standard is a technical specification for the creation and management of tokens on the Tron blockchain. It is similar to ERC-20 on Ethereum and BEP-20 on Binance Smart Chain. TRC20 allows for the creation of different types of tokens on Tron, including utility and stablecoins, by defining rules and functions for their behavior, such as transfers and accounting for balances.

AML wallet verification in our solution Btrace is available according to any of the standards described above.

Tokens created to a single standard have the same core functionality and can easily interoperate with each other, while tokens that meet different standards rarely can. Due to different rules governing token standards in the industry, they are not always compatible with each other. This means that tokens developed to different standards sometimes cannot coexist on the same platform, exchange or interact with each other. Owners of several cryptocurrencies often face the problem of using BTC on the Ethereum platform. To address such limitations, developers have introduced a new type of token known as wrapped tokens.