Initially, the cryptocurrency world seemed to be unsettled due to average knowledge about blockchain and Smart Contracts. However, with time, the crypto coin development prospects of many new digital currencies have been secured with token standards. These standards are for those who may have been cautious about investing in a digital token or cryptocurrency.
The idea of an open-source blockchain with integrated Smart Contract functionality to expand blockchain use cases across major industries was introduced by Vitalik Bueterin. Token standards are actually a defined set of rules that facilitate the development of cryptocurrency tokens on different blockchain protocols.
The Ethereum ecosystem welcomes blockchain enthusiasts worldwide to develop blockchain-powered solutions on top of its ecosystem and contribute to its growth without being worried about risks.
Understanding Token Standards
Smart Contract standards are a defined set of rules that must obey to utilize the underlying blockchain network. Blockchains for Smart Contracts or other decentralized applications (dApps) use these application-level standards. Standards for Smart Contracts refer to tokens, name registries, library formats, and many more.
Ethereum token development is one of the prevalent safest modes of token development standards, which upholds the whole network and numerous interconnected projects running simultaneously.
Most Commonly Used Token Standards
Different kinds of standards for supporting Smart Contracts has created. Let’s explore the most common token standards on Ethereum and their roles, followed by three other blockchain platforms.
ERC Token Standards
Ethereum Request for Comments is an acronym of the term ERC. Similarly, it is a concept devised by the Internet Engineering Task Force to communicate technical notes and requirements with developers and users.
Common ERC standards contain the required set of functions based on the token type that better match the Smart Contracts and allow applications to interact with them predictably. Some important ERC token standards are given below.
- ERC 20
- ERC 721
- ERC 777
- ERC 1400
- ERC 20
ERC 20 is the most dominant nonfungible token standard for new token creation in the crypto space. It is a commonly used standard for Ethereum-based tokens. The ERC-20 is a simple interface that contains technical standards and all the rules that Ethereum-based tokens must follow for token creation for re-using by other applications like DeFi.
● ERC 721
ERC721 is a token standard that deals with non-fungible tokens (NFTs) on the Ethereum blockchain. NFTs are a particular type of digital art piece known as cryptographic tokens: they have unique properties that are not interchangeable by their specification. Several characteristics distinguish NFTs from one another, making them a suitable medium for representing collectibles, game items, digital art, event tickets, domain names, and ownership records for physical assets.
● ERC 725
Fabian Vogelsteller, the developer of the well-known ERC-20 standard, also proposed the idea of the ERC-725 standard for Blockchain-based identity. It is the best fit for proxy Smart Contracts with its multiple keys and different Smart Contracts that can be managed with ERC-725. Machines, objects, groups, and individuals can all be defined using identity Smart Contracts. Users can hold the digital identity of the contracts instead of centralizing the identity to organizations.
● ERC 777
As with the ERC-227 digital token, the ERC-777 digital token suggests many more ways to boost blockchain usability. This digital token is also called an extended version of the common ERC-20 token standard with many new features. One of the most functional features is its ability to mint or burn tokens, which depends on a project’s token economic model.
● ERC 1400
A Security Token represents a real-world asset on a blockchain, and the ERC-1400 specification was created to describe them. Restricted transfers, the addition of transfer material, document library management, and forced transfers are all possible under this token standard. Further, it allows a wide range of features for the legal deployment of Security Tokens.
Other Blockchain Token Standards
● BEP-20
An extended version of the ERC 20 token is known as BEP 20. It is a Binance Smart Chain token standard that plays a vital role in the development of blockchain technology. Further, it is one of the most widely used Ethereum token standards.
● NEO (NEP-5)
The NEP-5 proposal contains a token standard for the Neo blockchain that allows systems to interface with tokenized Smart Contracts in a more generalized way. The standard for creating NFT is NEP-10. However, it is still in the pipeline phase. The NEP-5 standard represents a tokenized Smart Contract. This is used to regulate the token based on the Neo blockchain.
Final Thoughts
New Ethereum ERC token standards are evolving with new features and bug fixes for existing tokens. With the arrival of these tokens, the digital assets holding became secured and risk-free.
For ensuring the security of your assets, your blockchain platform provides the most value to users. You must first decide which digital token to use.
Connect with our crypto coin development company for a thorough discussion if you have a similar project in mind. We deal in all types of token and coin development.
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