Understanding the token standard

Among cryptocurrency projects, there are platforms that support smart contracts and those that do not. Typically, there is Bitcoin, which does not support smart contracts, and Ethereum, which supports smart contracts. Token issuance is possible on platforms that support smart contracts.

There are thousands of tokens on the Ethereum network. In order for them to be interchangeable, they must follow one rule. The standard in which tokens are issued is called ERC-20, and when writing a contract to issue tokens, it must be issued according to the ERC-20 standard. ERC-20 is a smart contract interface that manages how tokens are issued and exchanged, their balances and who owns them. (The meaning of ERC is that it is the 20th proposal for Ethereum Request for Comments.)

For example, when you want to exchange two different tokens on a decentralized exchange, you can only exchange tokens issued with the same standard. If they have different interfaces, it is difficult to exchange or link with other applications, so the token issuance standard is very important for compatibility.

Therefore, various networks that support smart contracts that can issue tokens have their own token issuance standards. In addition to Ethereum, various smart contract platforms such as Binance Smart Chain and Tron exist. Like Ethereum, these networks also have their own token issuance standards such as BEP-20 and TRC-20 for compatibility between tokens within the network they were issued on.

Just like Ethereum follows a standard called ERC-20 for issuing tokens with smart contracts, there is a standard called BEP-20 in BSC and TRC-20 in Tron. Through the token standard, we can also get information to identify which network the token asset is issued on.

Tether (USDT), known as a stablecoin, is not only issued as ERC-20 on the Ethereum network, but also on the BSC and Tron networks. In this case, you must specify the network selection correctly when making the transfer. For example, even if the name of the asset is the same USDT token, if you transfer USDT issued in ERC-20 to BEP-20, you will lose the asset because the network is different.

Even if these tokens have the same name and value, they are completely different tokens when they are issued on different networks. Therefore, when making a transfer, you must make sure that the name, the token address, the network selection, and the token standard matches so that you can avoid a situation of losing your assets. When transferring tokens using an exchange or wallet, you must make sure that the network information matches before making a transaction.