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Token standards

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From a technological perspective, tokenization occurs through the application of a specific blockchain platform that ensures that token balances and transactions are recorded in a distributed blockchain registry. Virtually every blockchain represents a unique set of features and different standards, such as TRON (TRC-20) or Ethereum (ERC-20).

The major token standards are not limited in extending their functionality, allowing them to be modified to meet specific requirements. For example, security tokens (Security token) have emerged that are similar to stocks and can accrue dividends. These transactions are performed on the blockchain, giving token holders the technological ability to receive income from the company. The transfer of tokens is accompanied by the transfer of this opportunity to other users. Thus, thanks to technological advances, token holders can benefit from the advanced capabilities of blockchain technology.

There are also tokens known as Utility tokens, which are intended for the internal infrastructure of projects, where their owners have the right to receive a certain good or service. The use of standards allows for the creation of financial interaction algorithms of varying complexity and structure. Standardization is an important aspect for developers, as it simplifies the process of understanding and structuring developments.

ERC-20

Token standards

The ERC-20 standard is a specific set of features and requirements that developers must meet in order for their product to interoperate with other projects using the same standard. Before ERC-20, there was an incompatibility issue between different Ethereum-based tokens, as each token required its own unique type of smart contract.

Simply put, individualized code had to be created to work with a new token on exchanges and wallets. However, supporting the growing number of tokens became labor intensive and turned into a problem. As a result of this situation, a single protocol for all tokens was developed called ERC-20.

The term ERC stands for Ethereum Request for Comment, and the number 20 is simply an arbitrary number assigned to the proposal.

TRC-20

Token standards

TRC20 tokens are tokens used on the TRON blockchain, which is a unique blockchain with high performance. The TRC20 standard defines the rules for creating tokens, based on smart contracts. These tokens are fully compatible with the underlying TRON blockchain and can be easily used for various purposes such as finance, gaming, social media, etc. In addition, creating TRC20 tokens on the TRON blockchain is very fast and efficient, making this standard popular among developers.

ERC-721

Token standards

ERC-721 is a token standard with the unique feature that they are not interchangeable. There are several token standards on the Etherium network, including three ERC standards for NFT: ERC-721, ERC-1155, and ERC-998.

When people talk about substitutability, they usually mean the property of objects or resources being interchangeable with other identical objects. Bitcoin and Ethereum refer to substitutable resources, meaning that, for example, one BTC can be substituted for another. However, this does not apply to NFT tokens. Each one is unique and cannot be replaced by another NFT.

Regardless of the technical details, an NFT token represents a certain title of ownership of a digital object. A possible object could be text, a photograph, audio, a digital work of art, a game character, a game item, real estate in a virtual world, a financial instrument, fan paraphernalia, club cards, or regular event tickets. In addition, the ERC-998 standard allows for the creation of tokens containing combinations of these objects and ERC-20 tokens.

BEP2 and BEP-20

Token standards

BEP2 and BEP-20 is a unified protocol for all tokens used in the Binance blockchain ecosystem. It contains a set of mandatory specifications that all tokens must meet in order to function successfully within the Binance network. The set of technical specifications ensures that assets can interact with other tokens and the network as a whole without any obstacles.

BTCB is the first token issued on the Binance blockchain that is backed by bitcoin and complies with the BEP2 standard. It has a fixed exchange rate, which is 1 BTCB for 1 BTC. It is also fully backed by an equivalent amount of bitcoins on a public reserve address. This address is available for verification by any user at any time.

One of the main benefits of crypto-linked tokens is the increased access of traders on the Binance DEX decentralized exchange to a multitude of coins that have their own blockchains and are not native to the Binance blockchain. The increased token selection on the Binance DEX platform should provide an opportunity for increased trading volume and liquidity, which in turn will further increase the usefulness of this exchange.

NEP-5

Token standards

NEO Enhancement Protocol 5 (NEP-5) is an open source algorithm that clarifies the rules for interoperability of NEO-based blockchain projects. NEP-5 is one of a family of NEO Enhancement protocols that govern NEO updates. This protocol is similar to the ERC-20/ERC-223 standards on Ethereum and describes the interaction in the NEO blockchain, where the number 5 represents the position number describing the interaction in the NEO blockchain. NEP-5 provides a single interaction mechanism for tokenized smart contracts that use the NEO system.

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