📋Overview

Here, we will review what a token is and the two types of tokens. After that, we will dive into the different token standards.

What is a token?

A token is a representation of something on the blockchain. A token can be a set of rules encoded in a smart contract or things like time, money, services, just about anything.

Tokens can represent digital and physical goods and assets, such as cars, creative works, information, documentation, access rights and various sets of permissions.

Tokens establish more transparent, efficient, and fair transactions allowing greater collaboration amongst individuals and across markets and industries.

Fungible vs Non-Fungible

Now that we know what a token is, it is important to note that there are two types of tokens: Fungible and Non-Fungible.

• Fungible: non-unique goods or assets that can be duplicated, divided, and readily interchanged

  Examples: fiat and crypto currencies, commodities, voting rights, etc.

• Non-Fungible: goods or assets that are unique and cannot be interchanged

  Examples: Deeds of ownership, houses, artwork, music, etc.

When determining fungibility, examine how the good or asset is being exchanged or traded. Fungible assets have an agreed upon value therefor are easily exchanged for similar items of the same value. On the other hand, due to the unique properties of non-fungible assets their value is not easily determined because it is based on various criteria.

Token Standards

A token standard is the structure that must be followed when creating and deploying a token based on the token's underlying blockchain. Token standards are established in order for smart contracts to maintain composability and for new tokens to remain compatible with existing decentralized exchanges.

ERC20: The most common standard for fungible (interchangeable) tokens, like voting tokens, staking tokens or virtual currencies.

ERC20 Advanced: This standard addresses the limitations of the ERC20 token standard.

Get Started: Use the FlexSmart platform to generate your own ERC20 token.

BEP20: This standard is an extension of the ERC20 token and focuses heavily on cross-chain compatibility and applies to all tokens created on BSC such as utility tokens, stablecoins, and security tokens.

ERC721: The standard for non-fungible tokens (NFTs), like a deed, artwork, or music.

ERC777: This standard is backwards compatible with ERC20 and allows for extra functionality on top of tokens such as improved transaction privacy or an emergency recover function, enabling new use cases.

ERC1155: This token standard allows for a single contract to represent multiple tokens, both utility tokens and non-fungible with increased gas efficiency.

Continue reading to learn more about the token standards mentioned above.

Tip: Not sure where to start? Check out our easy-to-follow User Guides to get step by step instructions on how to use the FlexSmart platform.