Digital currencies use wallets and transfer networks to hold, transfer and buy and sell. When conducting digital currency transactions, it is very important to pay attention to the blockchain used for that currency because more than 9,000 digital currencies have been introduced, each of which uses a specific blockchain network. Each blockchain for transferring, buying, and selling digital currency has several rules that must be considered when conducting various transactions. Also, not all currencies use the same network for transfers, and only currencies that share a common blockchain network use the same network. But what are digital currency transfer networks, and what are the features of each? In the continuation of this article, we will examine the answers to this question together.
The expansion of international trade and commerce was fraught with difficulties. Perhaps the most important problem that international trade has struggled with is the existence of multiple intermediaries. Intermediaries, including international institutions. To overcome this problem, digital currencies were created and introduced. Currencies eliminated intermediaries in global transactions and facilitated monetary and trade relations. Digital currencies are secure and anonymous, digital currency fraud is meaningless, and there is no way to stop or hack them. Digital currencies are based on blockchain technology, which offers the mentioned benefits to the users. Blockchain technology has different generations and networks.
What is a digital currency network?
A digital currency network is one of the sub-concepts of the blockchain network. A digital currency network is, in fact, the route of digital currency transfer. Each digital currency is transmitted over a specific network. Of course, some currencies can be transferred to different networks. In the following, we will get acquainted with different digital currency networks.
Types of digital currency transfer networks and their differences
Before we get into the different types of digital currency transfer networks, it’s best to get acquainted with some related concepts:
- What is the difference between Quinn and Token? Digital currency networks are divided into two different categories depending on the type of currency:
- Quinns: Quinns have their blockchain network and operate independently. Such as Bitcoin, Bitcoin Cash, Light Coin, Ethereum, Cardano, and…
- Tokens: Tokens do not have a dedicated network and work based on other currency codes. Such as Beth, Dai, Avi, Irene Finance, China Link, Binance Quinn, and…
- What is the fee? To make exchanges in digital currency networks, some people, miners, or nodes need to approve the transaction. These people will charge you a fee for issuing this confirmation. The amount of commission varies in different networks.
- What is the transfer time? The transfer time, calculated based on the number of transactions per second, varies between instantaneous and long periods. The transmission time varies according to the difference between digital networks (network hardness).
- Types of wallets: Wallets are required to hold digital currencies, and not every wallet supports every digital currency. Different wallets support different currencies, and this can lead to some limitations.
How to use the token standard
Digital currency exchanges are primarily concerned with transferring digital currency from one wallet to another. For the transaction to work properly, both wallets must be set up to support that digital currency transaction and support that digital currency. A very important point to note before making exchanges is that if one of the two wallets does not support the digital currency in question, the capital loss is possible. So before trading and exchanging, you must make sure that both wallets support the exchange network.
In some cases, a token supports several different currencies. In these cases, you have more freedom in choosing the network, and you can choose more networks to exchange. Once you are sure that the origin and destination of the digital currency both support existing networks for transacting that digital currency, consider two things before making a decision:
- Less commission for the transaction
- Less time to make a deal
Types of blockchain networks and digital currencies
In the following article, we will review some of the most important digital currency transfer networks:
ERC20 network (symbol: ETH) blockchain-based transmission network
The ERC-20 standard is a set of rules that must be applied to a token to operate in the Ethereum ecosystem. ERC-20 tokens are very useful because of their ability to be used in fundraising or ICO operations. China Blockchain-based projects can raise and sell ERC-20 tokens until their original China Blockchain is built. ERC-20 tokens can be transferred and stored on all valid Ethereum wallets. The ERC20 is a set of rules and regulations that help you build a smart contract with its tokens on the Ethereum platform.
Advantages and disadvantages of the ERC20 network
Advantages:
- These tokens make everything easier. Before these tokens came into force, each program had its language and idioms.
- The ERC20 standard made creating a token very easy, which is why Ethereum became the most popular ICO platform in 2017.
Disadvantages:
- ERC20 tokens have some problems. Instead of ether in smart contracts, they may be inadvertently destroyed when used as a payment method. To solve this problem, Ethereum seeks to create a new standard called ERC-223.
BEP2 network (symbol: BNB) Binance chain transmission network
The BEP-2 network is a technical standard for issuing and executing tokens in the Binance Chain. The network has defined rules that tokens must follow to operate in this system. The BinanceSchin network, which belongs to the Binance exchange, supports the original BNB coin and many tokens. The transfer fee on this network is much lower than the Ethereum ERC-20 network. Network wallets start with BnB. The transfer fee in this network is paid with the amount of BNB in that network. BEP-2 tokens also have the ability to display a wide range of digital assets and tradable goods.
The advantages of this network include the following:
- Every day, projects announce the transfer of a token or part of their token source to BEP-2 from the main network, ERC-20, or NEP-5 (the main encryption protocol in the NEO public blockchain).
- Bitcoin has even released a functional version of BEP-2 that can take advantage of this new blockchain platform’s speed, security, and trading efficiency.
- Fixed coins such as TrueUSD and Stably have entered the trade.
- So far, 133 assets have been listed in the Binance Chain.
BEP20 Network (BSC) (Symbol: BSC) Binance Smart Chain Transmission Network
Smart chain Binance is a blockchain parallel to the Binance blockchain designed to create smart contracts, and its environment is compatible with the Ethereum Virtual Machine (EVM). This function does not mean competing with Ethereum or substituting for Ethereum; BSC is just an Ethereum compatible blockchain and is designed to offer users more features such as creating faster blocks, lower transaction fees, etc.
In this way, users can transfer the same asset (ERC20 token) in a shorter time and at a lower fee to the Smart Binance (BEP20 token).
With the help of the BEP-20 network, compatible tokens can be used in different blockchains. Tokens from other blockchains can also be made available in the BSC.
Advantages of the BEP-20 token system:
- BEP-20 tokens are compatible with both BEP-2 and ERC-20 operating systems
- BNB supports these versions.
- Supports the performance of tokens made using the BEP-20 standard in the BSC network.
- It can be replaced with BEP-2, a native Binance Chain symbol.
- Many wallets support BEP-20 tokens.
- Tokens from other blockchains can be linked in the BEP-20 code. These tokens are known as Peggy coins.