While similar in their usage, ERC-20 and TRC-20 USDT tokens have minor differences that you should be aware of. In most cases, they can be used relatively interchangeably. However, there are some things to be mindful of, such as wallet differences and fees regarding these two token standards.
Tether (USDT) explained
Tether is what is known as a stablecoin. It represents one dollar on a blockchain, as it is paid 1 USDT = 1 USD. Tether, the company behind the coin, has many assets backing its currencies. Some of these holdings include US treasuries, corporate treasuries, and cash.
Tether is used in place of fiat on the blockchain, not just the US dollar. Tether also has coins representing Euros, Chinese yuan, gold, and Mexican pesos. It has been around since 2014 and is one of the most common stablecoins in the entire crypto world.
What are Token Standards?
Token standards can be best explained as rules that allow for developing cryptocurrency tokens on different blockchain protocols. Token measures include rules, conditions, and functions that dictate how the token works.
Standards are applied to application-level specifications, such as token standards, name registries, and library package formats. With this set of innovative contract standards and clearly defined parameters, anybody with sufficient knowledge may create their token using their preferred standard.
That being said, understanding the programming language underneath is essential for success.
What is Tether ERC-20?
ERC, or Ethereum Request for Comment, is a set of technical documents that contain guidelines for developing a smart contract. They define the specific location of functions for each token type and facilitate interaction between smart contracts and applications.
While anybody can create an ERC, it requires going through the Ethereum Improvement Proposal process, a document with the proposed features and strategy for the Ethereum blockchain network. If the community on Ethereum deems it an essential addition to the blockchain ecosystem, the proposal will be accepted, finalized, and implemented. The ERC-20 fungible token standard provides basic functionality to transfer tokens and allows tokens to be approved, and it was released in 2015.
It’s essentially a blueprint for creating fungible tokens on the Ethereum network. Fungible means that each token, or even fraction of a token, is equivalent to and indistinguishable from another. This is similar to how fiat currencies were, as a $5 bill is the same as another $5 bill.
What is Tether TRC-20?
TRC-20, also known as USDT-Tron, is the Tether token issued on the TRON network. It is a technical standard token and works based upon TRON’s blockchain, using TRON’s address, which means that all transactions made with TRC-20 take place on the TRON network.
TRC-20 and ERC-20 are identical except for the blockchains that they function on. One focuses on Ethereum (ERC-20), while another focuses on TRON (TRC-20). However, it is worth noting that fees on the TRON network are typically cheaper. It’s also worth noting that the underlying programming language for Ethereum and TRON is Solidity, meaning these tokens can be used back and forth.
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TRC-20 vs. ERC-20: pros and cons
There are quite a few similarities when it comes to the pros and cons of both of these token standards. One of the most significant advantages ERC-20 has over TRC-20 is security, as it is considered more secure than those standards on the TRON network. Still, conversely, speed is one of the main features of the TRC-20 standard, so you may find that depending on your need, you can go back and forth between the two.
ERC-20 and TRC-20 are written in the Solidity language, so they can be used back and forth, although the problem comes with the wallet. The wallet must be able to support whatever token standard that you are trying to store. Both address styles are different, so make sure you have a compatible wallet if you are using one.
ERC-20 has a much higher gas fee, so sometimes, people will choose to use TRC-20 to avoid some of the expenses. However, with the higher transaction value, it makes sense to pay a bit more in transaction fees to have the extra security.
Conclusion
When you look at these two token protocols, they serve the same function, as they both function as a representation of fiat currency and are created by smart contracts. These tokens can be bought and sold as well as traded on exchanges, with the ERC-20 token standard containing a variety of information, including:
- Details of the total supply of tokens
- How tokens are going to be transferred
- How tokens can be withdrawn
- Token balance in the account
- How tokens will be received
Creating a token is easy for developers, and documentation is far and wide. Because of this, ERC-20 continues to be one of the favored routes for development.
On the other hand, you have the TRC-20 token standard explicitly used for the TRON blockchain. Much like its counterpart, the standard defines rules that every token in the network must follow. TRON network was created as a more efficient clone of Ethereum, with lower fees and faster transaction speed. As the TRON Virtual Machine, the operating system for TRON smart contracts uses the same Solidity language for contract programming as Ethereum; all TRON tokens and smart contracts are compatible with the Ethereum network. In other words, TRON tokens can be used on the Ethereum network and the other way around. However, it’s worth noting that Tether tokens in both standards are incompatible.
In the future, it’ll be interesting to see how this plays out because it looks like a solution looking for a problem. While it is true that TRC-20 tends to be quicker and cheaper as far as fees are concerned, at the end of the day, it’s worth noting that Ethereum has recently upgraded, so it could make all of this a moot point.
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As an enthusiast deeply immersed in the world of cryptocurrency, particularly token standards like ERC-20 and TRC-20, I can provide a comprehensive understanding of the concepts discussed in the article. My expertise is demonstrated by a nuanced knowledge of the technical aspects, development processes, and practical implications of these token standards. Let's delve into the key concepts covered in the article:
1. Tether (USDT) Explained:
- Tether is a stablecoin pegged to the value of one US dollar and is backed by various assets, including US treasuries, corporate treasuries, and cash.
- It serves as a digital representation of fiat currency on the blockchain, not limited to the US dollar, as there are Tether tokens for other currencies like Euros, Chinese yuan, gold, and Mexican pesos.
- Tether has been in existence since 2014 and is widely recognized as one of the most common stablecoins in the cryptocurrency world.
2. Token Standards:
- Token standards are rules governing the development of cryptocurrency tokens on different blockchain protocols.
- These standards include rules, conditions, and functions that dictate how a token operates on a blockchain.
- Understanding the underlying programming language is crucial for successfully creating tokens using these standards.
3. Tether ERC-20:
- ERC-20 (Ethereum Request for Comment) is a set of technical documents providing guidelines for developing smart contracts on the Ethereum blockchain.
- It defines the functions and locations for each token type, enabling interaction between smart contracts and applications.
- ERC-20, introduced in 2015, is a fungible token standard that facilitates the creation of tokens on the Ethereum network.
4. Tether TRC-20:
- TRC-20, also known as USDT-Tron, is a technical standard token issued on the TRON network.
- Similar to ERC-20, it defines rules for creating tokens, but it operates on the TRON blockchain using TRON's address system.
- TRC-20 and ERC-20 are nearly identical in functionality but operate on different blockchains (TRON and Ethereum, respectively).
5. TRC-20 vs. ERC-20: Pros and Cons:
- Both standards have similarities, but key differences exist in security, speed, and transaction fees.
- ERC-20 is considered more secure than TRC-20, but TRC-20 offers faster transaction speeds with lower fees on the TRON network.
- The underlying programming language, Solidity, is the same for both standards, allowing tokens to be used interchangeably, but wallet compatibility is crucial.
6. Conclusion:
- Both ERC-20 and TRC-20 serve the same function as representations of fiat currency on the blockchain, created by smart contracts.
- ERC-20 token standards provide detailed information, including total token supply, transfer mechanisms, withdrawal processes, account balances, and token reception.
- TRC-20 is explicitly designed for the TRON blockchain, offering efficiency with lower fees and faster transaction speeds.
- While TRC-20 may be quicker and cheaper, recent upgrades in Ethereum may impact the dynamics between the two standards in the future.
In summary, the article explores the nuanced differences between ERC-20 and TRC-20 token standards, highlighting their similarities, distinctions, and potential considerations for users and developers in the cryptocurrency ecosystem.
