Understanding Token Standards: Why They Matter
👋 I’m an Associate Consultant - Marketing at Oodles We help businesses build and scale with custom blockchain development services—including dApps, DeFi platforms, smart contracts, NFT marketplaces, and enterprise blockchain apps.
Here’s the thing: when you launch a token in the blockchain world, you can’t just invent anything and expect it to work smoothly with wallets, exchanges, dApps, or other infrastructure. Token standards exist to provide the rules and structure so tokens are interoperable, trusted, and usable.
In this blog we’ll dive into the key standard ERC-20 (on Ethereum), contrast it with newer standards like BRC-20 (on Bitcoin), clarify how to pick the right one, and highlight what you need to ask when hiring a token development company. If you’re serious about tokens and want your project to stand out, this is essential reading.
What is ERC-20 and Why It Became the Default
Let’s break this down. ERC-20 stands for Ethereum Request for Comment 20, a technical standard that defines how fungible tokens should behave on the Ethereum blockchain.
Key Features
It defines a set of functions that a smart contract must implement:
totalSupply,balanceOf,transfer,approve,transferFrom,allowance.Because of that, any token built to ERC-20 spec can be supported by wallets, exchanges, and other smart contracts without reinventing the wheel.
It helped fuel the token boom (ICOs, DeFi, new protocols) because developers could launch tokens with predictable behavior.
Why It Matters
When you choose ERC-20, you’re choosing compatibility and large ecosystem support. That means less friction when listing on exchanges, integrating with wallets, and working with partners.
But — and there’s always a but — it comes with trade-offs: Ethereum’s gas fees, scalability limits, and sometimes slower transactions. These are things to factor in.
The Rise of Other Standards — Enter BRC-20 and Others
Tokens don’t stop at Ethereum. The industry keeps evolving, and newer blockchains or standards are emerging. One such is BRC-20.
What Is BRC-20?
BRC-20 is an experimental token standard on the Bitcoin blockchain, enabled via the Ordinals protocol. It allows the creation and transfer of fungible tokens by inscribing data on satoshis rather than deploying full smart contracts.
Key Differences vs ERC-20
It doesn’t use smart contracts in the way Ethereum does. That means some of the advanced features (complex logic, conditions) are harder or absent.
It leverages Bitcoin’s network strength and security but can suffer from slower throughput and higher fees when the network is congested.
The ecosystem around BRC-20 is far less mature than ERC-20’s, so tools, integrations, and support may be limited.
What This Really Means
If you pick BRC-20, you’re choosing a newer, less proven path. That might be fine if your use case fits (you care deeply about Bitcoin ecosystem adoption, want something experimental). But if you need broad infrastructure, the safest bet remains ERC-20 (or another mature standard).
How to Choose the Right Token Standard for Your Project
Here are some questions to ask yourself — this will help you pick wisely:
What is the primary blockchain ecosystem you intend to target?
If your audience lives in the Ethereum ecosystem, wallets, dApps, exchanges expect ERC-20. If you’re building something on Bitcoin or linking to it, perhaps BRC-20 or another Bitcoin-based standard.What features do you need in the token?
Do you need complex logic, governance, upgradeability, staking, interoperability? If yes, ERC-20 (or derivatives) may give you more flexibility. If your needs are simple transferability and fungibility, maybe a standard like BRC-20 works.What about costs, speed, and scalability?
If you expect many transactions, micro-transactions, or lots of users, you’ll want a standard and blockchain that supports it with acceptable fees and speed. High gas fees on Ethereum or congestion on Bitcoin may hurt UX.What is your risk appetite and timeline?
Using a well-tested standard is lower risk. Using experimental standards may offer some novelty but higher risk. If you want quick, robust launch, go mature.What tooling, ecosystem, and listing/integration support exist for your standard?
For ERC-20 there’s huge global support: wallets, exchanges, audits, libraries. For newer standards, you may need more custom work.
Why You Might Hire a Token Development Company
If you're not writing the smart contracts yourself and want things done professionally, a token development company can help in several ways:
They have technical expertise: writing secure smart contracts, deploying, auditing, handling token logic.
They understand token standards and can guide you to choose the right one.
They assist with integration: wallets, blockchain explorers, token listing preparation.
They help with compliance, security best practices, and avoiding vulnerabilities.
They can handle auditing, documentation, and go-to-market support.
If you want a specialized team, check out Oodles Blockchain's ERC-20 Token Development Company — they ensure your token is built to spec, secure, and ready for launch.
Practical Steps for Your Token Launch
Here’s a rough roadmap you could follow:
Define your token’s purpose: utility, governance, asset representation, etc.
Choose the blockchain ecosystem and standard (ERC-20, BRC-20, etc.) based on your needs.
Design token economics: supply, distribution, minting/burning, vesting.
Write the smart contract (for ERC-20) or token logic (for other standards). Include security checks.
Audit the contract to ensure there are no known issues.
Deploy to testnet, run tokens through use cases, interaction with wallets, and transfers.
Deploy to mainnet, integrate with wallets/exchanges, and publish documentation.
Monitor post-launch: track transactions, community feedback, ecosystem integration.
Maintain governance and updates as needed.
For a deeper comparative analysis, check this guide: ERC-20 vs BRC-20 Token Standards
Risks to Watch Out For
Even though token standards make things manageable, there are still risks:
Smart contract bugs: Even mature standards may have flaws.
Scalability & fees: If the network is congested, UX suffers.
Ecosystem maturity: Less-supported standards have fewer tools & integrations.
Regulatory & compliance: Tokens may be classified as securities.
Liquidity and market support: Without exchange listings, adoption slows.
Conclusion
If you’re planning to launch a token, here’s the takeaway: pick your standard with care, align it with your use case, make sure the development is solid, and engage experts where needed. The token standard you choose affects not just technical deployment, but also user experience, listing potential, integration with wallets/exchanges, cost overhead, and long-term viability.
For most projects wanting broad compatibility and ecosystem support, ERC-20 remains the go-to. If your project has a unique requirement aligned with Bitcoin’s chain or newer experimental territory, BRC-20 or other standards could be interesting — but come with higher risk.
And for a full comparison of ERC-20 and BRC-20 standards, check out this detailed blog: ERC-20 vs BRC-20 Token Standards.