The rapid evolution of blockchain technology has introduced a new class of digital assets—crypto tokens—that are transforming everything from finance to art. But not all tokens are created equal. The blockchain ecosystem distinguishes between fungible tokens and non-fungible tokens (NFTs), each serving different use cases and built upon different technical standards. Whether you’re an investor, a developer, or a business looking to tokenize an asset, understanding these two types and their respective standards is essential. This article breaks down how token standards define the nature and capabilities of fungible and non-fungible tokens, and why they play such a pivotal role in Crypto Token Development.
What Are Fungible and Non-Fungible Tokens?
Before diving into standards, it’s important to grasp the fundamental difference between fungible and non-fungible tokens.
Fungible tokens are interchangeable and have uniform value. A classic example is any currency. One dollar equals another dollar, just as 1 ETH equals another 1 ETH. These tokens are designed for financial transactions, staking, trading, and governance. They can be easily divided into smaller units—just like fiat money.
On the other hand, non-fungible tokens represent unique, indivisible assets. Each token is distinct, with metadata and attributes that differentiate it from others. NFTs are commonly used for digital collectibles, art, real estate, identity verification, and even intellectual property rights. One NFT cannot be exchanged on a one-to-one basis with another because of its uniqueness.
This distinction influences how tokens are developed, and more specifically, what token standard is used in their creation. This is where the role of a Token Development Company becomes important—they choose the appropriate standards and implement them in a secure, scalable manner tailored to the use case.
ERC-20: The Foundation of Fungible Token Development
The ERC-20 standard is the most widely adopted specification for creating fungible tokens on the Ethereum blockchain. Introduced in 2015, ERC-20 defines a set of functions and events that any Ethereum-based fungible token must follow. These include transfer, approve, transferFrom, and totalSupply.
This standard allows for seamless integration with wallets, exchanges, and DeFi platforms. Projects such as Uniswap (UNI), Chainlink (LINK), and Tether (USDT) have all been built using the ERC-20 standard.
In Crypto Token Development, using ERC-20 offers several advantages:
- Interoperability: Tokens can interact with the vast Ethereum ecosystem without custom coding.
- Liquidity: ERC-20 tokens can be listed easily on decentralized exchanges.
- Tooling Support: Robust developer tools and libraries like Web3.js and ethers.js support the standard.
A Token Development Company working with Ethereum will typically default to ERC-20 for fungible assets unless a specialized use case demands an alternative approach.
BEP-20: Binance’s Take on ERC-20 for the BSC Ecosystem
BEP-20 is Binance Smart Chain’s equivalent to ERC-20 and is used to develop fungible tokens on BSC. It mirrors ERC-20’s functionality almost identically, which is why developers often port projects from Ethereum to BSC with minimal changes.
The major appeal of BEP-20 is cost-efficiency. Transactions on BSC are significantly cheaper and faster than Ethereum, especially during times of network congestion. Projects looking to minimize gas costs or target high-volume user bases in emerging markets often prefer BSC.
Popular BEP-20 tokens include PancakeSwap (CAKE) and Venus (XVS). A Token Development Company offering multi-chain deployment will often suggest BEP-20 for startups or projects with limited initial budgets due to its low entry barriers.
BEP-2: The Legacy Standard of Binance Chain
Before BSC and BEP-20, Binance developed BEP-2 for its original Binance Chain. BEP-2 tokens operate on a separate blockchain with limited smart contract functionality. They are primarily used for fast, low-cost asset transfers and exchange functions.
Because of its limited programmability, BEP-2 isn’t suitable for advanced DeFi applications or utility tokens requiring complex logic. However, it’s still relevant for tokens that need simple, secure transfer capabilities.
BEP-2 might be used in projects where performance is prioritized over customization. In practice, many tokens exist in both BEP-2 and BEP-20 versions, allowing cross-chain flexibility via Binance Bridge.
ERC-721: The First NFT Standard
The ERC-721 standard revolutionized how digital ownership is managed by defining how non-fungible tokens could be created and transferred on Ethereum. Unlike ERC-20, where each token is the same, ERC-721 ensures each token has a unique identifier and can carry distinct metadata.
This uniqueness makes ERC-721 the backbone of the NFT ecosystem. Platforms like OpenSea, Rarible, and Foundation all use ERC-721 to mint and trade NFTs. Famous projects such as CryptoKitties, Bored Ape Yacht Club, and Decentraland were built on ERC-721.
Key features of ERC-721 include:
- Unique IDs for each token (via
tokenId) - Ownership tracking
- Optional metadata URI to describe the asset
- Safe transfer functions to prevent tokens from being sent to incompatible addresses
For businesses or creators entering the NFT space, a Token Development Company will usually implement ERC-721 when dealing with 1-of-1 digital assets or collectibles.
ERC-1155: Multi-Token Standard for Fungibility and Flexibility
While ERC-721 is effective, it has a major limitation: it creates a new contract for every unique asset. This approach is inefficient, especially for games or platforms dealing with large volumes of both fungible and non-fungible assets.
That’s where ERC-1155 comes in—a hybrid standard that supports both fungible and non-fungible tokens within a single smart contract. Developed by Enjin, it enables developers to mint multiple token types efficiently.
In Crypto Token Development, ERC-1155 offers:
- Batch transfers and minting, reducing gas costs
- Shared contract architecture, improving scalability
- Support for both NFTs and tokens in one ecosystem
For example, a game might issue ERC-1155 tokens where gold (fungible) and swords (non-fungible) are all stored in a single contract. This dual-functionality makes ERC-1155 ideal for blockchain-based games and marketplaces.
A skilled Token Development Company will often recommend ERC-1155 for projects requiring asset diversity and high-volume token interactions.
Key Differences in Development and Use Cases
Understanding which token standard to use requires assessing both technical needs and business goals. Here’s how fungible and non-fungible token standards differ in practical deployment:
| Feature | ERC-20 / BEP-20 (Fungible) | ERC-721 / ERC-1155 (Non-Fungible) |
|---|---|---|
| Interchangeability | Yes | No |
| Divisibility | Yes | No |
| Unique Metadata | No | Yes |
| Smart Contract Complexity | Moderate | High (especially with metadata) |
| Best for | Currencies, DeFi, utility | NFTs, collectibles, unique assets |
| Batch Operations | Limited | Supported in ERC-1155 |
A Token Development Company often begins by mapping these capabilities to the project’s goals, ensuring the selected standard matches the real-world application.
The Role of Standards in Security and Interoperability
Token standards are not just about technical design—they play a major role in security and interoperability. Standards ensure that tokens behave predictably across wallets, marketplaces, and platforms. This reduces the chances of errors, exploits, and compatibility issues.
For instance, using a non-standard or poorly implemented token contract can lead to:
- Inability to trade or list on exchanges
- Smart contract failures
- Vulnerabilities that hackers can exploit
That’s why security audits and compliance with official standards are non-negotiable in Crypto Token Development. Experienced Token Development Companies use vetted frameworks like OpenZeppelin and conduct rigorous testing to ensure compliance and safety.
Conclusion
Fungible and non-fungible tokens each serve unique roles in the blockchain ecosystem, and their differences are clearly defined by the standards used in their development. Whether you’re building a digital currency, launching a DeFi product, or creating a line of NFTs, the choice of token standard influences your project’s scalability, functionality, and adoption potential.
As the industry matures, these standards continue to evolve, bringing improvements in efficiency, flexibility, and security. Working with a Token Development Company gives businesses the technical insight and engineering support required to navigate these decisions, implement compliant contracts, and launch tokens that are secure, scalable, and ready for real-world use.
In the end, it’s not just about building a token—it’s about building the right kind of token that fits the problem you’re solving. And that starts with understanding what makes it fungible—or not.
