ETH vs NEO – The Most Popular Standard Tokens ERC and NEP

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In this article I will list the most common standards of the two platforms for releasing tokens (chips) like ETH and NEO, and I will also do an analysis plus some comparisons between them.

By reading this article, I suspect that many of the readers are quite well acquainted with the concept of Cryptocurrency, even more, you have often encountered it for sure. The terms Cryptocurrency or token, but not all study the standards and concepts underlying these terms.

For starters to be clearer you need to know that a ERC Standard or NEP is the same Smart Contract.

So from here, to be more clear the situation must begin with the notions of cryptocurrency is a type of digital currency, virtual, a surrogate currency, non-banking, used as a means of payment, (ex: Bitcoin, Ethereum, Bitcoin Cash, Ripple, Litecoin, Dogecoin, Cardano, Neo), the name of cryptocurrency indicates that this means of payment uses cryptography based on a chain of blocks called Blokchain and is decentralised, partially decentralized or even totally centralized to control transactions and prevent double expense.

A token is similar to a crypto coin that is used to represent a digital balance in a given asset that communicates with the database, based on Blokchain technology, and access to it is made through special applications that use Electronic signature schemes, i.e. Smart contracts; simply said, a Token does not have a Blokchain.

I’ll start with Ethereum because most tokens are specifically created on this platform.

The process of creating a token is actually the creation of an algorithm, which therefore will work as a certain token, this algorithm bears the name of Smart Contract. It’s a contract because in this algorithm all conditions are mandatory for execution, and it’s called Smart because it contains self-fulfilling and self-control functions on execution. Once a Smart Contract has been created, it can no longer be changed and the token according to the original algorithm, therefore developers prescribe the conditions for their operation, i.e. set a list of functions.

Of course with the help of Smart Contracts we can implement not only tokens, but also any other decentralized applications and many other projects.

From the beginning, since the Ethereum platform appeared, the developers of projects created different tokens, where each developer takes a decision independently of what rules and functions will have his Smart Contract, which therefore led to a conflict of compatibility between tokens and created wallets, apps, and each time the need to solve problems with this compatibility. Finally, the developers, in order to avoid such problems in the future, they decided to create a single standard, that has become Standard ERC-20.

ERC – Ethereum Request for Comment is the standard for creating tokens that defines the mandatory functions of Smart Contracts, which should be used when a Token is created on the Ethereum platform.

20 is the serial number of the application that the developer sent for perfection.

Later, in ERC-20 something went wrong and other standards were created such as ERC-223, ERC-621, ERC-721, ERC-827, ERC-948. The list can continue, but I will emphasize the most common standards at this time.

Standard ERC-20

The ERC-20 standard is the best known standard used to create almost all known tokens on the Ethereum platform. This standard was proposed in 2015 and was officially adopted in 2017, then started the boom of the ICO projects, which selected the Ethereum platform and especially the ERC-20 standard for creating their own tokens, because it is quite easy to understand, used and verify.

The ERC-20 standard includes the following functions:

1. Name – the function that contains the name of the token.

2. Symbol – function that contains the value of the short character of the token.

3. Decimals – the function that determines how many parts a token can be shared.

4. Total supply – the function that determines the total number of chips.

5. BalanceOf – the function that shows the balance in the account at a particular address.

6. Transfer – the transfer function of the token from the primary address to the user address (for example, an ICO participant).

7. TransferFrom – transfer function of tokens between users.

8. Approve (approval, confirmation) – the function that verifies the balance of the funds in the Smart Contract and regulates the withdrawal of funds depending on the parameters specified.

9. Allowance – the function that acts as a guarantee of the fact that the sender has the necessary amount to send to the recipient’s address.

The ERC-20 standard also includes two types of events:

1. Transfer – chip transfer event between addresses.

2. Approval – event that is declared when the approval function is executed successfully.

We can see that the functions determine how the token will work from the creation itself to its use, and these functions guarantee that the token can work on the Ethereum network, and all the functionality required for the life of the token from wallets compatible to the DAPP and so on, are adapted to this standard and the crowd adapts specifically under this standard.

The standard ERC-20 has greatly simplified the process of creating tokens and still is the most essential, but since it is assumed to be a pioneer in the standard ERC-20, with time some problems have been discovered that have given rise to new standards that add new features and possibilities.

Let’s briefly analyze the possibilities of the new standards.

Standard ERC-223

The standard ERC-223 was developed in May 2017 by Dexaran as a solution to the problem of sending chips to an incorrect address by the user. To make you understand, due to this error, more than $3 million were sent to incorrect addresses only in 2017, without the possibility of withdrawing them back, and the losses are still happening… And this error is not officially recognized, because users send funds to the wrong addresses through their carelessness. But Dexaran found a solution to this situation and made changes to ERC-20 by adding two functions to the standard or ERC-223:

1. A single transfer function that replaces the old “transfer” and “TransferFrom

2. “tokenFallBack” function for Smart reception contract, which determines the type of coins shipped.

Now, if you send the tokens to the wrong address, they will be returned to the sender’s address, just like when ETH is transferred to the wrong address.

An example: Bethereum from the Standard ERC-20 (BTHR) has now migrated to ERC-223 (Bether)

Standard ERC-621

The standard ERC-621 is an addition to the ERC-20 standard, which allows you to change the total number of token (totalSupply) into a Smart Contract on one side or another by adding two functions:

1. IncreaseSupply – Increases Quantitative function

2. DecreaseSupply – Quantity decrease function

On the one hand, a convenient addition, and on the other hand, the additional token emission is not always a positive phenomenon.

Standard ERC-721

The standard ERC-721 was created in September 2017 by user Dieter Shirley. This standard allows you to create collectible tokens, i.e. completely unique tokens that differ from each other and at the same time conform to the uniform standard ERC-721. A vivid example of the standard token ERC-721 is the token of the CryptoKitties and MonsterBit project.

And also, another example of the standard ERC-721 is Decentraland (MANA), virtual reality platform whose users can collect tokens, build cities and share values, thanks to tokens Interchangeable (NFT) with the standard ERC-721. At the base of this standard is the ability to implement API for tracking and teaching ownership of unique NFP (non-fungible tokens) – Which in translation means interchangeable tokens, which can be used on a large scale and that is where unique tokens are needed as example the collection games mentioned above, lottery slots, gambling, and other areas.

Standard ERC-827

The standard ERC-827 was developed in January 2018 by the user Augusto Lemble, as well as ERC-621 is aimed at completing the standard ERC-20 namely add the transaction data transfer function and the transaction verification function with the the third party, which together extends the capacities of the Ethereum network to a level of transmission of data from around the world in just a few seconds.

Many people call this standard the next generation of the ERC standard. This standard does not correct ERC-20, but extends the capacities being compatible with it.

Standard ERC-948

The standard ERC-948 was proposed in March 2018 by Kevin Owocki, the standard for managing subscriptions in the E-comercial sphere. There are already subscriptions to the Ethereum network, but Kevin suggested creating a single standard for this purpose and also suggested some add-on for solving the crucial scale and convenience problem. At the time the standard was not completely elaborated, but I decided to mention it, because I believe that this direction is very promising in a near future.

As we see developers are constantly working to improve the Ethereum network and in the future we expect a lot of new ideas and interesting achievements and if you are a personal developer, you have ideas, works, you can submit requests to Ethereum Improvement Proposal (PPE) and if your work is approved and accepted by the PPE Committee, your work will become the ERC standard with the serial number that will be equal to the order number of the application submitted by you.

NEO and standards of NEP Protocol (NEO Enhancement Protocol)

Both Ethereum and NEO are platforms based on Blokchain technology, and this is where all their similarities end. I will highlight two main differences between these platforms:

1. To create tokens on NEO, developers can choose from a series of programming languages like Java, Python, C#, etc., while for the creation of tokens on Ethereum developers must know and use a programming language specially designed for Ethereum called Solidity.

2. In Ethereum the creation of tokens is performed over or above the ETCH Blokchain, while in Neo everything takes place directly with the NEO Blockchain code, it brings to the NEO network, both advantages and disadvantages and: one advantage would be that this approach offers a network with the speed of higher transactions, up to 10 000 transactions per second to NEO, compared to 15-30 transactions per second in the Ethereum network. And the downside is that decentralization is lost in the NEO network, which is not considered a disadvantage in the community itself and fits into the concept.

Of course, there are other differences between these platforms, but I have listed them in terms of creating tokens.

Standard NEP-5

And now analyzing the functions of the standard NEP-5, try to find differences.

The NEP-5 standard includes the following mandatory functions:

1. Name – the function that contains the name of the token.

2. Symbol – function that contains the value of the short character of the token.

3. Decimals – the function that determines how many parts a token can be shared.

4. Total supply – The function that determines the total number of chips.

5. BalanceOf – The function that shows the balance in the account at a particular address.

6. Transfer – the transfer function of the token from the primary address to the user address (for example, an ICO participant).

The NEP-5 standard also includes the mandatory event:

  • Transfer – the transfer event of tokens between addresses, which is initiated when the transfer function is successfully executed in (transfer).

As you can see, the NEP-5 functions and events are identical to some ERC-20 functions.

Besides the standard NEP-5, it’s important to know what is the standard NEP-2 and NEP-6 which are not standards of NEO tokens, but they also indicate in the description of the wallets specifying whether a particular standard is accepted.

Standard NEP-2

The standard NEP-2 is the encryption standard of the private key 2FA for wallets, that is, the standard for writing code that will protect access to balance by entering a password and a unique code from different channels, so that there is no possibility of intercepting passwords.

Standard NEP-6

The standard NEP-6 is the NEO wallet standard, designed to solve the core problem of cross-platform portfolios. If you apply this standard to your wallet, then you will be able to quickly move tokens from one wallet to another wallet, without considering other wallet features.

But if everything is so good for NEO, then why almost all the existing tokens, according to CoinMarketCap data, are created on the Ethereum platform and so little on NEO?… There are many reasons and here are the most important of them:

1. Ethereum is the first platform for creating tokens with a large number of developers and an active community, so everyone has a hearing and almost everyone knows where to create their own token.

2. At the same time, the NEO project was under the “Iron Curtain” of the old Antshares brand, which developed inside China, and only after re-branding Antshares in NEO; the NEO platform opened to the whole world.

3. There are not a large number of developers in the NEO ecosystem, despite the familiar programming languages, which specialists should not continue to study, unlike the specific language of Ethereum “Solidity”

4. A little important factor in choosing a platform for creating tokens for developers and project founders is the number of cryptographic stock exchanges, where NEO significantly remains behind Ethereum. But this is only a matter of time.

5. And perhaps the biggest obstacle is the price threshold of a Smart Contract for NEO worth 490 GAS, which makes it less accessible compared to Ethereum. Although lowering the exchange rate this year has significantly reduced the cost of a smart contract for NEO.

These reasons describe the state of the past, explaining why there are so few tokens created on NEO. The present time, namely 2018, can already be considered a new stage in the life of the NEO platform, because there are all favorable conditions, and NEO already draws the attention of project developers to create their tokens on NEO blockchain.

Of course, both NEO and Ethereum platforms are not standing still, each working intensively developing and solving problems to achieve their goals, and in my opinion, both platforms deserve our attention. Basically, in most of the sources of information we found, NEO is assigned Ethereum’s “killer” status, and here I disagree; I am sure that competition is needed, so that every participant is worthy to become better, but not to be killed or replaced by another in the future, sure, there are already attempts to develop inter-platform technologies that would unite several Blokchains in a network.

Example of standard token ERC-20 in Ethereum network: EOS, Binance coin, Icon, Zilliqa

Example of standard token NEP-5 in NEO network: Ontology, Phantasma, Switcheo, nkn

Thank you for reading.

That's all folks!

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