How Token Standards Work: A Beginner’s Guide
Token standards set shared rules for transfers, approvals and balances. Before you send or approve, check the contract address and the network.
Vahe HakobyanEditor-in-chief
Updated Oct 6, 20263 min readFact-checked
On this page
- Standards define transfer, approval and balance rules.
- ERC-20 is fungible; ERC-721 is for unique NFTs.
- ERC-1155 can cover both in one contract.
- A standard does not make a token safe.
- Approvals let a contract spend later.
To use a token, check its contract address and network before you approve or send. The checks take a few minutes.
What is a token standard?
A token standard is a shared set of rules for tokens on a blockchain. It names common functions so software can handle many tokens the same way. A transfer moves tokens, an approve lets another address spend them later, and a balance function reports holdings. The standard does not promise that the token is safe or valuable.
What should I check before using?
Before you send or approve, find the token's contract address and confirm the network. A ticker can appear on more than one contract, so the address matters. Scam tokens can follow a standard, and a standard does not prove safety or value.
How do token standards work step by step?
Wallets, exchanges, and apps read the same standard functions to display and transfer tokens. A transfer updates balances and writes an event, and an approval lets a contract spend tokens later.
- 1Find the address and networkCopy the contract address and confirm the network matches your wallet.
- 2Read the token detailsThe wallet calls functions for name, symbol, decimals, and balance.
- 3Check recipient and amountReview both before you sign.
- 4Send the transferThe transfer function moves tokens and updates balances.
- 5Review approvalsCheck the spender and amount; a contract can spend later.
Which standards should I know?
ERC standards are common on Ethereum.
- ERC-20 is the fungible token standard on Ethereum. One ERC-20 token is interchangeable with another of the same type.
- ERC-721 is the non-fungible token standard. CryptoKitties launched in November 2017 with an early version, and the standard paper was published in 2018.
- ERC-1155 can hold both fungible and non-fungible tokens in one contract.
Frequently asked questions
No. ETH is the native coin of Ethereum and pays gas. ERC-20 tokens are separate contracts that follow a standard.
Usually no. BEP-20 is a standard on BNB Chain, and an ERC-20 token lives on Ethereum.
The contract can spend the approved tokens up to the amount you set. Some wallets let you revoke an approval later, but that depends on the contract and network.
The standard itself does not change US tax rules. The IRS treats crypto as property, so sales, swaps, and some transfers can be taxable events.
