ERC-20 explained

If you aim to learn more about cryptocurrencies in general and ICOs in particular, you may have come across the abbreviation “ERC20” on the web. This term was especially popular in 2017 during the ICO boom. And there’s no wonder as most ICOs that were conducted during this period were based on exactly on this standard. Let’s take a closer look at what it is.

What is Ethereum?

As ERC-20 is closely related to the Ethereum platform, let’s give it a definition first.

Ethereum is a decentralized platform for creating applications based on smart contracts. These contracts are in fact automated apps that simply execute specific commands when special conditions are met. Once launched on the blockchain, they run 24/7, without any possibility of downtime, third-party interference and cannot be a subject to censorship.

What is an ERC-20 token?

ERC-20 is a protocol standard which sets specific rules for those who want to issue their own tokens on the Ethereum network.

The abbreviation “ERC” stands for “Ethereum Request for Comments”. 20 is an identification number for this standard.

There are other standards that come under different ID numbers. For example, there is a standard ERC-721 that is used for issuing unique non-fungible tokens on Ethereum. The full list of standards and proposals can be found on Ethereum’s official website.

Advantages of ERC-20 tokens

Tokens issued on this standard provide both users and companies with the following benefits:

  • Standardization and compliance. All ERC-20 tokens are compatible with the Ethereum network and can be integrated into all Ethereum-based apps.
  • Increased liquidity. Since the newly issued tokens are uniform with the network, using these tokens becomes less complex and their liquidity increases.
  • Simplified development. It’s much easier to launch a new token that is based on the universally accepted standard than to invent something new.

Examples of ERC20 tokens

Among the most famous projects that issue their tokens using this standard are the following:

  • Augur
  • VeChain
  • Golem
  • OmiseGo
  • Raiden
  • Basic Attention Token (BAT)
  • Aragon (ANT)
  • TenX

ERC-20 Development & Consulting Melbourne

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