ERC-20 Definition
ERC-20, which stands for Ethereum Request for Comment 20, is a technical standard used for smart contracts on the Ethereum blockchain for implementing tokens. It defines a common list of rules that an Ethereum token has to implement, giving developers the ability to program how new tokens will function within the Ethereum ecosystem. This token standard allows for the creation of a token that can be traded, spent, or given to someone else.
ERC-20 Key Points
- ERC-20 is a standard on the Ethereum blockchain for implementing tokens.
- It provides a set of rules that must be adhered to in order for a token to be accepted and able to interact with other tokens on the network.
- ERC-20 tokens are blockchain-based assets that have value and can be sent and received.
- The majority of tokens issued on the Ethereum blockchain are ERC-20 compliant.
What is ERC-20?
ERC-20 is a protocol standard that defines certain rules and standards for issuing tokens on Ethereum’s network. In ‘ERC-20’, ERC stands for Ethereum Request for Comment, and 20 is the number that was assigned to this request. The clear set of rules and standards allows developers to accurately predict interaction between tokens. These rules include how the tokens can be transferred, how transactions are approved, how users can access data about a token and the total supply of tokens.
Why is ERC-20 important?
ERC-20 plays a significant role in the Ethereum ecosystem. Before the advent of the ERC-20 standard, there were many compatibility issues between different types of Ethereum-based tokens. ERC-20 provides a common set of features and interfaces for token contracts in Ethereum. This standardization has significantly simplified the process of creating a new token, as each new token doesn’t need to be reprogrammed from the ground up. It also ensures that the tokens perform in a predictable way, which has led to an explosion in the number of tokens being released.
Who uses ERC-20?
ERC-20 tokens are used by developers, investors, and service providers alike. Developers use the ERC-20 standard to develop new tokens. Investors use ERC-20 tokens to participate in initial coin offerings (ICOs), where they can purchase tokens during the early stages of a project. Service providers like exchanges and wallet services use ERC-20 tokens as it allows them to support a wide range of tokens without needing to integrate each new token individually.
When was ERC-20 created?
The ERC-20 token standard was created in 2015. Since then, it has been widely adopted by Ethereum developers and has become the foundation for many tokens issued on the Ethereum blockchain.
How does ERC-20 work?
ERC-20 defines a set of functions that a token contract can execute. These include transferring tokens, inquiring the balance of tokens at a certain address, and the total supply of tokens. In addition to these, it also includes a couple of signals that each token contract can trigger. When a person sends tokens to another, the contract triggers a transfer event and keeps a record of the movement of tokens. This standardization allows wallets and exchanges to handle tokens across multiple interfaces and DApps, which makes the entire ecosystem more efficient.
