What Are ERC-20 Tokens on the Ethereum Network?

This decentralized ledger of financial transactions is constantly evolving, with new data continuously added. Whether you are a seasoned trader or just getting started in the world of digital currencies, understanding these token standards will help you work with crypto more effectively. Token standards are important because they ensure that different tokens can work together without issues.

What are some uses for ERC-20 tokens?

It’s also worth noting how the creation of the ERC-20 standard influenced the . ERC-20 made it possible for developers to quickly build a token using the framework provided, which meant a significant decrease in the technical know-how and amount of work required to launch a token. Developers were able to crowdsale the tokens to the Ethereum community and raise significant amounts of money. This played a role in funding many essential platforms and projects that make up the Ethereum ecosystem today. No, TRC20 is the token standard based on the Tron blockchain, while TRX is the native and governance token of the Tron ecosystem. While TRC20 is faster and has lower fees, ERC20 has a wider range of cryptocurrencies available.

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Instead, they introduced token standards that govern programming on Ethereum and deliver high compatibility. Outside of crypto exchanges, ERC-20 tokens are often used to represent other assets, like in-game currencies, financial assets, or real estate. In addition, some crypto companies, like Circle, use the ERC-20 standard to issue dollar-valued tokens. ERC-20 was proposed by developer Fabian Vogelsteller in 2015 to address the need for a standard within smart contracts on the Ethereum blockchain. Vogelsteller submitted the proposal via the project’s Github https://ai-robert.com/ page as an Ethereum Request for Comment (ERC).

With almost 1,000 crypto assets that follow its specifications in circulation today, the ERC-20 token standard is one of the foundational pillars of the blockchain ecosystem. Think of it as a common language that allows different applications and exchanges to understand and interact with each other. It’s been around for a while, and it’s still the most popular way to create tokens. It’s not perfect, but it’s simple and well-understood, which is why so many people use it. Today, the ERC-20 token standard outlines rules and functions for creating and managing fungible tokens that can be exchanged for equal value and replicated within the Ethereum network. Additionally, this ensures that tokens adhering to the same standard can integrate seamlessly with wallets, exchanges, and third-party tools supporting the designated protocol.

• A fungible token is one that is exchangeable with another token, whereas the well-known ERC-721 non-fungible tokens (NFTs) are not.
• We do not recommend specific products or providers, however may receive a commission from the providers we promote and feature.
• ERC-20 is not only an important part of the Ethereum ecosystem, but a gateway into the broader blockchain space.
• Always confirm important product information with the relevant provider and read the relevant disclosure documents and terms and conditions before making a decision.
• There are ERC-20 tokens that represent real estate, art, stocks, unused hard drive space, and more.

With smart contracts, you simply insert cryptocurrency (such as Bitcoin) into the system (like a vending machine) to execute the contract. While ERC-20, ERC-721, and ERC-1155 have become staples, the blockchain world is always cooking up something new. Several emerging token standards aim to improve upon existing models or address specific needs that aren’t fully met by the current ERC standards. These new standards often focus on enhanced functionality, improved efficiency, or specialized use cases. After a boom in 2018, the year 2019 saw a further increase in the acceptance and in applications of the ERC20 token standard on an international scale as the utilisation of Ethereum smart contracts is growing. The ICO space is becoming increasingly more regulated while some countries are currently banning ICOs all together.