Ethereum is a prevalent and widespread cryptocurrency that is centered around the use of tokens, which can be sold, bought or traded. Today, there are different types of tokens that…

What is ERC20 Standard & Token? – All that you need to know

What is ERC20 Standard & Token? – All that you need to know

Ethereum is a prevalent and widespread cryptocurrency that is centered around the use of tokens, which can be sold, bought or traded. Today, there are different types of tokens that uses Ethereum platform to create smart contract, and are different from Ether.

These tokens have values and they represent different assets like vouchers, informal docs like IOUs, or even objects in the real world. In a simpler form, they are Smart Contracts that bring Ethereum blockchain into play. One of the most noteworthy Ethereum token standard is ERC-20, which is also known as “Ethereum Request for Comments”. It is an official protocol for recommending improvements to Ethereum network, in which 20 represents a unique proposal ID number. The protocol became popular among the startup companies to raise funds via crowdfunding.

What is ERC20 Token?

ERC-20 actually portrays a set of common rules for Ethereum based tokens to follow. It allows a specific token to empower the developers to envisage precisely how new tokens will function within a larger system. It ensures that tokens on the Ethereum network can meet.

The tokens that check all the essential boxes are known as ‘ERC20 Tokens’. These are actually blockchain assets that have value and can be sent and received, like Litecoin, Bitcoin and Ethereum.

The difference between a other digital currency and ERC-20 tokens is that these tokens are associate on the Ethereum network, which is hosted by Ethereum addresses and is sent by Ethereum transactions.

Popular ERC20 Token Projects

Today there are over 48941 ERC20 Token projects, actively tracked by Etherscan. Although most of the cryptocurrency start-ups are trying to deal with certain issues, but some projects have really done well from the rest. These projects include Power ledger, EOS, OmiseGO (OMG), Golem (GNT), Zilliqa (ZIL), Aragon (ANT) and Basic Attention Token (BAT) to name a few.

How does ERC20 Impacts Developers?

ERC-20 impacts the developers massively, as projects need not be redone every time a new token is released. Instead, they are designed to be attuned with new tokens, provided those tokens hold on to the rules. The best part is that all the new tokens in the Ethereum network have observed the ERC20 rules, which means they are ERC20 compliant.

ERC20 Functions

ERC-20 defines various functions to assist other tokens within the Ethereum system. These are usually basic functionality issues, like how tokens are transferred and how users can access data about a token. These signals and functions guarantee that different types of Ethereum tokens can work the same way, at different places, within the system. This makes easier for all the crypto wallets that support Ether to support ERC20 tokens, as well.

Issues Relating ERC20

One significant issue with Ethereum tokens is that tokens sent directly to a Smart Contract tend to lose money. If an error occurs in the protocol, it means that a token’s contract is not responding to its efforts of making a direct transfer, thus resulting in loss of money.

ERC-20 has seen dilemma by the broader Ethereum community, which means that the momentum is quite strong and all the new tokens will most likely confirm to ERC-20 rules. Some troubleshooting might occur as the standard is still evolving and Ethereum continues to develop.

 

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Charu Mehta is an adroit content writer and consultant in the disruptive fields of blockchain and cryptocurrency. With more than ten years of experience in writing, she has the ambidexterity to create both inspiring and intelligent content that not only makes her a laureate pacesetter in this avocation, but also reflects her zeal towards writing about the blockchain technology.

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