ZoneBitcoin EditorialThe ERC-20 token is the best known standard of all because it belongs to one of the most popular blockchains namely Ethereum. It is in fact the 2nd cryptocurrency in terms of market capitalization.
So, this is the type of token that we see the most, you might say. By reading this article, you will quickly discover why it is so successful.
To say it directly in the introduction, know that the ERC-20 token (ERC-20 token) is a standard token which is created and which is exchanged on the network Ethereum.
The somewhat barbaric name which is actually an acronym simply means " EEthereum Request for Chow". For number 20, well, that's just the number that was assigned so that we could sort the tokens.
Because yes, and we will see later, there are several types of token. However, it is the ERC-20 token which is clearly the most used and known. So, let's see what the famous ERC-20 token is before discussing the other types of tokens.
What is an ERC-20 token?
This token is called "fungible". This means that the token is interchangeable with other fungible goods as well. In addition, and it is a programmable token on a computer code, which means that one can define one's own spending conditions.
It is on the Ethereum blockchain that we can therefore perfectly use the tokens. They can be bought, sold or exchanged on exchange platforms. Each token (or token) represents a digital/digitized asset. This can be tangible objects or any other real-world assets.
Basically, an ERC-20 token is a standard for smart contracts created on Ethereum. It is thanks to the token that we can formalize and concretize a smart contract In fact. This is why these tokens are so important. It is on them that smart contracts are built.
Most tokens are ERC-20 Type
The tokens you use or are most familiar with are generally ERC-20. For what? For the simplicity of creating these tokens and the popularity of Ethereum above all. It is accessible to everyone and the creation of tokens on Ethereum is clearly made easier. In addition, there are more and more blockchain developers who can create a project on Ethereum.
For example, the BAT token du Brave browser is an ERC-20 token. We can also cite Maker (MKR), Augur (REP), Uniswap (UNI) and OmiseGO (OMG) to name only the best known.
Likewise, many cryptocurrencies you know started as ERC-20 tokens before having their own blockchain. It’s actually a good way to launch a project. First, we validate its usefulness and once we have good traction, we can move on to the next stage.
Thus, the token of Binance Coin (BNB) was first an ERC-20 token before having their own blockchain.
(I remind you here that the difference between token and cryptocurrency is this: A token exists on a third-party blockchain while a cryptocurrency has its own blockchain).
ERC-20 tokens constitute a standard on Ethereum
What you need to remember behind the word ERC-20 token is above all that it is a technical standard. It offers and represents a list of rules that all tokens will follow in their operation. These rules include how tokens will be transferred, how transactions will be validated, and how users will access data about the token and total issued supply.
This way, developers can accurately predict how tokens will perform on the network. ERC-20 tokens do not evolve on their own blockchain but on the Ethereum network.
The ERC-20 token represents a technical standard which is used in smart contracts, and therefore in the integration of tokens on the Ethereum blockchain
To summarize, here is the fundamental thing we can remember regarding ERC-20 tokens:
- The ERC-20 standard is the most used standard on the network for the development of all types of projects related to tokens.
- The functionalities of the ERC20 constitute in themselves a smart contract which will configure and distribute a token according to defined rules.
- The ERC20 token is like a fungible token that can be inter-traded with other ERC-20 tokens.
There are many uses for ERC-20 tokens
Now it's time to see what it's actually used for. Here is what we can do with ERC-20 tokens in concrete terms.
ERC-20 tokens are useful for fundraising
And, anyone can create their own token on the network. These are also the tokens that we will use when we want to launch crowdfunding: ICOs. Initial Coin Offering (ICO) are fundraising in the world of cryptocurrencies.
During the ICO explosion in 2017, the world had just discovered the incredible opportunity that ICOs offered. This is even how the world discovered the entire architecture of Ethereum.
Hundreds of startups have therefore been able to finance their companies thanks to ICOs. During this year 2017, more than 6 billion were collected. All this, with no administrative formalities and funds coming from all over the world. Even geographical barriers had just been broken down.
This is indeed a question that we can ask ourselves. During the ICO explosion in 2017, the world had just discovered the incredible opportunity that ICOs offered. this is even how the world discovered the entire architecture of Ethereum.
Hundreds of startups have therefore been able to finance their companies thanks to ICOs. During this year 2017, more than 6 billion were collected. All this, with no administrative formalities and funds coming from all over the world. Even geographical barriers had just been broken down.
Moreover, the investors themselves were delighted because sometimes, they were able to make enormous capital gains. And on the side of the entrepreneurs, obviously, it was the nec plus ultra; Being able to raise funds in a few days to start your project. What entrepreneur wouldn't dream of it?
Smart contracts are customizable
We said above that ERC-20 tokens are standard. Of course, however, be aware that you can still adapt them and add additional functions.
We can personalize them in some way, while ensuring that it remains compliant with the ERC-20 standard. This characteristic is very important and means that the ERC-20 token can then meet different uses.
The goal remains that all ERC-20 tokens can work together; Interoperability between smart contracts is then preserved.
This is what allows people to access precise information and be able to code each ERC-20 in a generic way.
Being able to tokenize real-world assets
This is certainly the most amazing use that can be made of tokenization in general. In fact, everything that can be "owned", every asset in the real world can be tokenized. Thus, companies, real estate (as we saw with RealT), works of art etc. Everything can be tokenized again.
This means that the value of the asset will be represented digitally by a token. The big advantage is that we can then "fractionate" this asset into small percentages. This can be very practical in the case of real estate or with financial assets again.
Practical Info: Which wallets support ERC-20 tokens?
Yes, ERC-20 tokens work on Ethereum and as such, they must be stored on compatible ERC-20 wallets.
👉 That said, I would like to point out that wallets are mainly used to receive, send and exchange. You will often need to use an exchange platform like Binance to buy your ERC-20 tokens.
(👨💻 Read it tutorial on Binance to learn how to buy cryptocurrency)
There are more and more Ethereum wallets and here are the most reputable and solid ones.
- consult tutorial for MetaMask : It is a wallet and a web browser extension. This is what makes it extremely practical because it can be connected to different sites. They can also be connected to hardware wallets like the Ledger for example.
- At the start, we didn't have much choice, and there was no example that MyEtherWallet, which is already practical and very functional.
- Otherwise, you have the cross-platform wallets like Exodus et Silver for example, which make it possible to manage a very large number of ERC-20 tokens.
How do I know if a token is ERC-20?
To know if a token is an ERC-20, you will need to know the blockchain on which the token is built. If you don't know, you can go to a site like Coinmarketcap and it will be listed near the token address.
For example, for the Stargate token (STG), you will find the Ethereum logo near the address. So this is the sign that you are dealing with an ERC-20 token.
Don't forget that tokens can be created on several blockchains as well.
Final words on ERC-20 tokens
It was with ERC-20 tokens that we realized the power of blockchain and how'ethereum could change our lives, really.
After the boom of ICO In 2017, we also saw an ever-increasing use of cryptocurrencies. The ERC-20 token is clearly participating in this craze, it’s obvious.
We also see with the decentralized finance for example, how enormous the possibilities are. And again, we've seen the applications in finance, but increasingly, we're seeing its applications in other sectors.
And that's a good thing, isn't it? !
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