ERC20 explained, erc20 token is a smart contract model in the Ethereum blockchain. The abbreviation ERC-20 stands for “Ethereum Request for Comments” and establishes a technical standard. The No. “20” is simply an “proposal identification number”, that is a coherent offer value which was submitted by blockchain architect Fabian Vogelsteller in November 2015. All ERC-20 are compatible with the Ethereum Blockchain.
Uses of ERC20 Explained ?
The big advantage of tokens is that they run on the Ethereum blockchain. This also means that tokens are often sent and received with an Ethereum wallet. Thats why enormous costs are often saved in the ICO area.
Desktop wallets for ERC-20 tokens
You can also download wallets online to secure your ERC-20 tokens. This includes providers such as myetherwallet, Parity or Metamask. PC wallets are generally available for free. In myetherwallet, the ERC-20 tokens were even swapped in the wallet for some time, i.e. exchanged for each other. As a result, the user does not have to send the parts to an exchange first.
Hardware wallets for ERC-20 tokens
Hardware wallets are considered a secure option for securing ERC-20 tokens and other assets. Since hardware wallets aren’t usually free, you should compare them before you buy. The Ledger Nano S (around 80 euros) and the Trezor (around 90 euros) are the best known hardware wallets on the market and are particularly suitable for beginners because they are very easy to use.
Store at ERC20 exchange
Another option is to store the ERC-20 tokens on an exchange. This is particularly advantageous for day traders who execute several transactions per day. However, you do not have private keys for individual ERC-20 tokens on an exchange. In the event of a hacker attack, there is a risk that you will not have access to your coins.
Technical standard for ERC20 explained
To create an ERC-20 token, the developer must follow certain rules. As a result, six rules must be included in the smart contract.
First, the specification of the overall supply, i.e. The total amount of each coin. In addition, certain transfer commands (transfer, transferFrom, Approve and Allowance) must be specified.
The so-called “balanceOf” shows how many coins an address contains.
Optional rules to create an erc 20 token
The first step in creating an ERC-20 token is to program a smart contract. With the Solidity programming language, additional optional rules can be integrated into the smart contract in addition to the six main rules.
This includes the name of the token, the symbol of the token and the length of the decimal place.
Popular with startups
ERC-20 tokens are often used by startups or crowdfunding projects because they are easy to create and companies can use pre-built technologies. Almost all ICOs are carried out via the Ethereum blockchain.
As a largely unregulated crowdfunding method, ICOs are particularly popular with start-ups. In many cases, start-ups were able to earn several million euros thanks to ICOs before the coin was released
What ERC20 tokens are there ?
Most cryptocurrencies are ERC-20 tokens and are executed on the Ethereum blockchain. BNB, Maker, Crypto.com and BAT cryptocurrencies currently have the largest market capitalization among ERC-20 tokens.
In total, there are over 1000 different ERC-20 parts and the trend is going up.
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What is the difference between Coin and Token ?
In the beginning there is one thing to be aware of. Coins and tokens are considered to be cryptocurrencies , although this designation is not entirely correct. The currency is technically the entity, the store of value, and the medium of exchange. And here is the contradiction, since most coins do not function as currency or medium of exchange.
The simplest view of the difference between coin and token is provided by CoinMarketCap, which divides coins and tokens according to the following logic:
” COIN IS A CRYPTOCURRENCY THAT CAN WORK INDEPENDENTLY. THE TOKEN IS A CRYPTOCURRENCY THAT IS DEPENDENT ON ANOTHER CRYPTOCURRENCY AS THE PLATFORM FOR OPERATION “.