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 a “proposal identification number,” a coherent offer value submitted by blockchain architect Fabian Vogelsteller in November 2015. All ERC-20 is compatible with the Ethereum Blockchain.
The significant 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. That’s why enormous costs are usually saved in the ICO area.
You can also download wallets online to secure your ERC-20 tokens. It 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 trade first.
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 them. The Ledger Nano S (around 80 euros) and the Trezor (about 90 euros) are the best-known hardware wallets on the market. They are particularly suitable for beginners because they are straightforward to use.
Another option is to store the ERC-20 tokens on an exchange. It 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.
To create an ERC-20 token, the developer must follow specific 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. Also, specific transfer commands (transfer, transferFrom, Approve, and Allowance) must be specified.
The so-called “balanceOf” shows how many coins an address contains.
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 and the six primary practices.
It includes the token’s name, the token symbol, and the length of the decimal place.
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 mostly unregulated crowdfunding method, ICOs are particularly popular with startups. In many cases, startups were able to earn several million euros thanks to ICOs before the coin was released.
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.
Similar: How to Build an Ethereum Mining Rig?
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 most superficial 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. “