Monday, November 28, 2022
Finance

A Quick Guide to ERC-20 Tokens

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In the early days of cryptocurrency, there was Bitcoin. After its success, there came an army of Bitcoin clones, offering cheaper and quicker transactions. At that point, the industry largely revolved around these payment coins. The onset of Ethereum and ERC-20 tokens revolutionized the entire industry. Without ETC-20 tokens, the crypto space would not be as vast or innovative.

A Background on Ethereum

Origins and the birth of ERC-20 tokens

The Ethereum network is the second-largest cryptocurrency in terms of total market cap, and this is for a very good reason. Ethereum is a powerful and versatile platform where smart contracts, decentralized applications, and ERC-20 tokens can be created. This way, the Ethereum blockchain is a little like YouTube, but instead of uploading videos, they can create their own ERC-20 tokens that can be used globally.

So why create a Guide to ERC-20 tokens in the first place? Prior to Ethereum, creating a blockchain network and your own tokens was difficult. Things were clunks and you had to develop everything from the ground up.

The introduction of the Ethereum blockchain means that developers no longer need to worry about the security, speed, and foundations of the underlying network. The result of this is that developers can focus on code writing and bring them to life without too much effort through the Ethereum blockchain.

What are ERC-20 tokens?

ERC stands for Ethereum Request for Comment, and the 20 is the number attached to that unique standard. There are also different ERC standards that serve different functions.

The tokens are made to be compatible with the Ethereum blockchain and have a simple list of rules in code to define how these tokens function on the Ethereum blockchain. These rules are made to help the crypto work with wallets without any need for updates. This results in a better user experience.

ERC-20 token uses

ERC-20 tokens have a wide number of use cases. The most common are:

  • Currency: Tokens can be used to provide a robust economic system for a project’s ecosystem.
  • Governance: Tokens can be used to enable a democratic voting system where each token holder votes on network updates and community proposals.
  • Staking: Tokens can be used for staking to aid in the securing of a specific blockchain and in return will attain staking rewards.

Token Rules

In order to create ERC-20 token cryptocurrencies, there are six general rules developers must follow and three optional rules.

These codes are called functions in programming languages and are essentially a block of code that performs a set of instructions. These codes are essential for good user and token implementation, specifically when making transfer or withdrawal requests, determining the number of tokens in circulation, and more.

Rules you must follow:

  • Allowance
  • Total supply
  • Balance
  • Transfer
  • transfer from
  • approve

Rules you can follow:

  • Token Name
  • Symbol
  • Decimal (up to 18 places)

One Last Thing

ERC-20 tokens have helped revolutionize the crypto world. The ease of making blockchains with ERC-20 makes it one of the biggest aspects of the modern crypto industry. If you want to tap into the potential, you should use Swyftx, Australia’s leading crypto platform.