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What is ERC-20

30 august 2017, 23:00 by

While acquiring your new ICO tokens, you most probably have come upon this ''ERC-20'' type of token. This is the most popular type of token right now and if you look at the technical part of most of the altcoins on today's market, you will see that they are indeed fit into this ERC-20 standardization.

 

Ethereum started it all

Everyone that has been doing some research around all of this cryptocurrency mess, has for sure came upon something called Ethereum. Some of them, may acknowledge it basically with another digital currency and payment method, but it is also a whole new technologies that has enabled to manage what is called now ''smart contracts'' and deploy new tokens. These tokens then act as a digital proof of ownership or act like an asset. These are the ICO tokens that you get when you participate in the project and these are the things that make sure you get your reward later on. This article will introduce you to the tokens, this time based and built upon Ethereum, so that you don't associate Ethereum only with digital payments.

What is ERC-20

 

So what is it?

ERC-20 is a type of standardization for these Ethereum tokens. It's basically a bunch of rules for the developers to follow in order to make sure their new tokens are compatible with the rest of already existing digital infrastructure. For example, it makes it easier for new tokens to be included in popular already existing dapps. There are 6 basic functions that are defined in ERC-20. They act as the base for the rest of the token to be built upon and include information about how to access the token, how it behaves when sent and received. For an ordinary token user it's nothing important, but it's something that allows him to easily manage a lot of different tokens.

 

What is ERC-20

 

ICO and ERC-20

New developing projects often doesn't have enough resources to be able to create an actual coin with it's own chain or wallet. The same applies for listing their coins on exchanges. That's why it's easy for the developers to deploy their coins on existing Ethereum infrastructure. You don't need any special wallet to hold this kind of coin. Your Ethereum address acts as this new token address as well, and you can access these tokens through your Ethereum wallet. You can easily buy new tokens without need of an official exchange and add them to your wallet, as it supports everything that follow ERC-20 rules. For more details on how to set up a multiple token wallet, we've written a how-to article on this topic.

Every token is different and they are not programmed in the same way or environment. It's essential to research your ICO token beforehand and make sure it's ERC-20 before blindly sending it into your Ethereum wallet. There is also an occurring problem when sending tokens directly to a smart contract, as it makes them disappear. There is a still developing new token standard called ERC-223 that aims to solve this problem, but there are no tokens yet that fully implemented this.

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