What is an ERC20 token?

Those of you who may have read my earlier postings would have seen an article on smart contracts. ERC20 tokens are an essential part of that system.

Here's an article that provides a beginners guide to that subject and was written by Tim Falk and Updated on Dec 17, 2020;

"A token is a type of cryptocurrency which can be created by anyone, without the need for much technical know-how or skill. This is one of the reasons there are so many cryptocurrencies on the market – tokens have enabled almost any brand, company or idea to make their own in a matter of minutes. ERC20 is a technical standard for tokens issued on the Ethereum blockchain. ERC20 tokens aren’t too complicated, let us explain them to you.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

What are ERC20 tokens?

Since its launch in 2015, Ethereum has become one of the driving forces behind the growth of cryptocurrency. Initial coin offerings (ICOs) have raised billions of dollars in funding for crypto projects from all around the world, and most of these ICOs are based on the Ethereum platform. Buyers contribute Ether (ETH) or bitcoin (BTC) to participate in a crowdfunding sale and in return receive some of the ICO project’s native tokens.

ERC20 is a technical standard for tokens issued on the Ethereum blockchain, providing a list of rules that all Ethereum-based tokens must follow. These include:

1. how the tokens can be transferred,

2. how transactions are approved,

3. how users can access data about a token and the total supply of tokens.

4. The protocol is necessary to ensure compatibility between the many different tokens issued on Ethereum.

Just like bitcoin, Litecoin and any other cryptocurrency, ERC20 tokens are blockchain-based assets that have value and can be sent and received. The difference is that instead of running on their own blockchain, these tokens are issued on the Ethereum network. This means they’re hosted by Ethereum addresses and are sent using Ethereum transactions.

Did you know?

Want to know why they’re called ERC20 tokens? The “ERC” stands for “Ethereum Request for Comments”, which is an official protocol used to propose improvements to the Ethereum network. The “20” is the unique ID number used to identify the proposal.

Popular ERC20 tokens list

Many crypto newcomers are surprised to discover just how prevalent ERC20 tokens are. Take a look at a list of the top 100 digital currencies by market cap, and you’ll see plenty of well-known currencies that use the ERC20 standard. At the time of this writing (May 2018), these include the following:

• EOS (EOS)
• TRON (TRX)
• VeChain (VET)
• ICON (ICX)
• OmiseGO (OMG)
• Zilliqa (ZIL)
• Aeternity (AE)

• 0x (ZRX)
• Bytom (BTM)
• Populous (PPT)
• Maker (MKR)
• RChain (RHOC)
• Augur (REP)
• Golem (GNT)
• IOStoken (IOST)

• Status (SNT)
• DigixDAO (DGD and DGX)
• Aion (AION)
• Loopring (LRC)
• Waltonchain (WTC)
• Basic Attention Token (BAT)
• Mixin (XIN)

However, it’s worth noting that some of these currencies, such as VeChain (VET), were initially issued as ERC20 tokens but will soon be swapped for native currencies following the launch of their own blockchains.

Read the original article here