What is ERC-20 Standard?
The ERC20 standard was designed for fungible tokens, and, as you may already know, there are also NFTs. They have a particular function in NFT marketplaces and they are related to digital artwork or collectables, such as digital trading card games or even in-game items.
When it comes to issuing a smart contract with tokens, ERC-20 has become the industry standard, but there are alternatives. ERC-20 was introduced in 2015, and some developers believe it has flaws. One of them is the ERC-621 which has the same set of functions as the ERC-20 but also has a function to increase or decrease the capacity of a token. Another notable example is the ERC-827. It has a feature that allows a third party to spend the token.
It is important to mention that the ERC-20 standard was created by an EIP (specifically, the EIP-20). This occurred a few years after the original proposal due to the plan's widespread adoption. However, even decades later, the moniker "ERC-20" remained.
ERC-20 TOKENS
ERC-20 is the name given to a standard fungible Ethereum token type but also to the standard that defines what must be implemented to create a new type of fungible token (see question 10) on the Ethereum network. ERC-20, introduced by Fabian Vogelsteller and Vitalik Buterin in 2015, provides an Ethereum-based token structure that is reasonably straightforward. Instead of inventing the wheel, developers can use his pattern. Instead, they might expand on a local foundation that has already been established.
Ethereum Request for Comments on Ethereum is referred to as ERC. The specifications for Ethereum programming are outlined in these technical documents. Compare these to Ethereum Improvement Proposals (EIPs), which, like Bitcoin's BIPs, call for modifications to the protocol itself. Instead, ERCs aim to establish standards that facilitate communication between contracts and apps.
In addition to peer-to-peer payments, the Ethereum project aims to create application cases for blockchains. This includes offering a trusted and secure platform for online transactions involving total strangers. In the long run, using smart contracts should increase both the profitability and security of traditional contracts.
WHAT ARE TOKENS AND THE ERC-20 STANDARD?
Before the implementation of the standard, exchanges had to build bridges to transfer tokens. ERC-20 unifies a standard with a certain set of rules and six different functions for smart contracts. One of these functions is to monitor the total token supply, circulating supply, and token balance. In addition, it ensures:
· Consistent and fast transactions
· More efficient transaction confirmations
· Reduced risk of breach of contract
· Faster interactions with other tokens and the blockchain
Additionally, it offers API compatibility across smart contracts and smart contracts, enabling exchanges and other services to communicate with any ERC-20 smart contract without needing to be fully conversant with each contract and token. It has become the most significant standard for creating smart contracts with tokens as their output.
The fact that most alternatives provide the same fundamental feature set is one of the reasons ERC-20 continues to be the most well-established token standard. As a result, they increase its functionality while still adhering to the same standards. These fundamental actions are:
"TotalSupply": This function details the total supply of tokens.
"The "BalanceOf" (balance of) function gives the owner's account balance.
"Transfer": Jump to carry out token transfers to a specified address for a certain number of tokens.
"TransferFrom" (transfer from): Performs transfers from a specified address for a predetermined number of tokens.
"Approve": This function permits a spender to take out a certain number of tokens from a certain account.
"Allowance": This function sends an owner a certain quantity of tokens from a sender.
WHY DO YOU SHOULD KNOW ABOUT ERC-20 IF YOU ARE USING CRYPTO?
ERC-20 tokens are smart contracts carried out on the Ethereum network. They operate inside of a programming environment created by the Ethereum team. This architecture is open-ended enough to support various applications without jeopardizing the Ethereum blockchain. For instance, with their unit of account, they can execute sub-accounting in parallel with the main Ethereum ledger. All of this without combining the addresses' Ether balances. But by ensuring the security, tractability, and transparency of the Ethereum network.
Because of their extreme versatility, ERC-20 tokens have come to be accepted as the norm. These tokens standardize the network's interface for creating and issuing new tokens. Applying specific guidelines and standards for its approval enables this. For instance, you need ether to move or edit an ERC-20 token. The economic and utilitarian aspects of the token are both supported by this circumstance.
ERC-20 tokens were developed to create interoperability and compatibility between tokens and advance the Ethereum ecosystem. ERC-20 tokens make the process of developing new coins simpler. Because the infrastructure is set up to support it, additionally, it came with tools for this purpose, like the EVM virtual machine.
THE DIFFERENCE BETWEEN THE STANDARD AND ERC-20 TOKENS
The ERC-20 standard governs the creation and transfer of Ethereum tokens. Fabian Vogelsteller suggested the most popular standard for Ethereum tokens in 2015 and has since gained widespread adoption. Token contracts may be created and managed more easily by developers thanks to ERC-20, which establishes standards all Ethereum tokens must adhere to. These regulations cover token transfers, user approval processes, and data storage on the blockchain.
The ERC-20 standard has greatly aided the creation of a thriving ecosystem of Ethereum-based tokens. On the Ethereum blockchain, more than 100,000 ERC-20-compliant tokens have been produced, with a market valuation of over $20 billion. Other blockchain platforms are also progressively adopting the ERC-20 standard to start their token economies. This demonstrates how open standards may spur innovation and adoption in the blockchain industry.
THE DIFFERENCE BETWEEN ERC-20 AND TRC-20
To be clear, TRC-20 refers to a token-based in the TRON ecosystem. It operates on the TRX network, whereas ERC-20 refers to a token based on the Ethereum network. To minimize confusion, we will now refer to the network as TRX.
The detailed distinctions between the two networks are numerous. They can be covered in a separate piece. However, for now, you should be aware that the Ethereum (ETH) network has high costs (or fuel) and is sometimes congested due to the excessive number of users and applications using it.
WHY WERE ERC-20 TOKENS CREATED?
The main motivation of the developers was to create something so broad, mainly to create a multi-capacity system. All this in a standard interface reusable for other applications: from wallets to decentralized exchanges. All this under an API that guarantees developers the following advantages:
1. Uniformity in programming: API is standard and stable, making it easy to program. This facilitates the creative task of programmers when creating a new software based on Ethereum resources.
2. Reduces programming complexity: As the API is simple, its use reduces the complexity of the software created to use it. This translates into better readability, security and suitability of the written code.
3. Support for multiple programming languages and portability improvements: As the tokens API is free, it can be programmed in different programming languages. Some of the supported languages for this task are Solidity, JavaScript, C, C++, Python, Java, and Go.
4. Less complexity in understanding each type of implemented tokens: This is because they will all be based on the same principles of functionality.
5. Greater security, especially thanks to features like a token allowance.
6. Lower risk of breach of contracts, as they have no impediments or incompatibilities. This is because the API is stable; changes made to it improve but never break compatibility.
CONCLUSION
The ERC-20 token is considered a crypto asset, just like coins that work with their blockchain. Each token represents ownership of a share in a crypto project and provides rights that vary from company to company.
ERC20 tokens are currently the most popular because the Ethereum blockchain was the only one that could allow ICOs for a long period. Some competitors are trying to break down this Ethereum network monopoly. However, few of them manage to provide such efficient services, so ERC20 tokens are still widely used.