ERC-20 Token is the backbone of decentralized finance (DeFi). These tokens are versatile, easy to use, and can be used to represent anything from assets to loyalty points to voting rights.

But what are ERC-20 tokens, how do they work, and why should you care?

In this blog post, we will take a deep dive into ERC-20 tokens and show you how they are powering the future of finance.

What is ERC-20 Token

Firstly, An ERC 20 token is a standard used for creating and issuing smart contracts. On the Ethereum blockchain.

Secondly, these contracts can then be used to create smart property or tokenized assets. ERC-20 is the technical standard for fungible tokens.

Which are created using the Ethereum blockchain. A fungible token is interchangeable with another token.

Where the well-known non-fungible tokens (NFTs ) are not interchangeable.

ERC stands for “Ethereum request for comment”. And the ERC20 standard was implemented in 2015.

ERC- 20 Token – Why it was created?

Mainly, Smart contracts were becoming more popular in 2015. However several issues needed to be addressed. Because anyone could make a token.

Many were being created. However, there was no way to ensure that all of the different tokens could be created, used, or exchanged.

Moreover, without a standardized methodology for tokens, every application would need its token.

Additionally, you would need to find a way to convert them back and forth between the hundreds of apps being developed.

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ERC-20 Token – Who is the Founder?

ERC-20 Token was proposed by developer Fabian Vogelsteller in 2015. What’s more, it was created to standardize the tokens within smart contracts on the Ethereum blockchain.

Vogelsteller submitted the proposal via the project’s Github page as an “Ethereum Request for Comment” (ERC).

As it was the twentieth comment. It was assigned the designation ERC-20.

In Addition, plenty of well-known digital currencies use the ERC-20 standard. Some examples are,

a. Tether (USD)

b. USD Coin (USDC)

c. Shiba Inu (SHIB)

d. Binance USD (BUSD)

e. BNB (BNB)

f. DAI Stablecoin (SAI)

g. HEX (HEX)

h. Bitinex Leo (LEO)

i. Maker (MKR)

Is the ERC-20 Token the same as ETH?

Ether (ETH) is the native token used by the Ethereum blockchain. Further, the network is a payment system for verifying transactions.

ERC-20 is the standard for creating smart contract-enabled fungible tokens. Again, these are to be used in the Ethereum ecosystem.

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What are the examples?

a.Bitcoin Price Index (XBX)

b. Ether Price Index (ETX)

c. Basic-Attention Token Price Index (BTX)

d. Bitcoin Cash Price Index (BCX)

e. Cardano Price Index ( ADX)

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What is the difference between an ERC Token and a Coin?

Essentially, Coins exist on their blockchain. Besides, multiple tokens can be created on an existing chain. Thereby, saving the developer time and money.

Basically, at a foundational level, coins and tokens offer some similarities. In representing value and enabling payment processing.

Additionally, these can be swapped for tokens with the reverse also holding.

Furthermore, where differences become apparent is in their utility. Essentially, most cryptocurrency coins typically operate as native coins on the blockchain. As a store of value.

Tokens – While tokens typically exist for use on a decentralized application (DApp).

Further, tokens are created on existing blockchains, many project tokens may exist within the same ecosystem. And then, most of which can be migrated as needs change.

Besides, differences extend further into development. What’s more, users looking to create a coin will need to copy an entire blockchain.

Further, in contrast, those looking at token development will start with creating a smart contract.

Essentially, the benefit is that the developer does not need to spend time deploying their blockchain. And then, it can therefore save time and resources.

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ERC – 20 Token -What can cryptocurrency tokens do?

Essentially, Cryptocurrency tokens can hold value like a coin. Further, it provides added utility through fundraising, and voting (or governance).

Additionally, it can provide points for a loyalty program.

Secondly, these can vary in usage. While some exist as an investment vehicle like Dogecoin(DOGE).

What’s more, others allow users to exchange between tokens on platforms like Ethereum (ETH).

And then, these tokens can be used as a fundraising opportunity for a new product or service your team might decide to offer.

Firstly, in parallel to an initial public offering, releasing a token can be done through an Initial Coin Offering. Or ICO with crypto tokens.

Therefore, use cases include representation as shares in a company. Additionally, the definition for proof of ownership, an entrance ticket.

Further, usage of a DApp, a voting tool, in addition, to a component of a loyalty program. Or being deployed as a part of a charity fundraising.

Example functionalities ERC-20 Token provides:

• transfer tokens from one account to another
• plus get the current token balance of an account
• to get the total supply of the token available on the network
• approve whether an amount of token from an account can be spent by a third-party account

If a Smart Contract implements the following methods and events it can be called an ERC-20 Token Contract. And then, once deployed, it will be responsible for keeping track of the created tokens on Ethereum.

Read here From EIP-20:

ERC 20 – Token – Why should you create a token?

Firstly, tokenization has become the standard for organizations. And teams considering fundraising opportunities or creating more active communities.

Further,it is becoming an increasingly popular concept. As It refers to assigning a token to anything of value in the real world.

Besides, many businesses, teams, and individuals already looking to digitize their offerings.

Furthermore, for simplified transactions, tokens are likely to become a global standard for conducting transactions.

Additionally, to remain ahead of the curve, tokens themselves offer users several benefits.

Essentially, including the ability to incentivize users to participate more actively in a given decentralized finance (Defi) project.

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ERC – 20 Token – Why Ethereum is considered to be the best platform for token creation?

Firstly, it remains at the forefront of Defi. Thereby, giving users access to a growing community with diverse functionality.

Secondly, to date, Ethereum and Solana (SOL), continue to be the most popular blockchains. Of course, depending on a user’s needs.

That said, the ERC -20 standard on Ethereum has remained the dominant pathway. For creating new tokens since the beginning.

Ultimately, making it the primary choice for crowdfunding and ICO use cases.

Moreover, the standard itself provides a simple interface, with the ability to be used on multiple applications. As a leader in DApp development and an ecosystem of many well-known platforms.

Secondly, it continues to be at the forefront of Defi. Making it a clear choice with extensive documentation for those creating their first coin.

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ERC – 20 Token – How can You create a token?

First, creating a token requires deploying a smart contract. Which is simplified with modern platforms.

And then, it enables users to fill in the details of their proposed token. Without coding or technical knowledge.

Traditionally, creating a token would require a creator to outline token properties. Including the supply, name, and number of auxiliary functions.

Further, this step would be followed by deploying a smart contract.

Additionally, QA testing and blockchain deployment, while you would traditionally require a basic understanding of coding.

Plus newer platforms simplify the process to enable anyone to deploy a token of their own.

One of these platforms is the Student Coin Terminal, where you can create a custom ERC-20 token. You can start the token creation process.

By connecting their Ethereum wallet (selecting between Wallet Connect or Metamask) Additionally, you can create one by selecting the “Get Wallet” button.

Another thing is that you will need to add enough funds to pay for the contract deployment. And then, set up your token. Last, with the foundation in place, you can set up your token.

Essentially, through a simplified format enabling you to complete a basic form.

Furthermore, with modern platforms like Student Coin, anyone can create a token of your own. Despite having limited or no technical knowledge.

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What is ERC?

ERC – full Form is “Ethereum request for comments”.

Firstly, it is just a technical guideline for assets created on the ETH blockchain. It is a document with some rules that programmers follow to write smart contracts.

ERC – 20

A standard to create fungible tokens on ETH Blockchain. The token is interchangeable with another token.

ERC – 1155

This enables the transfer of multiple tokens – nonfungible & fungible in the same transaction with fewer fees.

ERC – 725

It’s a standard for managing identity. It helps user to own and handle their identity on EVM based chain.

ERC – 721

Also, a standard to create Non-fungible tokens on Ethereum. All ERC-721 tokens are unique.

ERC – 165

Further, used to increase or decrease the supply of tokens ) it is still in draft)

ERC – 1400

This is a security token standard used to bring consistency in how we issue, trade, build, and manage security tokens.

ERC – 1337

Likewise, it enables setting up a recurring transaction model that enterprises can use. A token designed for subscriptions ( in draft )

ERC – 223

Only allows tokens to get sent to a SC address that allows the deposit of the token. Solves the token getting stuck on the wrong address. (not implemented)

ERC – 884

In the second place, it enables the creation of tradable ERC 30 tokens. Where each token determines a share in Delaware companies )still in draft )

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What are ERC Standards?

Firstly, whether you are an aspiring Web 3 enthusiast blockchain developer or are looking to understand how Ethereum-based tokens work.

Learning about ERC standards can be of immense help.

ERC is just a guideline for the assets that exist on the blockchain with the help of smart contracts.

These standards are also important because they accelerate the adoption of smart contracts.

Not only that, but ERC standards also foster interoperability among various dApps built on common standards.

Conclusion

The degree of fungibility of a token is represented by one of the 3 token standards on Ethereum.

ERC-20, ERC 721, and ERC-1155

A CRYPTO ASSET THAT HAS A DEDICATED BLOCKCHAIN IS TECHNICALLY A COIN.

WHILE ALL OTHER ASSETS CREATED ON A THIRD-PARTY BLOCKCHAIN ARE CALLED TOKENS.

Firstly, just in case you are confused, the numbers following ERC are simply the serial numbers of the ‘request for comments’ that proposed these standards.

Secondly, thanks to the innovation of ERC Tokens, it is possible for artists to create a unique token. Which represents their art piece.

As well as it is possible for creators to represent the scarcity of their creations and monetize their work.

Also, game developers can impart real-world value to their games. Thereby using in-game items.

Also, it is possible can create an entirely new, user-governed economy on the Internet.

Especially, something that was never thought of or worked on, before.

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