With plenty of new people joining the cryptocurrency space, it's time to continue to explain the basics of this space.
Today, I'd love to explain to you what ERC-20 tokens are.
ERC stands for Ethereum Request for Comment, and 20 is the proposal identifier.
ERC-20 tokens are only created and used within the Ethereum Network. Within the Ethereum Network there is a standard that all ERC-20 tokens must meet, and a number of uses that are expected.
For example, tokens must have a total supply (total stock), balanceOf, transfer, transferFrom, approve and allowance function. Optionally, the token is expected to have a name, set a symbol (ticker) and a decimal (max. 18 and also the default).
This all sounds a bit technical, so we'll keep it all as easy as possible. Currently, more than 200,000 different ERC-20 tokens exist. Not all of these tokens are in use, but at the moment, according to CoinGecko (CoinGecko: Cryptocurrency Prices & Market Capitalization), there are a few thousand tokens that actually have value.
The Ethereum Network
In short, Ethereum is an open-source blockchain protocol. It is a decentralized platform used by many developers.
It is relatively cheap and easy to build on the Ethereum Network. The network has so many tokens that it has become the standard within the cryptocurrency space.
This also has advantages for users, as ERC-20 tokens can be stored in many different wallets. In addition, it is easier and cheaper for projects to list ERC-20 tokens on an exchange compared to other types of tokens.
Smart contracts
The Ethereum Network uses smart contracts. ERC-20 tokens are therefore also created and sent by means of smart contracts and by means of smart contracts, the balance of every wallet that has kept the ERC-20 token. This can be viewed at http://etherscan.io.
Examples of ERC-20 tokens
As mentioned, there are thousands of different ERC-20 tokens. In fact, I’ve written about various projects with ERC-20 tokens on Quora already:
