These standards include how the tokens can be transferred, how transactions are approved, how users can access data about a token, and the total supply of tokens. The protocol is necessary to ensure compatibility between the many different tokens issued on Ethereum. The original token standard of Ethereum, ERC-20 has played an integral role in the growth of blockchain projects — not only for the Ethereum network, but the entire crypto ecosystem. Proposed in 2015 by Fabian Vogelsteller, one of the founders of Ethereum, it is a technical standard for building fungible tokens on the Ethereum blockchain. ‘ERC’ stands for ‘Ethereum Request for Comments’ and ‘20’ is the https://ai-robert.com/ number assigned to this particular proposal, which defines a set of rules for how tokens should be created, issued, and deployed.
Amilcar has 10 years of FinTech, blockchain, and crypto startup experience and advises financial institutions, governments, regulators, and startups. Another excellent implementation of the ERC-20 token standard is the OpenZeppelin ERC-20 implementation(opens in a new tab). ERC-20 is not only an important part of the Ethereum ecosystem, but a gateway into the broader blockchain space.
- ERC standards, such as ERC-20, ERC-721, and ERC-1155, heavily rely on smart contracts.
- She’s currently writing a book exploring the ins and outs of Bitcoin governance.
- Without these standards, things would be chaotic, like trying to plug a foreign appliance into an outlet without an adapter.
- ERC-20 defines a common list of rules that all fungible Ethereum tokens should adhere to.
It is one of the most widely adopted protocols in the crypto community for creating smart contracts on the Ethereum blockchain network if not even the most popular token protocol. Technology is always improving, and that’s going to affect token standards too. We might see new types of smart contracts that can do more complex things, or new ways to store and manage tokens that are more efficient and secure. For example, advancements in zero-knowledge proofs could allow for more private transactions, while improvements in layer-2 scaling solutions could make transactions faster and cheaper. It’s widely supported, so it’s easy to find wallets, exchanges, and applications that work with ERC-20 tokens. It’s also relatively simple to implement, which makes it a good choice for new projects.
Are ERC20 tokens safe?
It’s a bit of a wild west right now, but things are slowly starting to get more organized. It’s likely that regulatory clarity will drive adoption of tokenized assets. Right now, ERC-20 tokens are the go-to for many things, but they aren’t perfect for every situation. We might see standards designed specifically for things like supply chain management, voting systems, or even identity verification. The key is to make these standards interoperable so different systems can talk to each other.
Revolutionizing Finance: The Future of Digital Asset Issuance in 2025
Thus, each token standard has its unique features and potential flaws, but you have to carefully build your plan in order to choose what’s best for your funds. BAT is the native token of Brave, which is the web browser built on top of the Ethereum network. Users receive BAT for viewing ads and can use tokens to support content creators directly, fostering a new way of interacting with online content and advertising. A type of cryptocurrency that gives token holders the ability to vote on the future direction of a blockchain project. The Ethereum Virtual Machine (EVM) is software that runs smart contracts and calculates the state of the Ethereum network after each new block is added. Crypto has come such a long way that you can choose from thousands of digital tokens, each coming with its benefits and utilities.
Wrapped Bitcoin (WBTC)
In other words, ERC-20 is what ensures that users can buy, swap, and HODL the many cryptocurrencies built on this standard. Without this framework, developers would create tokens using unique codebases and toolkits that could not interact with one another or protocols in predictable ways. With more than 1,000 tokens in circulation, the use cases for ERC-20 continue to expand. ERC-20 tokens represent a large variety of assets, both digital and physical. There are ERC-20 tokens that represent real estate, art, stocks, unused hard drive space, and more.
You’ve probably heard of ERC-20 and ERC-721, but ERC-1155 is like their cooler, more versatile cousin. It’s designed to handle multiple types of tokens within a single smart contract, which is a big deal for efficiency and flexibility. Think of it as a container that can hold both your regular, interchangeable tokens and your unique, one-of-a-kind digital items. Storing and sending ERC20 tokens can be done through Ethereum wallets like MetaMask and Ledger.