What is Ethereum ERC-20 And Why Is It So Important

Ethereum & The ICO

Initial Coin Offering is funding with cryptocurrencies. Token or coins are used to purchase crypto as an investor. In return, you will get legal tender or other cryptocurrencies like Bitcoin or Ethereum.

If the ICO manages to collect the needed amount and the project is successfully started, then all the sold coins will have value.

2017 was the year of ICOs. Nobody could keep track of the projects appearing daily. They all promised amazing results and asked for funding. Now things are much calmer – the investors have already left the space, many projects never got launched.

What exactly is a Token?

They are a very important part of smart contracts which are located on the Ethereum Blockchain. A token could do many different things, like:

Toll: it could be a gateway to a Dapp. For accessing the Dapp, you will be required to hold the tokens.Voting Rights: The owners of tokens also might have some voting rights. For example, those holding EOS tokens can vote for block producers. It wants to become an operating system that is decentralized and enables work with industrial-scale applications.Value Exchange: This is one of the most widespread tasks a token might have. They can help with the construction of an internal economic system within the app.Enhancing the UX: It can help enrich the UX in a certain environment. For example, in the browser Brave, those who have tokens will get the chance to change the environment and make the user experience better, like putting appropriate ads. Currency: Tokens can also be used to keep value and then used to make transactions either in or out of the ecosystem.

What is ERC-20?

ERC stands for Ethereum Request For Comments and 20 is a unique ID. ERC-20 is a technical standard that could be found for smart contracts that are for implementing tokens. Most tokens are compliant with this standard.

It is a protocol standard which puts particular rules and standards  in place. They help when it comes to issuing tokens. A token is like a smart contract which is required to follow some rules. A number of functions which are consistent in all tokens are transferFrom and balanceOf.

In this way you can see what amount of a particular token is owned by one person and it also possesses functions so that it could be transferred.

The importance of ERC-20 Standard

The fact that there is a common function in all ERC-20 tokens enables users to interact with them in the same manner. Once you create an application that works okay with one ERC-20, this means that this same program will also be able to interact fine with all ERC-20 out there. This helps with the easy addition of tokens to an application and eliminates the requirements for custom code. By just putting the contact address of the new token you will be able to add it to the app. For instance, when there is an exchange, a new token is added, which means that the addition of a particular new smart contract is needed. You can order the contract to send a certain amount of token with the other side’s wallet address as a recipient. If there is a requested withdrawal, the exchange will inform the contract to send tokens back out to people.

An execution of this logic is required only once. In case a new token is to be added, then you just need to add the new contract address to the database.

What is Ethereum ERC-20 and Why Is It So Important?

Ethereum ERC-20 is a technical standard used for smart contracts on the Ethereum blockchain. It provides a framework that ensures interoperability between different Ethereum tokens. This means that ERC-20 tokens created on Ethereum can be traded and exchanged on platforms that are ERC-20 compatible.

What Are ERC-20 Tokens?

ERC-20 tokens are digital representations of a specific asset or utility. They can represent anything from real estate to gold. As smart contracts, these tokens exist on the Ethereum blockchain and are stored in wallets, like any other type of cryptocurrency.

When a new token is created, developers need to adhere to the ERC-20 protocol standards. This ensures the token is compatible with the Ethereum blockchain. This includes determining the token’s name, how many tokens are available and how to transfer them.

What Are the Benefits of Using ERC-20 Tokens?

  • ERC-20 tokens are easily transferrable and have fungibility features
  • Developers can easily create new tokens using the ERC-20 standard
  • It allows for interoperability between different Ethereum tokens
  • It’s a standard framework that provides a uniform structure

What Are Some Examples of ERC-20 Tokens?

Some of the more widely used ERC-20 tokens include Bitcoin, Ethereum, Dai, USD Coin and Augur. These tokens are all part of the Ethereum network and provide users with access to the platform’s functionality.

Frequently Asked Questions

Q: What is the purpose of ERC-20 tokens?

A: ERC-20 tokens are digital tokens that are built on the Ethereum blockchain. They are used to enable developers to interact with the blockchain, to create and manage their own token contracts and to transfer tokens seamlessly between different accounts.

Q: Are ERC-20 tokens secure?

A: Yes, ERC-20 tokens are highly secure. They follow stringent protocols to ensure that all transactions are secure and that no fraud or manipulation can take place.

Q: How do I buy ERC-20 tokens?

A: You can purchase ERC-20 tokens through many different cryptocurrency exchanges, such as Coinbase or Binance. Once you have purchased the tokens, you can store them in an Ethereum wallet.


Ethereum ERC-20 is a technical standard used for smart contracts on the Ethereum blockchain that ensures interoperability between different Ethereum tokens. These tokens allow developers to create their own contracts, securely transfer tokens between accounts, and have fungibility features. Examples of ERC-20 tokens include Bitcoin, Ethereum, Dai, USD Coin, and Augur. All of these tokens are secure and can be acquired through popular cryptocurrency exchanges.