What are ERC-20 tokens?
Recently, so-called ICOs have become one of the most common methods of raising funds for the launch and development of projects in the crypto-coins sector. Most ICOs use the Ethereum network as a platform or, more precisely, the intelligent contracts of that network. In conducting fundraising campaigns, ICO organizers generally accept ETH or BTC as payment, giving investors tokens. Most of the time, these are tokens of the ERC-20 standard.
What does the acronym ERC-20 stand for?
ERC (Ethereum Request for Comments) is an official protocol for making suggestions to improve the Ethereum network; 20 - is the unique identification number of the offer. The technical specifications of the tokens produced in the Ethereum block system were published in 2015. The tokens that meet these specifications are known as ERC-20 tokens and, in fact, are intelligent contracts for the Ethereum block system. Despite the fact that ERC-20 tokens work within the framework installed by the Ethereum command, this structure is quite broad, giving developers more flexibility in creating them. The ERC-20 standard defines a set of rules that must be met in order for a token to be accepted and capable of interacting with other tokens on the network. The tokens themselves are block assets, which can have value, and can be sent and received like any other crypto.
What was the reason for creating the ERC-20 standard?
Prior to the emergence of the ERC-20 standard, there were many compatibility issues between different forms of Ethereum token, each of which had an absolutely unique smart contract. In other words, for a stock exchange or exchange to make the token available for trading, developers always had to write completely new code. So doing this in an increasing number of tokens has become increasingly problematic, taking a lot of time. To resolve this problem, a default protocol has been created for all tokens.