One of the most important Ethereum token standards is known as ERC20.
One of the most important Ethereum token standards is known as ERC-20, and if there’s any model we can thank for making cryptocurrencies more prevalent in use and more accessible in our daily lives, it’s this one. ERC20 token development became the technical standard; It is used for all smart contracts within the Ethereum blockchain , for token implementation and more.
What are they and how does it work?
ERC20: its history
When Ethereum began to grow within the market, many developers entered the crypto ecosystem looking to create their own decentralized applications (dApps) or initial coin offerings as a way to finance their work. Initial Coin Offerings or Token Sales are a form of financing in which companies raise funds through tokens or cryptocurrencies that they created themselves.
Suddenly many new tokens were being created on Ethereum , which caused a lot of problems . ERC20 tokens were created with the idea of helping solve this dilemma.
What is an ERC 20 token?
On the Ethereum blockchain, smart contracts are created and issued using an ERC 20 token, which is a standard that was introduced in 2015. This is a request for comments from Ethereum.
These kinds of smart contracts can be used to produce tokenized assets that investors can purchase. It is essentially a set of guidelines that establish a model for tokens based on Ethereum. It guarantees that every contract, account, wallet, and other network actor is aware of the precise nature of every token and how to use it.
Additionally, it makes it much easier for developers to create tokens because they have a template to work from rather than having to start from scratch each time!
The ERC20 standard can be compared to an arcade where the various machines are compelled to cooperate with one another. All ICOs had to be built under the ERC20 standard, which ensured that they can interact with each other without problems.
With it, all existing accounts and crypto wallets within this ecosystem could send, receive and transfer each token in the same way as they would with any other token and, although now it seems logical and not revolutionary, at the time the objective of its The creation and operation of each new token that was launched could be very different without an ERC20 standard.
Why did this standard help?
For a developer and the scalability of a blockchain, working without ERC20 was a big problem since if they wanted to work together and have interoperable applications, they had to study each other’s code base and learn exactly how those two different tokens were going to interact.
Doing this on the basis of one specific project versus another project could work, but when we’re talking about an ecosystem full of thousands of tokens and projects, it was never going to be possible or profitable. And so, the ECR20 standard solves this problem , proving that it changed the face of Ethereum and cryptocurrencies.
How can you identify an ERC20 token and why does it matter?
Before explaining how to identify an ERC20 token development service , we must first understand why we would want to identify it.
One of the main reasons is to know how a user can store a token: if a token is ERC20, a user can store it on any Ethereum address since that token was launched within the Ethereum blockchain and interacts directly with it.
Because of that, if it is indeed identified as an ERC20 token, that interoperability that is established through the Ethereum ecosystem means that a user can send a token to any Ethereum wallet , making it very easy to store and interact with that token .
This Ethereum is constantly working for this type of interoperability and that entire ecosystem that was being facilitated through the use of tokens and the connection to its blockchain .
Basically, this ID is just so that a user can know how easy it is to store it in their own wallet and thus not have to worry about keeping it on a centralized exchange for simple convenience, since that convenience is provided by Ethereum.
For create ERC20 tokens to work and be identified as such, they must meet certain characteristics .
But if one is a regular user and not a developer, it is not important to know exactly what these criteria are.
Instead, the easiest and most reliable way to determine which token is an ERC20 is to look directly at its source code (which is written by a programmer in some programming language depending on the context and field of application, for example JavaScript or Python). .
As? First you have to go to Etherscan.io and find the token by searching for its address or name (it is important that you verify with a reliable source that you have the correct smart contract address since there are thousands of fake token contracts) through one of your own transactions, for example.
Then go to Profile Summary which is on the right, click on the contract address and then in the contract tab , press ctrl+F or cmd+F simultaneously and search for “ERC”.
This will probably show “ERC20” and other numbers corresponding to other types of tokens, which are usually a superset of ERC20.
As the Ethereum platform grows and evolves, so do the token standards, and as time goes on and new, more robust standards are released, it looks like the ERC20 standard is going to be phased out. But whatever happens to it, its impact within the ecosystem cannot be ignored.