What is ERC20?
What is ERC20? It is a term that refers to a technical standard. It determines the popularity among different tokens on the Ethereum platform.
The presence of this technical standard allows Ethereum-based smart contracts to treat certain forms of tokens in a specific way. It allows developers to follow a ‘format’ or ‘guideline’ when creating a new digital asset to ensure that it works on Ethereum.
The term ERC stands for Ethereum Request for Comment. The other 20 refers to the number of requests.
The platform was first recommended by developer Fabian Vogelsteller on November 19, 2015.
Developers have adopted ERC20 as a prominent standard for new digital assets. The birth of ERC20 allows developers to create digital assets using the platform without having to write new crypto wallet code.
You can understand it roughly, ERC20 is the common standard, the “common language” of the Ethereum blockchain.
ERC20 became more popular when ICO projects exploded in 2017.
The cryptocurrencies written on this standard and operating on the Ethereum blockchain are called ERC20 tokens. So what is ERC20 token?
What is ERC20 token?
As we have seen above, ERC20 is a common technical standard for tokens operating on the Ethereum blockchain.
So ERC20 tokens are tokens written according to the ERC20 standard.
ERC20 tokens are generated through smart contracts. It manages transactions between wallet addresses and calculates the balance of each wallet address as well as the total number of tokens in circulation and supply.
In fact, you can completely write your own ERC20 token in a simple way.
How to distinguish ERC20 tokens
The identification of ERC20 tokens is very simple. That is looking at the wallet address of that token.
Since the ERC20 token runs on the Ethereum blockchain, it will have the same wallet form as the Ethereum wallet. ERC20 token and Ethereum wallet both start with 0x….
Based on this basic identification, you can completely distinguish what is an ERC20 token, which is not an ERC20 token.
Disadvantages of ERC20 tokens
There are some problems that the standard ERC-20 not resolved.
In some cases, tokens may be accidentally destroyed when they are used to pay for a smart contract instead of using ETH.
In addition, because the creation of an ERC20 token is very simple, this leads to many crooks taking advantage of creating useless tokens or fake tokens. Because of this, you need to carefully check the contract address (contract address) of the token, to avoid buying the wrong token.
Almost any wallet that can hold Ethereum can store ERC20 tokens.
Readers can refer to the article: Top 5 best rated Ethereum (ETH) wallets in 2019 for more options.
Depending on your trading or investment needs, you choose where to store ERC20 tokens.
Some wallets you can refer to such as: MyEtherWallet, TrustWallet are 2 suitable wallets for those who trade often with cheap withdrawal fees. Trezor cold wallet, Ledger Nano S, Nano X cold wallet are suitable for investors who want to hold coins for a long time.
Maybe you are interested: What is MyEtherWallet? Instructions on how to create a MyEtherWallet wallet and how to use it
In addition, you can store ERC20 tokens at reputable exchanges for more convenience in trading.
How to own ERC20 tokens
Previously, most ERC20 tokens were issued through an ICO.
Currently, the ICO market is going down, so tokens are less used this form to issue.
Besides, you can go to exchanges to buy ERC20 tokens. Some exchanges such as: Binance exchange, Huobi exchange, OKEx exchange, etc. support a lot of tokens, you should refer to these exchanges.
Through the article, I hope to have provided readers with the necessary knowledge to understand what ERC20 is as well as understand ERC20 token.
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