What does ERC20 Stand For?
The technicalities of the blockchain world are daunting for beginners. However, understanding a few basic concepts can help you make safer investments and better understand the world of cryptocurrencies. It is the same case with the concept of ERC-20. As the name on its own does not give much information about what it is, this article will focus on explaining what ERC-20 and ERC-20 tokens are. It will better equip you with an understanding of how the cryptocurrency world works.
What is ERC20?
ERC20 is a technical standard that defines how smart contracts should interact with each other on the Ethereum blockchain. Fabian Vogelsteller proposed the standard in November 2015. It is now used by thousands of projects. Ethereum themselves clarified that ERC-20 "introduces a standard for Fungible Tokens". In other words, “they have a property that makes each Token be the same (in type and value) as another Token."
ERC-20 implements an API within smart contracts. An API is "a set of functions and procedures allowing the creation of applications that access the features or data of an operating system, application, or another service."There are several standards and procedures that each token must follow.
These include token transfers from one wallet to another, getting the current token balance of an account, and so forth. It allows for the creation of ERC20 tokens. These are created on the Ethereum network and are traded on cryptocurrency exchanges. They are also stored in Ethereum wallets. ERC20 tokens are popular because they are easy to develop and integrate into other projects. Many popular cryptocurrencies use this standard.
What does ERC20 stand for?
To start by dissecting the word ERC-20, "ERC" stands for "Ethereum Request for Comment". It means that it would provide technical notes and requirements for developers. The "20" in ERC-20 refers to a unique ID number assigned to this request. This guideline specifies the security requirements for token apps that can interoperate with other products and services. For a token to be called an "ERC-20 token", it must meet the technical standards laid out by the original Ethereum Request for Comment.
What is an ERC20 token?
Developers code programs as ERC-20 tokens on the Ethereum blockchain. It means that they take advantage of the security and decentralization that the Ethereum blockchain provides. Think of Ethereum (ETH) being the parent token, and ERC20 tokens being the children. Some examples of ERC-20 tokens include Chainlink (LINK), Basic Attention Token (BAT), and Maker (MKR).
Because ERC-20 tokens are built on the Ethereum blockchain, they are easy to create and issue. It has led to several different ERC-20 tokens being created for several purposes. One of the most important things to note about ERC-20 tokens is that they are not just currency. They can represent anything that can be owned or controlled. It makes them very versatile and useful for a wide range of applications. In other words, ERC20 tokens are blockchain-based assets with some specific characteristics:
- ERC20 tokens are fungible, meaning each token is identical to another of the same type.
- They are also divisible, which means that you can hold a fraction of a token. ERC20 tokens are also transferable; you can send them to someone else.
- They are easy to use and integrate with other applications, they are versatile, and they are built on the Ethereum blockchain. ERC-20 tokens have a lot to offer both businesses and individuals.
As mentioned before, these tokens can be used to represent anything that can be owned or controlled. It makes them suitable for a wide range of different applications. Finally, since developers build ERC-20 tokens on the Ethereum blockchain, they take advantage of the security and decentralization that the Ethereum blockchain provides.
While there are many advantages to using ERC-20 tokens, there are also some disadvantages. One of the disadvantages is that because they are built on the Ethereum blockchain, they can be subject to Ethereum's volatility. It means that the value of ERC-20 tokens can go up and down very quickly. Another disadvantage of ERC-20 tokens is that they are not as widely accepted as some other types of cryptocurrency. It may be more difficult to spend them.
Finally, because ERC-20 tokens are so easy to create, people can scam and create fraudulent projects. Before investing in any ERC-20 token, do your research to make sure it is legitimate. Because ERC-20 tokens are still a relatively new technology, there may be some bugs or glitches. However, the ERC20 standard is constantly improving, and these issues resolve over time.
ERC20 wallets: How to find one?
When picking a suitable ERC20 wallet, there are a few factors to consider. First, make sure that the wallet supports the ERC20 standard. This can usually be found in the wallet's documentation or on the website. Second, make sure that the wallet is compatible with your operating system. Third, check to see if the wallet has been audited by a third party.
This helps to ensure that the wallet is secure and reliable. Finally, make sure that you are comfortable with the user interface of the wallet. Once you have found a few wallets that meet these criteria, you can then compare them and choose the one that best suits your needs. Some popular ERC20 wallets include MetaMask, MyEtherWallet, and YouHodler. However, more and more wallet types are being created every day. This means that you have more choices over which wallet to choose! Just make sure that they are safe to store cryptocurrencies in!
There are several benefits to using an ERC20 wallet. First, as daunting as it may seem, they are easy to use. There are various guides online showing you how to make use of one. These wallets also offer a high degree of security and are compatible with different applications and services. Developers create these wallets on the Ethereum blockchain, which provides a high degree of security and decentralization. There are a few different ways to buy ERC20 tokens.
One way is to use an exchange that supports the Ethereum blockchain. Another way is to use a service that allows you to convert other cryptocurrencies into ERC20 tokens. Finally, you can also participate in an initial coin offering (ICO) for a new project that issues ERC20 tokens.
YouHodler has several popular ERC20 tokens for you to buy, exchange, lend and earn interest on. Visit us today to try it out!
How to buy ERC20 tokens on YouHodler
Now that you know what an ERC20 token is, it's time to start collecting them! YouHodler has over thirty great options to choose from and buying them is very easy. Just sign up, deposit currency, and use our exchange feature to buy any token on the platform. YouHodler is easy enough for beginners to figure out with additional advanced features for the crypto veterans out there. So click the button below and give it a try. We'd love to know what you think.