What is an ERC20 token?

  • What is an ERC20 token?
    • An ERC20 token is a blockchain-based asset with similar functionality to bitcoin, ether, and bitcoin cash: it can hold value and be sent and received.
    • The major difference between ERC20 tokens and other cryptocurrencies is that ERC20 tokens are created and hosted on the Ethereum blockchain, whereas bitcoin and bitcoin cash are the native currencies of their respective blockchains.
    • ERC20 tokens are stored and sent using ethereum addresses and transactions, and use gas to cover transaction fees.
  • Why ERC20?
    • ERC20 is an official protocol for proposing improvements to the Ethereum (ETH) network. ERC stands for Ethereum Request for Comment, and 20 is the proposal identifier. This is a common standard for creating tokens on the Ethereum blockchain.
    • This token standard defines a set of rules that apply to all ERC20 tokens that allow them to interact seamlessly with one another.
    • Wallets and exchanges use the standard to integrate various ERC20 tokens onto their platforms and facilitate exchanges between ERC20 tokens and other cryptocurrencies.
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