What is ERC-20 Tokens? All About Ethereum's Most important Token standard

 

In 2014, Vitlalik Buterin and it's additional partners introduced Ethereum as an open-source platform for creating decentralized applications.Most of Buterins motivation for creating a new Blockchain platform came from Bitcoins lack of flexibleity. Since then, the Ethereum Blockchain has attracted developers, enterprises, and entrepreneurs from all around the globe, resulting in an increase in user's employing smart contracts and distributed applications. Ethereum Blockchain support over five tokens standards, each of which reflect the rules and conditions token must adhere to be declared as Ethereum compatible. One such crucial token standard that we will discuss in this extensive article is the ERC-20. Although the impact of the ERC-20 standard on the Ethereum price is very limited, it helps in regulating the creation and issuance of smart contracts on Ethereum, Token enabling crowdfunding, token sales, and the developing decentralized applications.

ERC-20 Token Standard: Brief introduction 

In the context of Token Standard, the most crucial standard is ERC-20. It instruct developer's to create and distribute tokens on the Ethereum network. Moreover, Vitalik Butrein and Fabin Vogelsteller proposed it in the year 2015 as a technical standard for developing fungible tokens on the Ethereum network. Here, ERC stands for 'Ethereum Request for comments,' and '20' is the number allocated to this proposal. Therefore, in simple terms ERC-20 is the set of rules that tells how token should be produced, distributed and deployed. With it's widespread popularity, many Cryptocurrencies employee this token standard, which has become a driving force in the Ethereum ecosystem, with over 1000 contracts on the network. This standard allows developers to create tokens with customizable properties like total supply, token name, symbol, and decimal accuracy. This gives developer's the ability to tailor token to specific operational needs.

Working for ERC-20 Token Standard 

ERC-20 Token Standard began it's operations as a smart contract that follows the standard feature and requirements. Here's how the ERC-20 Standard works:

Token contact 

A smart contract is put in place on the Ethereum network to create an ERC-20 Token. It contains the code that defines the token's behavior, features and the mechanism for creating assets that user's may purchase. Thousand of Tokens are built to ERC-20 standard, which includes polygon (MATIC), NavC, Chainlink (LINK), Shiba Inu(SHIB), Arbitrum (ARB), etc.

Necessary Functions and Events 

The ERC-20 Token Standard outline which function and Events the token's contract must support. These required functions and Events contain ways for transferring token between addresses, checking an account token balance, and allowing token transfers on behalf of another address.

Fungibility 

ERC-20 standard token are fungible, which means they maybe used interchangeably and have the same value as the similar type of other tokens. This feature facilitate the division and standardize of the token units.

Token metadata

It includes additional metadata such as names, symbol's and decimal places. These attributes explain the  Tokens identity, representation, and accuracy.

Token Ownership 

ERC-20 Token Standard are linked to the Ethereum addresses. All the token balances are tracked and documented in the contract, which includes a mapping of addresses to token balances.