What’s the deal with ERC20?

Photo by Shubham Dhage on Unsplash

What’s the difference between a token and a coin?

It’s easy to get confused between a crypto token and a coin.

Why do you need a standard ERC specification?

Why does anything need a standard? So that people can integrate their products or devices easily. Take the 3 pin power outlet in your house for example. Since the power socket is standard (in a region), it is easy for manufacturers to produce power sockets that will plug into the wall outlet. It is not difficult to manufacture and build unique and different power connectors. It will take just three pieces of metal. But the standardisation enables ease of integration and the creation of an ecosystem for both the manufacturers and the customers.

Does ERC20 give value to the coin?

ERC20 is a standard and it does not give value to the coin. The value of a coin depends on various factors like its usage as collateral, its gas fees, the ability to be lent and borrowed and the fact that it can be traded and used to purchase NFTs.

What are Ethereum Improvement Proposals?

EIPs are proposals on the official Etherium Github page where people propose improvements for the Ethereum platform. After deliberations, they are included in the main standard.

Read it yourself at Ethereum Github

ERC20 Methods

ERC20 proposes that the following methods will enable exchanges and wallets to handle tokens across multiple interfaces or dapps (Decentralized Applications)

totalSupply

Get the total token supply

balanceOf

Get the account balance of the owner account

transfer

Send tokens to an address

transferFrom

Send tokens from one address to another address. Mostly used to automate transfer.

approve

Allow debits from your account

allowance

Returns an amount that is allowed to be withdrawn

Key Takeaways

The ERC20 token has provided a standard protocol and enabled various tokens to exist on the Etherium blockchain. The token implementation is easy for developers. Smart contracts on ERC20 ensure that the transactions are risk-free.

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Avinash Bangera

Avinash Bangera

Product Manager by day; Gaming and Technology Enthusiast by night.