What Are ERC-20 Tokens?

The language standard that made Ethereum the most popular ICO platform

ERC20 is Ethereum’s technical token standard used for smart contracts within the whole Ethereum blockchain ecosystem. It provides a set of rules that every developer has to implement for their tokens to be bought, sold, or traded within the Ethereum ecosystem. ERC-20 designed tokens, thus, can represent a plethora of digital assets from IOUs, vouchers, and even tangible objects or real estate properties. The simplicity of the token contract implementation made cryptocurrency rise in popularity among crowdfunding-based companies through the Initial Coin Offering, or ICO.

There are six mandatory and three optional rules for a developer to implement in designing their ERC20 token so that it can be traded, exchanged, or transferred to a crypto wallet solely within the Ethereum blockchain.


  • Total Supply


  • Token Name

Basically, Ethereum as a decentralized network functioning as a blockchain that records transactions and as a virtual machine that produces smart contracts. It allows for Decentralized applications, or Dapps, to be built on top of the blockchain where developers pay in Ether, the ecosystem’s native token. Dapps are used to create tokens as currencies, proof of ownership, shares in a company, and many others.

ERC-20 is Ethereum’s universal language that all tokens used in the Ethereum network. Therefore, any token with generic ERC-20 can be traded with one another, put on an exchange, or transferred automatically to a wallet. ERC-20 made it easily possible for any token to be created that Ethereum became the most popular ICO platform of 2017.

Being a nascent technology does not make ERC-20 perfect. In fact, there are still some issues that needed addressing. Millions were lost as many times ERC-20 tokens were inadvertently destroyed when they were used as payments for smart contracts instead of the native Ether. A new standard named ERC-223 is currently in the works and is yet to be realized since it is not yet compatible with ERC-20. There was also the classic integer overflow issue that allowed attackers to acquire large amounts of tokens caused by the batch overflow bug. Exchanges suspended transactions until the bug was fixed.

ERC-20 compliant tokens have the independence to be who they are and because it is easy to create one, usually an hour or even under 20 minutes, it generates a great amount of competition among the other cryptocurrencies and encourages everyone to be creative in their approach to lots of different problems. ERC-tokens will leave developers more focused on their causes since the Ethereum blockchain will take care of all the technical issues. Traders who are familiar with Ethereum will easily absorb the perspective any ERC-20 token has.

ERC-20 tokens are transparent since they are created on Ethereum’s public blockchain and, therefore, can be looked up by anybody.

To date, there are more than 200,000 ERC-20 tokens on the Ethereum blockchain. That means they can be sent and received through Ethereum addresses, enabling them to be accepted by an expansive user base.

Ethereum gas is the fee that all users pay for the validation of their transactions. This is a great advantage for Ethereum because of the constant movement of Ether even when other users are not trading or transacting. One thing more. The movement of other tokens on the Ethereum blockchain will keep the overall trading volume excellent. Plus, the success of any ERC-20 token will benefit Ethereum as a whole.


The beautiful thing about the Ethereum community is that you are free to go independent and create your own blockchain once you are successful.

Tron started out as an ERC-20 token before migrating to its own blockchain called Mainnet, along with the community it generated to make the move possible. What’s more, Tron developers claim that Mainnet will be 400 times faster than Ethereum.

Another ERC-20 starter that is creating a name for itself is Chainlink, which is using oracles to get ahead with smart contracts. It is viewed that Chainlink will eventually leave Ethereum when the right time comes.

A surprising discovery is the Binance Coin as another successful ERC-20 token serving as a utility token on the Binance Exchange, which traders use to receive discounts. It is currently the 8th largest cryptocurrency based on market capitalization.

That’s it with Ethereum. The hatching nest for any promising smart contract.

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