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What is An ERC 20 Token

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What is An ERC 20 Token

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  1. What is an ERC-20 Token? ERC 20 Development

  2. In the world of cryptocurrencies there are key concepts that we must know. One of them is the ERC-20 Token. ERC-20 tokens are smart contracts (intelligent contracts) that have a pre-established structure so that they fulfill certain functions . The acronym ERC-20 stands for Ethereum Request for Comments or in Spanish, Request for Comments for Ethereum. The structure of the erc20 token creatorwas created with the aim of facilitating the implementation of various functionalities in the Ethereum blockchain. This structure makes it easier for developers to create a token . Because the Ethereum blockchain is an integrated system, the developers created new mechanisms to facilitate certain tasks, including the creation of new coins. If you want to learn how ERC-20 tokens work and what they are for, we will tell you everything in this article.

  3. History of ERC-20 Tokens The ERC-20 tokens have their origin in the year 2015 , specifically on November 19 . This creation was proposed by developers Fabian Vogelsteller and Vitalik Buterin . The ERC-20 became part of the EIPs of the Ethereum network under the name of EIP-20 . When we talk about EIP we mean Ethereum improvement protests . ERC-20s had the 20 added to the end to represent the EIP number where the project is described. These smart contracts describe a standard about functions and events that can be implemented on Ethereum. From its proposal to the present , a huge number of ERC-20 token Generator have been created. When the Ethereum developers started working on this proposal they were looking to create a multi-capacity system. All this system would be under a reusable standard interface for other applications. The ERC-20 was created to be an API that would grant developer users benefits such as programming uniformity, reduced programming complexity, and support for multiple programming languages ​​and improved portability .

  4. How do ERC-20 tokens work? As we have already mentioned above, ERC-20 tokens are a kind of smart contract that runs on the Ethereum blockchain. The operation of these tokens is within a programmatic framework established by the Ethereum development team . This framework allows different uses without interrupting the progress of the Ethereum blockchain. The ERC-20 standards dictate protocols to follow to create , distribute and exchange tokens. Any user can develop their own cryptocurrency under this standard, although this requires certain basic knowledge and project development time . The ERC-20 tokens are capable of bringing parallel sub-accounting to the Ethereum blockchain by having their own monetary unit. It should be noted that this entire process is carried out without mixing Ether balances in the same addresses with other ERC-20 tokens. In addition, it is possible to guarantee transparency , traceability and security in the Ethereum network.

  5. To create an ERC-20 token, the developer must implement six completely mandatory functions in the smart contract. These functions are: • TotalSupply : Used to identify the total ERC-20 tokens created. • BalanceOf : The balanceOf function returns the number of tokens a given address has in a user's account. • Transfer: Allows you to transfer a certain number of tokens from the total supply to a user account. • TransferFrom : This function allows a user to transfer the tokens to another user. • Approve : This function verifies a transaction against the total supply of tokens making it impossible to forge a token. • Allowance : This function is useful to limit the number of tokens that a smart contract can withdraw from a balance. Without this feature we risk having our funds stolen through misuse.

  6. Advantages and disadvantages of ERC-20 tokens

  7. Advantages of ERC-20 tokens • It facilitates the creation of tokens . Developers previously used other terminologies to create tokens. • Exchanges between tokens • Universal standard. Thanks to this standard, the new tokens can be placed in an Exchange or transferred to wallets automatically.

  8. Disadvantages of ERC-20 tokens An ERC-20 token can be unintentionally destroyed if used as a smart contract payment instead of using Ether. • Scalability . They are not very scalable since if we launch an ERC-20 token to the network when it is congested, its usability could be affected. • Frauds . Anyone can create an ERC-20 token which can be used for good or bad by any user.

  9. THANK YOU

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