What is an ERC-20 Token?
An ERC-20 token is a standard used for creating and issuing smart contracts on the Ethereum blockchain. The acronym stands for "Ethereum Request for Comments 20," and it defines a set of rules that all Ethereum tokens must adhere to. This standard ensures that tokens are interoperable, meaning they can easily interact with wallets, exchanges, and other smart contracts.
ERC-20 tokens have gained immense popularity in the world of cryptocurrency, particularly during Initial Coin Offerings (ICOs) when new projects raise funds by issuing tokens. Investors can buy these tokens, which often grant them certain privileges like voting and access to services within the associated ecosystem.
The main features of ERC-20 tokens include transferability, the ability to approve and transfer tokens on behalf of another address, and information on total supply and balance. This standardization has allowed for a vast array of projects to flourish on the Ethereum platform, from decentralized finance (DeFi) applications to non-fungible tokens (NFTs).
In summary, ERC-20 tokens are critical components of the Ethereum ecosystem, providing flexibility and functionality while promoting innovation within the cryptocurrency space.