What are ERC-20 Tokens?
ERC-20 tokens are a type of digital asset built on the Ethereum blockchain, adhering to a specific set of standards that allow for interoperability among various applications and platforms. The term "ERC" stands for "Ethereum Request for Comments," and "20" is the unique identifier for this particular standard.
Key Features
- Smart Contracts: ERC-20 tokens utilize Ethereum's smart contract functionality to manage token transactions and ownership.
- Interoperability: Because they follow the same standard, ERC-20 tokens can easily interact with decentralized exchanges, wallets, and other dApps.
- Divisibility: ERC-20 tokens can be divided into smaller units, making them useful for microtransactions.
- Transfers: Tokens can be easily sent from one wallet to another, adhering to defined functions for transferability.
Use Cases
ERC-20 tokens are widely used for a variety of purposes, including fundraising during Initial Coin Offerings (ICOs), representing asset ownership, and creating decentralized applications (dApps). They have become a foundation for tokenized ecosystems across various sectors in the cryptocurrency space.
In summary, ERC-20 tokens play a vital role in the Ethereum ecosystem, enabling developers to create a diverse range of applications while ensuring compatibility and ease of use.