Cryptocurrency is filled with confusing words and jargon. Sometimes it seems like it’s all a farce to appear smarter. Like, what are ERC-20 tokens anyway?
So if you’ve been feeling a bit overwhelmed by all the technical crypto terms, don’t sweat it. We’ve all been there and it’s completely inevitable.
Today we’re looking at one of the most common technical terms: ERC-20 tokens. It might sound complex but it’s pretty straightforward and as crypto jargon goes, this is one of the better and more needed terminologies.
So what are ERC-20 tokens?
An ERC-20 token is a cryptographic token that has been created on the Ethereum network. When a cryptocurrency is referred to as an ERC-20 token, this simply means that it is based on the Ethereum Network.
ERC-20 is a technical standard on the Ethereum network that must be met for a token to become an ERC-20 token. By adhering to the technical standards, developers can guarantee that their token will be able to function within the Ethereum ecosystem.
Ethereum is a decentralized cryptocurrency platform that can support decentralized applications (dapps). Developers are able to use Ethereum to create dapps and use the underlying Ethereum technology to power them. This saves developers a load of time and means that Ethereum hosts a decentralized ecosystem of useful applications. Anyone can use Ethereum to create their own token using a smart contract.
How ERC-20 tokens changed crypto
The introduction of Ethereum changed crypto forever because it vastly increased the simplicity of stepping into the crypto game and creating a token of your own.
Flash back to 2017, tokens were popping up left right and center. Literally. There were so many new tokens because the interest was so high. Every day there was a new company creating a new ERC-20 token and hosting an ICO to raise money, aiming to eventually develop their business plan.
It was a crazy time. Some investors made a lot of money by finding the best ICOs and getting involved before everyone else. Don’t be fooled – crypto isn’t like that anymore and, in reality, that’s a good thing.
Ethereum was responsible for the ICO boom of 2017 and caused the introduction of so many cryptocurrencies and projects that are still making excellent progress today. The ease of creation of the tokens also introduced a lot of duds too though.
ERC-20 tokens are fairly simple to create and have changed the crypto landscape forever. Now when someone talks to you about an ERC-20 token, you’ll know exactly what they are talking about – a cryptographic token that is based on the Ethereum network.