If you are interested in Cryptocurrencies then you might hear about ERC20 Tokens. But what are they and why are they important? In this article, we will explain everything in detail.
Summary of ERC20 Token
- ERC20 Tokens are a type of cryptocurrency that is created on Ethereum Blockchain.
- Unlike Bitcoin or Ether which are native to their Blockchain, ERC20 Tokens are created by third-party developers. They use the Ethereum network as a platform.
- ERC20 Tokens can represent anything from shares in a Company to a digital asset in a game.
- They follow standard sets of rules and guidelines. These rules specify how the tokens can be transferred, exchanged or managed for wallets and exchanges.
- Some of the most popular ERC20 Tokens are USDT, BNB, UNI, AAVE, and LINK.
What is an ERC20 Token?
ERC20 stands for Ethereum Request for Comment 20. It is a technical standard that defines a set of rules for creating and interacting with tokens on Ethereum Blockchain. A Token is a digital asset that represents something of value. Such as Cryptocurrency, a Utility token or a representation of a real-world asset.
ERC20 was developed by Ethereum developer Fabian Vogel Steller in November 2015, as a way to standardize the development and use of tokens on Ethereum. Before ERC20, there was no ideal way to ensure that different tokens could work well with each other or be compatible with other applications on the network or not. This creates lots of confusion for developers and users.
ERC20 solved this problem by specifying a common interface for tokens. It means that any token that follows the ERC20 standard can be easily recognized and handled by any application that supports ERC20. This makes it easier to develop new tokens, exchange them, store them and use them in various decentralized applications.
ERC20 defines six mandatory functions as well as two optimal functions that a token contract must implement. All these functions allow users to perform basic operations with tokens. Such as transferring them, approving, checking their balance, getting the total supply of tokens and many more.
In addition, ERC20 also defines two events that a token contract must follow when a token transfer or approval occurs. These events also allow tracking as well as reaction to token activities.
Examples of ERC20 Token functions are
- Name () – Return the name of a token such as UNI or DAI
- Symbol () – Return the symbol of the token such as UNI or DAI
- Decimals () – Return the number of Decimal places that the token supports such as 6 or 18.
- Total supply () – Return the total number of tokens that exist in the network.
- Balance of (address _owner) – Return the number of tokens that a given address owns.
- Transfer (address _to, uint256 _value) – Transfer a specific amount of token from a sender address to another address.
- Approve (address _spender, uint256 _value) – Allow another address to spend a specific number of tokens on behalf of the sender’s address.
- Allowance (address _owner, address _spender) – Return the number of tokens that an address is allowed to spend on behalf of another address.
Some examples of ERC20 Token events are:
- Transfer (address indexed _from, address indexed _to, uint256 _value): emitted when a token transfer occurs.
- Approval (address indexed _owner, address indexed _spender, uint256 _value): emitted when an approval occurs.
What is Ethereum?
Ethereum is a platform that allows anyone to create and run decentralized applications using blockchain technology. Blockchain is a system of distributed ledgers that can store and verify the data without relying on a central authority.
Ethereum is powered by its own cryptocurrency Ether which is used to pay for the execution of smart contracts and transactions on the network.
Ethereum was conceived by Vitalik Buterin in 2013 and launched in 2015 with the help of other co-founders such as Joe Lubin and Gavin Wood.
However, Ethereum has undergone many updates since its inception. It introduced a new fee mechanism in 2019 which improved the security and efficiency of the network. In 2021, it also introduced a new fee mechanism that reduce the wastage of transaction fees.
Today Ethereum is more than a Cryptocurrency or a platform. It is a global community of Developers, users, and Crypto lovers who share a common vision of creating a more open, secure decentralized world. In addition, Ethereum is also a catalyst for many emerging technologies based on blockchain such as NFTS, and Metaverse.
Benefits of ERC20 Token
ERC20 Token offer many benefits to both the developers and users such as
Inter-operability
ERC20 Tokens are designed to be compatible with any Ethereum Exchange or Wallet. Thus, it makes it easy for the users to manage and trade them.
Standardization
ERC20 Tokens follow a common set of rules and functions and ensure compatibility with other tokens.
Efficiency
ERC20 Tokens can optimize the usage of your account and make your transaction easier. In addition, they also reduce the complexity of your token interaction and minimize the risk by providing transparency.
Innovation
ERC20 Tokens allow the creation of new types of digital assets such as Utility Tokens, and Security Tokens. They also attract the integration of real-world assets such as real estate, Art etc. into the Blockchain.
Profitability
ERC20 token can generate a high return for investors by increasing the value over time. They also offer access to new markets and opportunities that may not be available otherwise.
How to Create an ERC20 Token?
ERC20 Token is one of the most popular ways to raise funds through ICO. Here, we will guide you through the steps of creating your ERC20 Token using markdown languages like Markdown or Common Mark.
Understanding ERC20 Token
First, let’s gain a basic understanding of ERC20 Tokens. These functions are similar to cryptocurrencies like Bitcoin. But they are built on the Ethereum network.
However, ERC20 Tokens are fungible. It means they can exchange and operate within a pre-defined set of rules.
Choosing the right tools
Before going into the creation process it is important to choose the right tools. Markdown languages Markdown or Common Mark can provide an efficient way to create your content. These languages offer user-friendly syntax that allows you to focus on the content instead of complex formatting options.
Step 1 – Setting up the Development Environment
To create an ERC20 token, you need a development environment. You can start by setting up an Ethereum Wallet to store your tokens and interact with Blockchain. You can use a popular Wallet like Meta-mask which provides a user-friendly interface for easy token management.
Step 2 – Coding with Smart Contract
The next step involves Coding with a Smart Contract that will define the behaviour as well as rules of the ERC20 Token. You can write code for Smart Contracts using programming language like Solidity, which is good for creating Ethereum Smart Contracts.
However, within the Smart Contract, you can define the essential functions such as token name, symbol, supply and the ability to transfer the tokens between addresses. It is very important to test and debug your smart contract before deploying it to the Ethereum network.
Step 3 – Deploying the Smart Contract
Deploying the Smart Contract to the Ethereum network is very important towards creating your ERC20 Token. You can use a framework like Truffle to deploy your smart contract easily. Once your smart contract is deployed you will receive a unique contract address that represents your ERC20 token on an Ethereum Blockchain. This address is very important for trading and token management.
Step 4- Smart Contract Verification
To enhance the transparency and credibility of your ERC20 token, it is important to verify your smart contract code. Platforms like Ethers can allow you to publish and verify your smart contract code. This platform ensures that users can trust your token and understand its codebase.
Step 5 – Token Distribution and Management
After Deploying and verifying your smart contract, now it’s time to distribute and manage your token. You can use Ethereum Wallet to handle your token transfer and ensure its proper distribution.
Use Cases of ERC20 Token
ERC20 Tokens have several use cases such as
Currency
Tokens can provide an economic system for a project ecosystem. For Example, DAI is a stablecoin that maintains a 1:1 tied with the US dollar and we can use it for lending and borrowing on various decentralized platforms.
Governance
Tokens can be used to enable a democratic voting system where all token holders can vote on network updates. For example, Uni is the governance token of Uniswap. It is a decentralized exchange that allows users to swap any ERC20 Token.
Staking
Tokens can be used to incentivize users to participate in securing as well as maintaining your network. For Example, ETH is the native token of Ethereum that can be staked by validators to earn rewards.
Utility
Utility Tokens can help to access a product or service within a DAPP. For example, BAT is a utility token of the web browser Brave. Brave rewards users and publishers for viewing and creating the content.
These are some most common Use Cases of ERC20 Token. However, there are many possibilities that ERC20 Tokens can represent a wide range of utilities or assets on the Ethereum network.
Case Studies of Successful ERC20 Token
Here are some case studies of successful ERC20 Tokens are
Chain link
Chain Link is a decentralized Oracle network that connects Smart Contracts to real-world data such as market price, sports score etc. Its ERC20 Token LINK helps to pay node operators for providing data feeds.
Uni Swap
Uni Swap is a decentralized exchange that allows users to swap any ERC20 Token without intermediaries or fees. Its ERC20 Token UNI is used to govern the protocol and to distribute rewards to liquidity providers.
Teather
Teather is a stablecoin that maintains a 1:1 tied with the US dollar. It is backed by fiat currency reserves. Teather ERC20 Token USDT works as a medium of exchange, storing a value in the crypto market.
Basic Attention Token
Basic Attention Token is a Utility Token. It powers the Brave Web Browser that rewards users and publishers with tokens for viewing and creating content. Basic Attention Token ERC20 Token BAT is used to measure and access premium services and features on the Brave platform.
Shiba Inu
Shiba Inu is a meme coin that aims to be decentralized as well as a community-driven alternative to Dogecoin. Its ERC20 SHIB is used to participate in the Shiba ecosystem which includes decentralized exchange and metaverse.
List of Best ERC20 Token in 2024
There are thousands of ERC20 Tokens in the crypto market each has its use case and community. Some of the most popular ERC20 tokens include Teather, Chain Link and Uni Swap.
However, many new and emerging ERC20 projects are worth keeping an eye on in 2024. These projects aim to solve many problems in the crypto space. Here are some of the best ERC20 Tokens in 2024 based on their potential and innovation.
Ethereum
Ethereum is the native token of the Ethereum network. It is the second-largest cryptocurrency by market capitalization. Ethereum is used to pay for gas fees to execute the transactions and smart contracts on the network. In addition, Ethereum is also used to store value as a medium of exchange and for trading on Defi platforms.
Polygon Ecosystem Token
Polygon Ecosystem Token is a layer 2 scaling solution that aims to provide faster, cheaper and more secure transactions than Ethereum. It supports various types of blockchains such as plasma chains and standalone chains. The native token of Polygon is MATIC which is used to pay for gas fees on the network. MATIC is also used as a reward for users who contribute to the security of the network.
Wrapped Bitcoin
Wrapped Bitcoin is an ERC20 Token that represents Bitcoin on Ethereum Blockchain. WBC (Wrapped Bitcoin) is backed 1:1 by real-bitcoin that is locked in a Custodial service. Moreover, WBC allows Bitcoin holders to access the benefits of Ethereum such as Smart Contracts, and DAPP without having to sell or convert their Bitcoin.
Chain Link
Chain Link is a decentralized Oracle network that connects Smart Contracts with real-world data. Such as prices, and events. It allows smart contracts to access reliable information from various sources without relying on a single point of failure.
The native token of Chain Link is LINK, which is used to pay for Oracle services. However, LINK is also served as a reward for node operators who provide high-quality data to the network.
Ai doge
Ai doge is a meme generator that uses Artificial Intelligence to create viral memes from text prompts. Users can also earn Ai tokens by creating and sharing memes on the platform. Ai doge is one of the latest projects to build on the Ethereum network.
Best ERC20 Wallets in 2024
ERC20 Wallets are applications that allow you to store and manage your ERC20 Tokens which are based on Ethereum Blockchain. There are many types of wallets such as hardware, software, mobile, web and exchange. Each has its advantages and disadvantages depending upon the needs as well as preferences.
Some of the factors you should consider when choosing an ERC20 Wallet are –
Security
How safe your wallet is from Hackers? Does it have a feature like Encryption or Backup?
Features
What functions does your wallet offer Such as Token swapping, Staking, integration or NFTS support?
User-friendly
Is it easy to use your wallet? Does it have a simple interface and customer support?
Compatibility
Does your wallet support all the ERC20 Tokens you want to hold or trade? Does it also support other networks or coins such as Bitcoin, or BSC?
Fees
How much does it cost to your wallet? such as transaction fees, network fees etc.
Based on these criteria here are some of the Best ERC20 Wallets in 2024
Best Wallet
Best Wallet is one of the best wallets for storing ERC20 tokens. It is a non-custodial wallet that offers decentralized storage as well as token trading through its in-built DEX. However, it is more than just a wallet. It also offers staking, security features, unique insights into trading crypto and early access to new projects.
Zengo
Zengo is a highly-rated ERC20 Mobile Wallet that is available for both Android and IOS devices. It supports a wide range of ERC20 tokens including many of the popular tokens on the Ethereum network. Zengo is a rich wallet feature that allows app trading and purchases and offers support for NFTS or multiple blockchains.
Ledger
Ledger is one of the safest ERC20 wallets. It offers cold storage via a small hardware device. There are three ledger models to choose from ranging from $79 to $279. All the ledger models can keep private keys offline so ERC20 tokens can be held without fear.
Trust Wallet
Trust Wallet is compatible with all the ERC20 Tokens. ERC20 token can be added manually via the contract address if it is not pre-listed. It also offers free staking and token swaps.
Meta Mask
Mata Mask is another non-custom-dial wallet that supports all ERC20 Tokens. It’s free to use and available as an Android app. In addition, Meta Mask also comes as a browser extension. It has an in-wallet portfolio dashboard that supports staking and token swapping.
Coinbase
Coinbase is a decentralized wallet for IOS and Android users. It supports custom tokens on various networks including Ethereum. However, there is no requirement to open an account with Coinbase to use its wallet.
Binance
Binance offers ERC20 Wallet and Cryptocurrency Exchange under one roof. Users need to just log into their accounts and move their funds between them. Moreover, Binance also offers saving accounts and other Defi products.
The Future of ERC20 Token in the Crypto World
ERC20 Tokens have enabled a plethora of innovative applications in the crypto world such as Defi, NFTS or decentralized exchanges. However, as the Ethereum network evolves and faces new challenges and opportunities, the future of ERC20 Tokens may also change.
Challenges of ERC20 Token
Despite their benefits, ERC20 Tokens also face some challenges in the crypto world.
Scalability
One of the main challenges for ERC20 Token is scalability. As the Ethereum network is more expensive and congested to use, ERC20 Tokens suffer from high transaction fees and slow confirmation time. This affects the user experience and adoption of the ERC20 token. Especially for those who need fast transactions.
Security
Security is another challenge for ERC20 Tokens. Since ERC20 tokens are based on smart contracts they are vulnerable to bugs or hacking. It results in a loss of funds.
Regulation
Regulation is also a challenge for ERC20 Tokens. As the crypto world attracts more attention from authorities, ERC20 Tokens may face some regulations.
Opportunities for ERC20 Token
Despite their challenges, ERC20 Tokens may also have opportunities in the crypto world.
Innovation
Innovation is one of the main opportunities for the ERC20 token. As the crypto space evolves and grows new use cases and applications emerge.
Adoption
Another opportunity for ERC20 Token is adoption. As more and more people are aware of the crypto world, more demand for ERC20 Tokens will arise. This creates more incentives for developers and users to create and use ERC20 Tokens.
Improvement
Improvement is another opportunity for the ERC20 token. As the technology improves new solutions and standards for ERC20 Tokens emerge. These solutions aim to address the challenges of ERC20 Tokens.
Factors that may influence the future of ERC20 Token
The Transition of Ethereum 2.0
Ethereum is undergoing a major upgrade that will shift its mechanism from Proof of Work to Proof of Stake and introduce scalability solutions such as sharding. This will improve the speed and efficiency of the network. However, it will also require some changes such as updating the code and migrating to a new smart contract standard.
The emergence of a new Token standard
ERC20 is not only a token standard on Ethereum. New ones are constantly developing to address different needs and use cases. For example, ERC721 is a standard for creating unique as well as collectable tokens such as NFTS.
The Competition from another blockchain
Ethereum is not only a platform that supports token creation. Other Blockchains also offer superior solutions from the same type of services.
For example – Binance Smart Chain is a Blockchain that is compatible with Ethereum. It offers cheaper and quicker transactions and has attracted many Defi projects. Another blockchain such as Solana is also developing its ecosystem and token standard and may pose a threat and opportunity for ERC20 Token.
These are some of the main factors that may influence the future of ERC20 Tokens. But there may be others that are unpredictable.
The Crypto space is very dynamic and evolving. Therefore, ERC20 Tokens will have to adapt and stay relevant. However, as per their adoption and potential ERC20 Tokens will likely remain an important part of the crypto world for the upcoming future.
Solutions 1313 – ERC20 Token Development Company
Solutions 1313 is one of the leading ERC20 Token Development Companies that can offer you custom and secure solutions for blockchain projects. We have a team of skilful token developers who are compatible with any Ethereum platform or smart contract. Whether you want to launch your ICO, Defi or non-fungible tokens, we can help you design and deploy your ERC20 tokens with ease.
You can contact us today to get a free quote for your Crypto Token development project.
FAQs
What is the difference between ETH and ERC20?
ETH is a native cryptocurrency of the Ethereum Blockchain. It is a platform that supports smart contracts and decentralized applications.
ERC20 is a standard for tokens that builds on Ethereum Blockchain and follows a set of rules. ERC20 Token can represent various assets such as Utility tokens, stablecoins etc.
What is an ETH wallet?
An ETH wallet is a hardware and software device that allows you to store and receive ETH.
How do you convert your ERC20 tokens to Bitcoin?
To convert your ERC20 tokens to Bitcoin, you need an exchange that supports both types of assets. For example, you can use a decentralized exchange such as Uni Swap to swap your tokens for ETH. Then use another exchange to swap your ETH for Bitcoin.
How do I add ERC20 tokens to a Coinbase wallet?
If you want to add ERC20 tokens to a Coinbase wallet then you need to follow certain steps such as –
- Open the Coinbase wallet app
- Click on the Receive icon
- Select the ERC20 Token you want to receive
- Share your wallet address with the sender
- Wait for the transaction verification message completion on the Blockchain
Can we have multiple ERC20 wallets using one private key?
Yes, you can have multiple ERC20 wallets using one private key as long as they are derived from the same seed phrase. A seed phrase is a set of words that generate your private key and allow you to restore your wallet in case you lose access to it.
How to transfer ERC20 tokens to an exchange after an ICO?
If you want to transfer ERC20 Tokens to an exchange after an ICO then you need to follow some certain steps –
- Find out if your exchange supports the token you want to deposit.
- If the exchange supports your token, then login to your account and go to the deposit section.
- Select the token you want to deposit and copy the address provided by the exchange.
- Go to your wallet and send the amount of token you want to deposit to the address that you copied from the exchange.
- Wait for the transaction verification message completion on the Blockchain and then check your exchange balance.
What is the best-decentralized Exchange for ERC20 tokens?
The best Decentralized Exchange for ERC20 Tokens depends on your specific needs. However, some factors that you need to consider are liquidity, Fees, Security and user experience.
Some examples of the popular decentralized exchange for ERC20 tokens are Uni Swap and Balancer.