ERC20, tokens have existed for almost three years now. However, they were made super popular by the Ethereum development team. Essentially, the ERC20 is a token standard that most developers aim for their ICO tokens to comply with.
The standard became popular because of the boom in the attention that ICO’s have been getting recently. The ERC20 standards API is developed for easy integration with the deployment of tokens through smart contracts. Literally, almost all good ICO projects have their tokens built on ERC20 standards. It’s actually kind of weird if they aren’t.
The term ERC itself means Ethereum Request for Comments, which is used to help developers understand how they should deploy smart contracts within their projects.
The ERC standard utilizes 6 functions for tokens that are used in the Ethereum system. Think of these as functional parameters, such as how tokens are sent to users and how the data within a token can be used. It also describes the different signals of tokens.
These standards are in place to guarantee that all of the different kinds of Ethereum tokens function in the same way within the system. Additionally, it allows for all ERC20 tokens to be supported by almost every single wallet which supports ETH.
Practically every single new token made by an ICO complies with the ERC20 standards.
How is an ERC20 contract set up?
It should be noted that before ERC20 became the golden rule in the Ethereum network that developers were simply keeping it in mind when they made tokens.
However, tokens that did not comply with the standard ultimately lead to problems within the Ethereum ecosystem. Pretty much due to mistakes which led to investors never receiving tokens and etc.
So obviously when something as important as tokens follow the same rules and comply with the same standards, then everything functions better.
How do users use ERC20 tokens?
ERC20 tokens are usually tradeable on all popular exchanges. However, this kind of comes down to the ICO too and how active the team is with the project.
This standard is a great improvement over the technology that was used before. However, the system may occasionally experience difficulties. If you want to be extra cautious try and send a few tokens to a second account that you have from your main one before you send them to an exchange or someone else.
Additionally, remember to never buy such tokens from ICO’s using your exchange wallet. Because exchanges are not designed to support ICO token transfers. Thus, you will lose all of your tokens if you do so.