The ERC20 Standard: All You Need to Know

ERC20 is a very common and popular concept that is often heard in the crypto market. It’s an Ethereum token standard that mentions the rules an ERC20 is governed by. If you are looking to learn more about the ERC20 standard, you’re at the right place.

What is ERC-20?

ERC20 is a cryptocurrency scripting standard that stands for “Ethereum request for comment.” It was created and used to dictate the rules and actions that a particular type of Ethereum token or smart contract must follow. In simple terms, ERC20 can be understood as a set of rules and functions that any and all ERC20 tokens on the Ethereum network must follow.

The ERC20 standard also governs the creation and issuing of smart contracts on the Ethereum network.

All top crypto tokens based on the Ethereum blockchain use the ERC20 standard. Thanks to the ERC20 standard, creating new tokens based on Ethereum are now easier than ever. In fact, this has been a major force behind the immense rise and popularity of ICOs in recent years. In the past few years, there have been thousands of ERC20 tokens successfully created and launched by companies, ranging from startups to small companies and corporations.

An ICO or Initial Coin Offering is a token sale event, which is organised by a company looking to raise funds to create a new ERC20 token or decentralized app (DApp). The company accepts funds from investors in exchange for its tokens. Many cryptocurrencies and their linked companies found immense success in the ICO market and eventually launched their respective ERC20 tokens in the market.

ERC20 is one of the multiple Ethereum token standards that define how different Ethereum-based tokens operate.

What does the ERC20 Standard include?

As said before, the ERC20 Ethereum token standard covers the rules and functions that an ERC20 compliant token must follow. These include:

TotalSupply: Information about the total supply of that token

BalanceOf: Provides details of the token balance of a person’s account

Transfer: Used when a person wants to transfer a particular number of tokens to a specific address

TransferForm: Used when a person wants to transfer a particular number of tokens from a specific address

Approve: Provides approval for withdraw a fixed number of tokens from a particular account

Allowance: Returns a fixed number of tokens from a spender to the owner in a particular period