The immeasurable success of Ethereum and other altcoins clearly reflect that a wide range of masses are getting aware of the tokens and the term ‘tokenization’. This has crawled up into a popular communal lingo due to the profusion of Initial Coin Offerings (ICOs) that are developed on the Ethereum network. That is exactly where we come across the ERC20 token standards. They are single-handedly accountable for the billion dollar ICO industries and they have played a pivotal role in making cryptocurrencies more established. Let's simplify what this means, how does it help to achieve in relation to the Ethereum Smart Contracts and how important is it for your ICO.

What Is ERC20 Token Standard?

Ethereum Request for Comments or ERC is the official protocol that promotes & provides the essential improvements to the Ethereum platform. It is a list of standards that facilitate a set of definitive commands that a crypto token needs to implement on the Ethereum network so that it can be accepted as an ERC20 token.

The ERC20 is neither a type of software nor a form of technology nor a unique piece of code. Rather, it is a technical specification that a new token on the Ethereum network has to implement.

Additionally, when we talk about ERC20 tokens, it is a cryptocurrency formulated on top of Ethereum blockchains, the Ether-powered platform of smart contracts and currently ranked as the second most sought-after digital currency in terms of market caps. Its protocol standard encompasses standard functions listed as follows:

• Transferring the tokens
• Delve into the token’s balance at a specific address
• Total supplies of the tokens

The ERC20 Token standards also comprise of the basic modalities of what a token should include in order to start trading after its launch.

Also Read The importance of Smart Contracts Security Audits

Which Are The Most Popular And Important ERC20 Token ICOs In The Market?

If we dig deeper, there are quite a handful of ERC20 token coins that were launched on the Ethereum blockchain. Here is a list of the top ones:

• Golem (GNT)
• Augur (REP)
• The Abyss (ABYSS)
• ChainLink (LINK)
• TenX (PAY)
• Basic Attention Token (BAT)
• Raiden (RDN)
• VeChain (VEN)
• OmiseGo (OMG)
• Aragon (ANT)

What Does An ERC20 Do?

In order to comprehend the basic functionalities of ERC20, it is essential to recognize the Ethereum system as the one that engenders programmable currency. And therefore, since the ERC20 tokens are devised atop Ethereum, they too morph into programmable tokens and the potential of their customization and design is limited to the visions of its developers or designers.

Also, the use cases of the ERC20 token are diverse and noteworthy and can seamlessly facilitate the following:

• Collateral deals
• Tokenized assets such as gold and silver
• Securities dividends
• The voting systems based on this technology
• Staking platforms
• Financial systems
• Native currencies that functions with DApps

ERC20 And ICOs: A Final Note

In the present day, a majority of Initial Coin Offerings (ICOs), which are usually crowd sales, is built and based on Ethereum’s ERC20 Token standards.

Before the existence of ERC20, every ICO token executed as an Ethereum smart contract that included their own forms of basic functions such as transferring tokens so as to reinvent the wheel. This own version of token transfer had its own arguments and distinct names. This sometimes led to a massive amount of difficulties and even a single token exchange was a pain to transact.

Also Read The Obscured Requisite Of A Cryptocurrency Wallet Development

Whereas, all the tokens that comply with ERC20 come with the same name & functionalities and take the same arguments. Thus, through this process of crypto exchange, the liquidity of tokens got enhanced along with the uniformity, a lot less risk was involved, and the complexity got lessened to a greater extent.

All in all, if you are also looking to build crypto tokens powered by Ethereum, let us know. We’ll be happy to assist you in more than one way!