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What is an ERC20 token?
Read our beginner’s guide to Ethereum’s ERC20 token standard.
If you’re new to the world of cryptocurrency, you’re probably well aware that wrapping your head around how digital coins and tokens work involves a pretty steep learning curve. There’s plenty of technical jargon as well as acronyms and buzzwords that need to be deciphered before you can understand the intricacies of cryptocurrency. One of the terms you may hear bandied about a lot is ERC20.
ERC20 is a technical standard for tokens issued on the Ethereum blockchain. For a simple explanation of exactly what that means, keep reading.
What are ERC20 tokens?
Since its launch in 2015, Ethereum has become one of the driving forces behind the growth of cryptocurrency. Initial coin offerings (ICOs) have raised billions of dollars in funding for crypto projects from all around the world, and most of these ICOs are based on the Ethereum platform. Buyers contribute Ether (ETH) or bitcoin (BTC) to participate in a crowdfunding sale, and in return receive some of the ICO project’s native tokens.
ERC20 is a technical standard for tokens issued on the Ethereum blockchain, providing a list of rules that all Ethereum-based tokens must follow. These include how the tokens can be transferred, how transactions are approved, how users can access data about a token and the total supply of tokens. The protocol is necessary to ensure compatibility between the many different tokens issued on Ethereum.
Just like bitcoin, Litecoin and any other cryptocurrency, ERC20 tokens are blockchain-based assets that have value and can be sent and received. The difference is that instead of running on their own blockchain, these tokens are issued on the Ethereum network. This means they’re hosted by Ethereum addresses and are sent using Ethereum transactions.
Did you know?
Want to know why they’re called ERC20 tokens? The “ERC” stands for “Ethereum Request for Comments”, which is an official protocol used to propose improvements to the Ethereum network. The “20” is the unique ID number used to identify the proposal.
Popular ERC20 tokens list
Many crypto newcomers are surprised to discover just how ubiquitous ERC20 tokens are. Take a look at a list of the top 100 digital currencies by market cap and you’ll see plenty of well-known currencies that use the ERC20 standard. At the time of writing (May 2018), these include the following:
Which wallets support ERC20 tokens?
If you’re buying any digital currency that’s issued as an ERC20 token, you’ll need to find a wallet that’s compatible with these types of tokens. Happily, because ERC20 tokens are so popular, there are plenty of wallets to choose from, including the following:
- Hardware wallets. Ledger Nano S, TREZOR, BitBox
- Desktop wallets. Eidoo, Mist, Parity, Exodus
- Mobile wallets. Eidoo, Coinomi, Trust, imToken
- Web wallets. MyEtherWallet, MetaMask
To find out ways to securely store your ERC20 tokens, you can begin by comparing the above wallets. You can also learn more about storing your cryptocurrency in our ultimate guide to wallets.
Disclosure: At the time of writing, the author holds ADA, IOTA and XLM.
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