ERC-20 is a standard that a token on Ethereum can meet. If tokens meet all the stated standards, they become ERC-20 tokens. These tokens have value and can be sent and received by parties, just like Litecoin, Bitcoin, and Ethereum.
The only difference between these tokens and other digital currencies is that they ride on the Ethereum blockchain. They are hosted on an Ethereum address and are sent via an Ethereum transaction.
ERC-20 tokens have been around since 2015. However, it is only recently that developers on Ethereum formalized them. Thus, they are considered a true token standard and not just a method that developers can use to create tokens on Ethereum. This move to formalize ERC-20 standards was prompted by a growing interest in ICO activity.
Naming ERC Tokens
It is important that you understand there is no central registry for these tokens. Thus, there is no guarantee of the uniqueness of a given symbol or name. Once you create a token contract, it is up to you to have it added to a common site such as CoinMarketCap, MyEtherWallet, or Etherscan. Ensure that you follow the instructions given if you want your name to be accepted. Look for a reasonable name and symbol for your token that is easy to grasp.
The Impact of ERC-20 on Developers
ERC-20 has a positive impact on developers. The reason is that it creates a defined set of rules for all tokens on Ethereum to follow. This allows developers to predict how these tokens will behave within the Ethereum ecosystem.
The main benefit is that projects do not need to be redone with the release of every new token. Rather, ERC-20 is compatible with all other tokens that adhere to the rules. Most developers now adhere to the ERC-20 rules. This means that almost all tokens released via Ethereum ICOs are compliant with ERC-20 rules.
ERC-20 Is Technically Still a Draft
Essentially ERC-20 is still in draft form. That means the rules are not enforced by most of the Ethereum community. However, the momentum is strong, and most tokens now make an effort to comply with ERC-20 requirements.
However, it is important to keep in mind that the standard, just like Ethereum, is still quite young. There is going to be the need for some troubleshooting as the platform grows. One issue that has arisen in recent times is that each time a token is sent to a smart contract, it causes a loss of ether. According to one of the biggest exchanges out there, each time this happens, it has cumulatively led to losses of about $70,000 for investors. However, these look like teething problems, which will be sorted out with time.
Do you think the ERC-20 standard will last? Is there the need to make improvements to it? Let us know what you think in the comment section below.