And a miner uses these fees to execute transactions on the network. Hence, there’s a gas fee to perform a transaction. Ethereum’s ERC-20 tokens and some other alternatives, including the ERC-223, ERC-721 are among the most popular.īasically, what sets ERC-20 tokens apart from standard crypto is it relies entirely on the Ethereum blockchain rather than having their unique blockchain. Tokens, on the other hand, are a utility that exists on top of a blockchain. That means these cryptos are running on their distinct blockchains, and the ledgers are distributed on decentralized blockchains. In fact, the terms cryptocurrency and tokens represent different meanings, and it shouldn’t be used interchangeably.įirst of all, cryptocurrency is a form of digital assets where they are encrypted by cryptography. The Difference Between Standard Crypto and ERC-20 TokensĮRC-20 tokens indeed function as a regular cryptocurrency, but their concepts are different.
In the end, an individual or organization that fulfills these protocols can issue its own set of tokens. These standard ERC-20 parameters include its name, symbol (an abbreviation used when displaying balances), decimals (determines the number of decimal places after the point), and the total supply of issued tokens. Hence, Ethereum set a standard for every new token built on Ethereum to abide by the rules (ERC standard’s protocol.) From there, a new coin is must submit comprehensive information to the Ethereum Improvement Proposal (EIP). When analyzing cryptocurrencies from the blockchain perspective, new tokens have always struggled to interact with each other. But the ERC-20 token standard paved a strategic pathway for creating new tokens that neither of us should ignore. But, what is ERC-20, and how does it work? Why Do Crypto Users Need to Know the ERC-20 Standard?Ĭrypto traders and investors may or may not thrive with the technical knowledge of blockchain or smart contracts. So, when you’re exchanging USDT or DAI, the chances of you being exposed to the concept of ERC or ERC-20 tokens are inevitable. On the contrary, ERC-20 is a set of rules that help developers simplify and improve the process of creating a standard Ethereum-based token. These tokens mainly rely on a specific smart contract that keeps track of that token’s transactions. ERC-tokens are digital assets designed, issued, and used just like a Bitcoin, except it runs solely on the Ethereum blockchain. The ERC-20 refers to (Ethereum Request For Comments) while the number 20 represents the unique number ID to distinguish the standard from others. Thus, making them compliant with the ERC-20 tokens and standard. Many of these coins are built on the Ethereum blockchain. The popularity of cryptocurrencies has grown immensely in recent years, and with Bitcoin reaching its all-time high, it’s not surprising many altcoins aspire to penetrate this competitive industry.
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