What is ERC-20?
ERC-20 tokens are based on the Ethereum blockchain.
Just like mainstream cryptocurrencies such as Bitcoin, they can be used to make purchases—or traded for fiat currencies and crypto.
Fixed Supply Assets Stored in Ethereum Wallets
These assets usually have a fixed supply and can be stored in a dedicated Ethereum wallet.
A wide range of ERC-20 tokens were created in 2017 and 2018 during the boom of initial coin offerings.
They usually form decentralized apps’ backbone, or DApps for short.
Exploring ERC-20 and ERC-721 Standards
Generally speaking, ERC-20 tokens are fungible—meaning that each is identical and can be easily exchanged.
Nonfungible tokens are often referred to using the ERC-721 standard, meaning each has unique characteristics that set them apart.
The ERC-20 standard comes with strict conditions that must be followed.
This isn’t too dissimilar to the internet, where websites won’t work correctly unless fully compliant with HTTP.
Unlocking Possibilities
Some use cases for ERC-20 tokens include in-game assets, which have also shaped the world of loyalty points.
The sheer level of versatility that ERC-20 tokens offer is one of the reasons why these tokens have become so popular.
To succeed and achieve liquidity and widespread awareness, these assets often need to launch on an exchange where they can easily be traded.