Understanding the ERC20
It is common to use the token concept as a synonym for digital currencies, however, this is wrong. The differences between these two concepts lie in the fact that cryptocurrencies fulfill a financial function and tokens can be adapted to different user needs.
There are five types of tokens : Platform, Security, Transaction, Utility and Governance. Platform tokens are used for the creation of decentralized applications and are the ones with the most use cases, erc20 token creator which can be varied. We can find them on entertainment platforms, in advertising or in the market. These tokens benefit from the block chain on which they are built to obtain greater security and the ability to support the transactions carried out.
Security tokens or security tokens (STO) are financial assets that represent some real asset within the blockchain, such as a trust, shares, or even properties or even animals, as is the case with the BitCow token delivery corresponding to the participation in the profits, a property right, among other similar legal rights.
Transaction tokens, as the name implies, help verify transactions on the blockchain and are exchanged for goods and services. Some cryptocurrencies can function as transaction tokens such as Ether and Bitcoin, however not all tokens are cryptocurrencies.
Utility tokens are tokens used to use an existing platform or protocol. Its use usually reduces the costs involved in using the platform. erc20 token generator An example of these tokens is Binance’s $BNB used to pay exchange fees, to participate in token sales on its launch pad, and also feeds its decentralized exchange service, Binance DEX.
We could define Governance tokens as titles that users have to be able to give their opinion and participate in decisions within a protocol. These tokens are used in the voting systems of the blockchain and guarantee transparency in the participation of the governance of the protocol.
ERC-20 tokens
Every time we see the issuance of a new token we can realize that most of these tokens are based on the EC20 token standards and protocols, this raises the question: what is an ERC-20 token?
The Ethereum Request for Comments 20 or ERC-20 according to the Ethereum site , is “ the technical standard used for all smart contracts on the Ethereum blockchain for fungible token implementations ”. These parameters or list of requirements must be met in order to implement a token in the Ethereum blockchain. it will be easy to know that the platform or project.
The fact that a token meets these parameters not only guarantees that the asset meets certain characteristics necessary to interact in a network, it also helps investors feel safe knowing.
ERC20 standards
In 2015 Fabian Vogelsteller published the standards for ethereum token creation so that developers could predict how new tokens will work within the Ethereum network.
“ Although Ethereum allows developers to build absolutely any type of application without restriction to specific feature types, and prides itself on its ‘lack of features’, there is a need to standardize certain very common use cases to allow users and applications interact more easily with each other ” the document points out. Some of the specifications that a token must have are: number of units to be distributed, balance, balance query for specified addresses, how transactions are approved, among others depending on the type of token. Three of these features are required and six are optional. By complying with the specifications of each token, they can be created and offered to the public.
The mandatory requirements for the creation of an ERC20 token are:
- token name
- Symbol that will identify it
- Number of decimals. It is the number of times a token can be divided which goes up to 18 decimal places.
The optional requirements for the creation of an ERC20 token are:
- totalSupply: number of tokens that will be created.
- transfer: number of tokens that will be allowed to be sent by each user from the total supply.
- balanceOf — Returns the number of tokens a given address has in its account.
- transferFrom — Allows users to transfer tokens to another user.
- approve — Helps identify tokens against the total supply of tokens to prevent counterfeiting, and in turn verifies a transaction.
- allowance : Allows to verify the amount of tokens that a user has
It provides functionalities like transferring tokens from one account to another, to get the current token balance of an account and also the total token supply available on the network. create erc20 token In addition to these, it also has other features such as approving that an amount of an account’s token can be spent by a third-party account.
If a smart contract implements the following methods and events, an ERC-20 token contract can be called, and once implemented, it will be responsible for keeping track of the tokens created on Ethereum
