Understanding ERC-20
ERC-20, or Ethereum Request for Comment 20, is a technical standard used for issuing and implementing assets on the Ethereum blockchain. Proposed in 2015 by Ethereum developer Fabian Vogelsteller, this standard sets out a common set of rules that an asset must follow to function correctly within the Ethereum ecosystem. These rules pertain to how ERC-20 assets are transferred within the Ethereum blockchain and how their supply and account balances are consistently tracked.
The Purpose of ERC-20
The primary purpose of the ERC-20 standard is to ensure interoperability between various assets and applications on the Ethereum blockchain. This interoperability makes it easier for developers to predict how different assets and applications will interact. ERC-20 assets can be used to represent a wide range of digital assets or tradable goods, such as digital tokens, vouchers, gold certificates, loyalty points, and IOUs. They can also be used to tokenize voting rights during elections.
Usage of ERC-20 Assets
ERC-20 assets are utility resources of the Ethereum blockchain. Each has unique functions and is designed for various purposes within the ecosystem. ERC-20 assets can be stored in most ETH wallets and sent to any Ethereum wallet address. They represent fungible assets and are established on the Ethereum network through the use of smart contracts.
The Impact of ERC-20
The introduction of the ERC-20 standard has significantly impacted the Ethereum ecosystem. It has simplified the process of creating and issuing digital assets, leading to increased interest in ICO crowdfunding events and blockchain technology overall. To date, there are over 350,000 ERC-20 assets on Ethereum, including well-known assets like Tether (USDT), Binance USD (BUSD), Polygon (MATIC), and Shiba Inu Coin (SHIB).
The Future of ERC-20
The future of ERC-20 is expected to continue contributing to the growth of the Ethereum ecosystem. The standard has enabled developers to build on Ethereum, resulting in a network effect that has produced numerous new assets. As the Ethereum ecosystem continues to evolve, the ERC-20 standard will likely play a pivotal role in its development.
