An Ethereum-based technical standard or guideline for creating and issuing smart contracts on the Ethereum network.
The Long Explanation
The ERC-20 is an Ethereum token standard that was proposed in 2015 by Ethereum developer Fabian Vogelsteller, and officially recognized in 2017. It provides a set of rules to be followed by any token or smart contract for it to properly function within the Ethereum network.
‘ERC’ stands for “Ethereum request for comment”. Rather than being a piece of code or a software, it is a technical guideline or specification for smart contract developers on the Ethereum network.
Thanks to its ease of use and implementation, the ERC-20 standard has been widely adopted by developers. This standard defines how tokens are transferred within the Ethereum blockchain, how balances are recorded, and how tokens and decentralized applications (DApps) interact.
You can think of it as a set of rules provided to developers to enable their tokens function smoothly within the Ethereum blockchain. These rules have been widely adopted and used for the creation of tokens for digital currencies, loyalty vouchers, gold certificates, in-game assets, etc.
Today, there are over 500,000 ERC-20 tokens on the Ethereum network, as against just over 5,000 as of mid-2017. A major reason for this exponential growth enjoyed by the ERC-20 standard has been the result of its ease of use for the setup and launch of ICOs (initial coin offerings).
In fact, the rise of ERC-20 tokens was a major driver of the ICO bull market of 2017/2108. Many successful crypto projects, such as EOS (an ERC-20 token which raised over $180 million in 5 days) and BNT (which successfully raised over $150 million in crowdfunding).
Today, a lot of ERC-20 standard tokens are hugely popular, from Tether (USDT) to LINK, OMG, SHIB, MKR, etc.
However, it isn’t the only ERC standard for Ethereum tokens. The ERC-721 standard, for instance, is incredibly popular amongst creators of Ethereum-based non-fungible tokens (NFTs).
