Ask an Expert: What are ERC20 tokens?

In Ask an Expert/Blog/Cryptocurrency/Ethereum

Wondering what are ERC-20 tokens and their functions? Join us on this episode of Ask an Expert, where Taylor Gerring takes your from the origin of ERC-20 to it’s practical application today. Check out our video and the our original post below for this episode’s script.

What are ERC20 tokens?

ERC20 tokens are subtokens built on the Ethereum network. In particular, ERC20 refers to a specific token standard to help ensure compatibility between token interfaces.

Why do tokens need a special API?

Having a common set of application programming interfaces between tokens makes it easier for developers to build more advanced functionality on top, such as a wallet that can handle any ERC20-compatible token without needing to create a special update to support it.

What else is ERC20 good for?

Some of the cool things possible with ERC20 tokens is the ability for a smart contract multisig wallet able to own and interact with multiple subtokens. Another interesting application is a decentralized exchange whereby buyers and sellers of an ERC20 token can trustlessly exchange value thanks to smart contracts standing in as the impartial third party.

What does ERC20 stand for and where did it come from?

Ethereum Request for Comment – Issue #20 was born from the GitHub archives where Ethereum developer and users discussed various proposals and options. The effort was largely led by developer Fabian Vogelsteller.

Are all Ethereum tokens compatible with ERC20?

No, some tokens are only partially compatible or don’t comply at all. The standard has proven somewhat popular and the vast majority of Ethereum subtokens do implement the standard.

Dive a little deeper with more Ask an Expert conversations here! For more information on the Ethereum project, we have a great resource page here with information and other external links for resources on the project.