ERC-20 Token Meaning
Bitcoin was the first cryptocurrency in the world, but Ethereum was the first cryptocurrency and blockchain that offered various decentralized services within its network. To make these services possible, the Ethereum network allows other tokens besides Ether to run within the network. These tokens are known as ERC-20 tokens.
Similar to other coins, ERC-20 tokens can be traded within the network, which also entails profitability. However, ERC-20 tokens can also be used for running those other decentralized services in the Ethereum network, such as creating and launching Decentralized Applications (dApps), Decentralized Finance (DeFi), Decentralized Exchange (DEX), and many more.
Usually, ERC-20 tokens have a fixed supply. This is done for the purpose of avoiding price inflation. Nevertheless, most ERC-20 tokens have a large supply so that a shortage is not necessarily caused. ERC-20 tokens are also fungible. Fungibility means that these tokens are the same as other tokens, meaning that the price of one ERC-20 token might have an equivalent utility of another ERC-20 token. However, ERC-20 tokens are not usually private, so if an ERC-20 token is used for illicit purposes, its value might not be the same as others.
Why Create ERC-20 Tokens In The First Place?
Ethereum network allowed people to create and launch their projects within the network. Many people were able to launch their own tokens in the network. However, the main problem was that the tokens launched by various users had trouble interacting with one another, despite all the dApps that could serve as media for these interactions. As such, the Ethereum network developed some rules through smart contracts, where any token released within the network would have to go through those rules. Therefore, these tokens were then known as ERC-20 tokens.
ERC-20 tokens have removed some of the barriers of projects wanting to work with one another, so their creation has improved and changed blockchain technology once and for all. Other networks besides Ethereum have started integrating these same rules to have their own tokens. For instance, Binance blockchain uses BEP-20 tokens.
Some examples of ERC-20 tokens are EOS (EOS), Chainlink (LINK), OmiseGO (OMG), Zilliqa (ZIL), etc.
How To Buy ERC-20 Tokens?
A lot of ERC-20 tokens are available in cryptocurrency exchanges such as Coinbase or Binance. So you can directly buy ERC-20 tokens through these exchanges. Other ERC-20 tokens that are not yet very popular and are not supported yet by exchanges can be bought through MetaMask.
MetaMask wallet allows you to have access to various dApps in the Ethereum network and access decentralized exchanges for all ERC-20 tokens. You simply need to write the correct address of the token. To buy ERC-20 tokens through MetaMask, you need to have some ETH available. Keep in mind that gas fees require you to have more Ether than you anticipate to exchange.
ERC-20 tokens can also be stored in cold wallets. The best cold wallets that support ERC-20 tokens are Ledger and Trezor.
Takeaways
- ERC-20 tokens have removed some of the barriers of projects wanting to work with one another, so their creation has improved and changed blockchain technology once and for all.
- Some examples of ERC-20 tokens that work in the Ethereum network are EOS (EOS), TRON (TRX), ICON (ICX), OmiseGO (OMG), Zilliqa (ZIL), etc.
- You can directly buy some ERC-20 tokens through crypto exchanges.
- The best cold wallets that support ERC-20 tokens are Ledger and Trezor.