How do you do it? Being a standard, it can carry out certain rules and parameters that allow its acceptance. Among its main functions for the development of new tokens are:
Give uniformity to programming: the application programming interface is standard, common or the same for all developments and that speeds up the task of programming using the same pattern. Thus, programmers can run new software that is based on the capabilities of Ethereum.
Reduce the complexity of programming: as the interface or API is simpler, it is also easier to use the software that was created to use it. So the erc20 token development in reading and security process is simpler to execute.
Define the name of the new tokens that will be created so that they differ from the others and there is no confusion.
Set tokens symbol.
Fix the decimal places that allow to establish the divisibility of the token.
Know the total amount of available tokens .
Be aware of the current status of the account in question and allow the execution of transactions.
Enable the transfer of tokens to different accounts through the intervention of third parties. It establishes the possibility of consultations and a maximum limit to the number that the controller can manage.
In addition, it has an intrinsic relationship with the Ethereum
cryptocurrency and the Ether token, since to modify or move an ERC 20 it is necessary to have ETH.
Ether or ETH is the cryptocurrency of Ethereum, which is more than a virtual currency since it allows to generate other totally different cryptocurrency tokens in Ethereum as well as request, lend and obtain interest on ETH and other tokens protected by ETH.
Benefits of ERC 20 tokens
ERC 20 tokens were created and released to fix compatibility issues that the Ethereum blockchain had.
This is because each token on the blockchain had its own smart contract and the platform had to create entirely new code for each exchange in order to insert a new token into the network. In this way, having a large number of tokens generated complications and slowness in an interface full of smarts contracts.
For that reason, the developers of Ethereum created a standard that serves as a pattern or reference point for the other tokens.
Specifically, it allows developers to start creating new tokens without having to start everything from scratch every time they need it. Likewise, there are guidelines and format rules for transfers and developments to be executed.
In this context, ERC20 development became popular due to the increased interest in ICOs. These allow the financing of a project through the issuance of a digital currency on Blockchain technology.
The advantages of ERC 20 are several and are characterized by:
Save time and streamline the exchange process. ERC 20 takes advantage of the Ethereum infrastructure without creating an entirely new blockchain every time a transaction occurs.
/ — Greater security executed by cryptography that protects the entire Ethereum ecosystem and allows establishing encryption codes for the transmission of messages and the exchange of cryptocurrencies. Through encryption and decryption, all transactions are protected from possible hacking, modifications or readings by third parties who do not have permission or authorization to access the data.
/ — Increase in the demand for Ether since in order to operate with ERC 20 it is necessary to acquire ETH and, thus, increase trust and security for the cryptocurrency and for the entire ecosystem in general.
/ — Interoperability with other tokens that are ERC 20 compliant as well as Ethereum decentralized applications or dApps. This situation occurs because if all the tokens developed on the platform use the same standard or ERC 20, they will all be easier and more agile to exchange, as well as it will be easier to operate in other applications that work within Ethereum.
It generates great liquidity for the purchase of ETH, because the ERC 20 token generator that works as a base for the development of new blockchain projects.
/ — It enhances the Ethereum ecosystem by creating compatibility between tokens that are created within the network.
To conclude, it is necessary to remember that tokens are digital assets that have a certain value in a specific context and are closely linked to cryptocurrencies, since they are located within the blockchain system and in the transfer of cryptocurrencies without the intervention of third parties. In all cases, the transactions are recorded in a data book similar to an accounting book.
Ethereum is more than a cryptocurrency. It is an entire ecosystem that allows the development of new technologies and applications. The ERC 20 token differs from the rest by being a standard designed to optimize the platform and simplify the creation of new tokens. Without this system, all developments would take more time and would slow down the interface.