ERC20 tokens are a type of cryptocurrency token that is built on the Ethereum blockchain. These tokens are created to operate in a smart contract environment on the Ethereum network. ERC20 tokens follow a set of rules and standards that govern how the tokens must behave and operate on the network.
Some of the key features of ERC20 tokens include:
1. Transferability: ERC20 tokens can be transferred between addresses on the Ethereum network.
1. Fungibility: One ERC20 token is equal to another, making them fungible assets and interchangeable.
1. Compatibility: ERC20 tokens can be stored in any Ethereum wallet that supports the ERC20 standard.
1. Permissions: The smart contract that governs the ERC20 token can control the permissions for buyers and sellers.
1. Decentralized: ERC20 tokens are transparent, and all transactions can be viewed on the blockchain.
In order to create an ERC20 token, a developer needs to create a smart contract on the Ethereum network that will issue the tokens. Once the smart contract is created, the tokens can be distributed to users in exchange for Ethereum or other cryptocurrencies.
ERC20 tokens can be used in a multitude of ways, from acting as utility tokens for a specific application or service to functioning as a store of value. They are also used as fundraising mechanisms through initial coin offerings (ICOs).
