What is ERC20 technology

ERC-20 token

Token Standard on the Ethereum blockchain.

It is also possible to create tokens using smart contracts. Ultimately, these are nothing more than other smart contracts. For example, you determine how the tokens are transferred and ensure that the credit balances of the individual users (addresses) are saved.

The transfer of tokens can be demonstrated as a trivial example of a smart contract that implements a token. This specifies that when a transfer is made, a check is first made to determine whether the sending user's credit is sufficient to carry out the transaction (transfer sum

  • Increase A's account balance by the amount X.
  • Reduce B's account balance by the amount X.

More precisely, the function for the transfer of tokens is:

function transfer (address _to, uint256 _value) returns (bool success)

So a token is nothing more than a smart contract that implements functions like these.

The best-known form of tokens on the Ethereum blockchain are the so-called ERC-20 tokens. ERC-20 is an official Ethereum standard that was published by Fabian Vogelsteller and Vitalik Buterin at the end of 2015.

The standard defines an API that developers can use to issue their own standardized tokens. Certain methods of the smart contract are thus firmly specified. This also enables third-party providers to read out the information more precisely and to carry out transactions, since the same basic set of program functions is used for each ERC-20 token. A third-party app can therefore be programmed generically for each ERC-20 token without knowing the specific token.

The official specification of the standard can be found in the associated Github archive.

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