The ERC-20 introduces a standard for Fungible Tokens, in other words, they have a property that makes each Token be exactly the same (in type and value) as another Token. For example, an ERC-20 Token acts just like the ETH, meaning that 1 Token is and will always be equal to all the other Tokens.
The ERC-20 (Ethereum Request for Comments 20), proposed by Fabian Vogelsteller in November 2015, is a Token Standard that implements an API for tokens within Smart Contracts.
It is important to stress that ERC-20 is a standard, as it defines the functions and events that a digital token must manage to qualify as ERC-20. It is not a specific symbol or product.
Any token that implements the ERC-20 specification automatically generates an ERC-20 token. The Ethereum blockchain is among the most used and widely used blockchain networks and is still dominating the DeFi arena.
Functionalities ERC-20 provides:
- transfer tokens from one account to another;
- get the current token balance of an account;
- get the total supply of the token available on the network;
- approve whether an amount of token from an account can be spent by a third-party account.
ERC-20 standardization enabled the rapid development of a very large ecosystem of digital tokens on Ethereum. Before the creation of the ERC-20 standard, every project had to reinvent the wheel, which also caused errors and incompatibilities.
Most services developed on Ethereum today only run this standard. It is easy to create an ERC-20-based service because you already know the basic functions that this standard will support.
In general, the ERC-20 standard greatly facilitated the work of developers and those wishing to build on the Ethereum blockchain. There are many projects and digital currencies that started as ERC-20 tokens and then developed and came out with their own networks.
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