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Ethereum Establishes and Adopts the ERC20 Standard

Maciej Borkowski

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Monday, September 11, 2017, the ERC20 standard has been at last finalized. Co-authored by the creator of Ethereum, ERC20 completes a EIP (Ethereum Improvement Proposal), first created on November 19, 2015.

What does this mean?

Quoting the Github page:

The following standard allows for the implementation of a standard API for tokens within smart contracts. This standard provides basic functionality to transfer tokens, as well as allow tokens to be approved so they can be spent by another on-chain third party.

If this still doesn’t ring a bell, let’s explain what a token is. On a blockchain network, a token represents financial value or a digital asset, similar to gambling tokens, representing fiat currency.

Tokens don’t neccessarily need to be a store of value, they can also represent stuff like discount coupons. The Minime ERC20 token contract allows the ERC20 to be cloned for this and other purposes.

An ERC20 token is a token bound to Ethereum’s token standard. The benefit gained from this is interoperability. In short, the ERC20 empowers developers. It is a list of rules for all Ethereum tokens to follow. Provided all tokens on the Ethereum network use the standard, the tokens will be easily exchangeable. The impact that ERC20 has on developers is huge, as the implication is that projects won’t have to be redone every single time a new token is released.

Is that all?

What was fixed in the final release was the major issue of losing your money upon sending tokens directly to a token contract. According to CoinDesk, about $70,000 worth of tokens have been lost for this reason. Not a good thing. It had to do with how token contracted function. While you would use the same wallet in which you store your Ether to buy, sell, or transfer a token, it’s a token contract that you’re actually interacting with. When a user transferred a token to another party, on a technical level, was calling a function on the token’s contract to move the tokens for them, as opposed to them directly issuing tokens from their own wallet. Now users rejoice, as the fix has been applied.

If you wish to know more, the Ethereum Foundation has thorough resources on it’s website. They go through every step of the cryptocurrency creation, beginning with generating a token contract, to it’s deployment and interaction. In-depth token customization options are shown. While the ERC20 standard is complete, be sure to check GitHub from time to time to stay in touch with all the latest developments in the area of Ethereum tokens.

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