Hey guys, the term today we want to discuss here is a well-known topic. You may have heard about ERC20 token. In the same time, some of you may have participated in such ICOs.
However, did anyone of you ever thought about what exactly the ERC20 token is? Where it comes from? Is this token is the only way to raise millions of funds?
I think, very few of you may have thought about it. Moreover, you have come here to know about it. And this is the only reason you are reading this article.
So, here we go:
What is the ERC20 Token?
The ERC20 token is solely designed protocol standard for Ethereum Network. It is used to issue tokens on Ethereum Network.
Here, you may want to know then Why ‘ERC20’? Why this abbreviation mean?
The ERC refers to or stands for the abbreviation of Ethereum Request for Comments. And 20 stands for or refers to unique ID number, which will differ this standard from others.
Like the HTTP protocol ERC20 is also a protocol for Ethereum network. Therefore, the Ethereum community has created 3 optional and six mandatory rules.
- Decimal (up to 18)
Where it came from?
On November 19, 2015, Fabian Vogelsteller first proposes form ERC20 token. In that time ERC20 shortlisted some rules about the implementation of Ethereum token. Those rules also describe how the developers will be given the ability to develop the program. And all these will help the token to function within the Ethereum ecosystem.
After that, Initial Coin Offering (ICO) working crowdfunding companies grab it with the most popularity. Because it was simple to deploy. Moreover, it bears the standard of Ethereum token, and it makes positive points for them.
Advantages of ERC20 Token
Different start-ups or Dapps, like- Metamask also set their own standard. Therefore, they launch a token in Ethereum Network.
By the way, after the invention and launch of the ERC20 token, things have become much easier. There are a lot of benefits of ERC20 token:
- Enhanced liquidity of ERC20 tokens
- Confirms the transaction more efficiently
- Reduce the risk of contract breaking
- Uniformity and fast transaction
Suppose, many tokens are launched in Ethereum Network. Some may cost 100s or 1000s. That doesn’t matter. But each of them does not bear their standard of liquidity. Moreover, it creates problems among clients to trade. On the other hand, it will create problems when exchanges.
Likewise- if you want to establish a new token, you have to work from bottom to top to establish it.
So, if you have only one liquidity standard token, then it is quite easy to trade and exchange.
So guys, be sure that you may find many other tokens, by which you can exchanges without third party via smart contracts on decentralized exchanges. I want to get your notice here. Remember they are of the same underlying technology. Therefore, their standard of implementation could be the same. But, ERC20 token is the only one practical scenario.
What is STOs?
Though we are discussing here all about ICO’s but I think it is relevant to know about STO security token offering. It is just like ICO but the difference is STO is well regulated where the potentiality of scam less. But ICO is an easy process and there no need any third party authorities. In some easy words to understand STO have monetary value from strong authorities.
STO is regulated by offering KYC and shareholder expected profit from investment. On the other hand ICO token purchaser is only getting involved the project. There has much more investment risk than STO’s.
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