ERC-20 is a standard set for creating fungible tokens on the Ethereum blockchain. This means that all the tokens created on this blockchain are identical and can be exchanged for one another. This standard provides sets of rules and functions that ensure interoperability, allowing these tokens to be integrated with various wallets, exchanges, and decentralized applications (D-Apps).

• ERC-20 stands for “Ethereum Request for Comment 20,” a Standard for creating coins on the Ethereum blockchain.
•  Fungible Tokens – This means that they can be swapped for another token of the same type.
• ERC-20 tokens are created using Smart contracts, which automatically execute rules for functions like total supply, balances, and transfers.
•  They can represent a wide range of digital or real-world assets, such as utility tokens, governance tokens, stablecoins, in-game currencies, or even real estate.

Developers use the interoperability of the token to predict how these assets will interact with each other and with various applications. This is the primary purpose of the ERC-20 standard. To ensure compatibility between assets and applications on the Ethereum blockchain.

What Is An ERC-20 Token

ERC-20 tokens are cryptocurrencies that will operate on the Ethereum blockchain. ERC-20 is a technical standard that acts that defines how tokens are created and interact with the Ethereum network. It’s like a blueprint that ensures compatibility with various Smart contracts, platforms, and services. ERC-20 Tokens make it possible for developers to create new tokens without building a completely new blockchain from scratch. Instead, these tokens leverage Ethereum’s existing infrastructure, allowing for faster development and greater compatibility across the Ethereum ecosystem. ERC tokens are widely used for creating decentralized applications (D-Apps), DeFi projects, and even meme coins.

Some Popular ERC-20 Tokens include:

• USDT – Tether USD
• USDC – USD Coin
• SHIB – Shiba Inu Coin
• PEPE – PEPE frog meme coin

An important information to learn about ERC-20 tokens is that all the transactions involving these tokens require the network’s primary asset (ETH in this case) to cover gas fees. This means that you’ll need to have enough ETH in your wallet to pay for transactions on the Ethereum network, regardless of the token you’re transferring or using.

How To Transfer ERC-20 Tokens

To send ERC-20 tokens, you need to understand that all Ethereum wallet addresses are compatible with ERC-20 tokens. To send an ERC-20 token, you must find the recipient’s wallet address. When you have their address, sending the token is as simple as entering the wallet address and sending it to them. You can send the ERC-20 tokens from a centralized exchange like Binance or Coinbase, or a software wallet like Metamask or Trust Wallet. You must be aware of the gas fees when transferring ERC-20 tokens; these are fees that are mandatory the users to pay to the miners to have their transactions included in the blockchain. Gas fees can inflate during peak hours when multiple transactions are being made by many users.

How To Receive An ERC-20 Token

You need a wallet that is Ethereum compatible and the token’s contact address to make it visible. The ERC-20 standard operates on the Ethereum network, so any Ethereum address can receive these tokens.

• Set up an Ethereum-compatible wallet: you need a crypto wallet that supports ERC-20 tokens. You can choose a suitable wallet depending on your security and access preferences. If you are a beginner, then you should choose software wallets like Metamask, Trust Wallet, or the Coinbase wallet. Hardware wallets like Ledger provide maximum security, and you store your private keys offline.
• Find your wallet address: in most wallets, it’s displayed at the top of the interface and will start with 0x.
• Share your address with the sender: Give your copied wallet address to the person sending you the ERC-20 token. Check thoroughly that the wallet address matches the correct address to prevent losing funds.

Important Factors To Remember:

• While sending ERC-20 tokens, make sure that the network you have selected is, in fact, ERC-20; selecting a wrong network like BEP-20 (Binance Smart Chain) can result in loss of your tokens.
• While receiving tokens does not cost you any fee but later sending them requires you to pay transaction fees in Ether (ETH). You need to have a small amount of ETH in the same wallet to cover these fees.
• When using self-custody wallets like Metamask or Ledger, you have full control over your private keys; however, with custodial wallets on exchanges, the exchange controls the keys, making them less secure.

Conclution

ERC-20 is a solution to growing concerns that multiple tokens are to be made transferable on a single blockchain. This proposal, implemented in 2015, guides the creation of tokens compatible with the Ethereum blockchain. These tokens are interchangeable, and they can be sent to any wallet that supports the Ethereum network. 

FAQs

No ETH is the native cryptocurrency of the Ethereum blockchain. ERC-20 tokens, on the other hand, are distinct tokens following the ERC-20 standard on the Ethereum network.

An ERC-20 address only starts with “0” and “x”. For example, 0xbc6e.

Yes, Trust Wallet is ERC-20 Compatible. You can store, send, or receive ERC-20 tokens like USDT, UNI, LINK, etc. on Trust Wallet.

Binance Smart Chain’s BEP-20 provides lower transaction fees compared to Ethereum, and these fees are paid in Binance Coin (BNB), the native cryptocurrency of the Binance ecosystem. The lower fees and faster transaction speeds make BEP-20 a more attractive option for token transfers compared to ERC-20.

Yes, if you have a backup of your wallet, use it to restore access.