Tokens designed and used solely on the Ethereum platform.
ERC-20 tokens are based on the Ethereum blockchain. Just like mainstream cryptocurrencies such as Bitcoin, they can be used to make purchases — or traded for fiat currencies and crypto.
These assets, which usually have a fixed supply, can be stored in a dedicated Ethereum wallet. A wide range of ERC-20 tokens were created in 2017 and 2018 during the boom of initial coin offerings. They usually form the backbone of decentralized apps, otherwise known as DApps for short.
Generally speaking, ERC-20 tokens are fungible — meaning that each of them are identical and can be easily exchanged. Nonfungible tokens are often referred to using the ERC-721 standard, meaning each of these tokens have unique characteristics that set them apart from others.
The ERC-20 standard comes with strict conditions that must be followed. This isn’t too dissimilar to the internet, where websites won’t work properly unless they are fully compliant with HTTP.
Just some of the use cases for ERC-20 tokens include as in-game assets, and these assets have also been shaping up the world of loyalty points.
The sheer level of versatility that ERC-20 tokens offer is one of the reasons why these tokens have become so popular. In order to succeed and achieve liquidity and widespread awareness, these assets often need to launch on an exchange where they can easily be traded.
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