What Is ERC-20 Token?

Last updated 16th Feb 2023

Ethereum is a unique cryptocurrency that allows decentralized applications to be built on top of its blockchain with the utilization of smart contracts. However, a problem quickly arose - smart contracts couldn’t interact with one another. Therefore, this standard was created to solve this issue and allow contracts to interact. ERC-20 is the technical standard for fungible tokens created using the Ethereum blockchain

It’s the most popular standard on the Ethereum network, and many well-known brands use it to create their own cryptocurrency rather than developing a whole blockchain themselves. UniSwap and AAVE are great examples of this. Moreover, you can create wrapped coins like WBTC, so technically, you can invest in Bitcoin without buying it on its original blockchain.

This beginner-friendly guide will cover the basics of ERC-20 tokens and the contents of the standard. We’ll also showcase the top cryptocurrencies that utilize the ERC-20 standard.

Are ETH and ERC-20 the Same?

No, ETH is the native cryptocurrency of the Ethereum blockchain and is used as a payment method, investment asset, and for verifying transactions. This is the standard for developing smart contracts with fungible tokens than can be used in the Ethereum ecosystem.

ERC-20 Definition

That stands for Ethereum Request for Comment 20. It’s a clear way to differentiate from other Ethereum standards.

Brief History of ERC-20

Fabin Vogelstellar proposed the idea of this standard in 2015 on Github. Since it was the twentieth comment, the Ethereum Request for Comment (ERC) was assigned this name. The standard was implemented and approved in 2017 by the Ethereum developer community.

However, the name isn’t entirely correct, as the standard is an Ethereum Improvement Proposal 20 (EIP-20). Nevertheless, the ERC-20 name stayed because it was widely popular.

ERC-20 Functions

These tokens must implement the minimum following functions:

  • Total Supply: This is the number of total coins issued in the cryptocurrency’s ecosystem.

  • Approve: Verifying whether a smart contract is allowed to allocate a certain amount of tokens to a user, considering the total supply.

  • Transfers: Sending tokens to a specified address and withdrawing coins from specific accounts.

  • TransferFrom: Another type of transfer method which is used to transfer tokens between users.

  • Balance: Showing data on the owner’s account balance.

  • Allowance: Checking if one user has enough balance to send a certain amount of tokens to another.

  • Approval: A log of an approved event

These functions are essential for users to use an ERC-20 cryptocurrency since they determine the circulating number of coins, allow transactions between addresses, and more.

Benefits of Using ERC-20 Tokens

  • Adoption: Highly adopted in the crypto industry, with exchanges, wallets, and smart contracts utilizing the standard. This makes it easier to use ERC-20 dApps, as many are compatible with different tokens.

  • Use-cases: Developers can create various decentralized applications utilizing ERC. For example, stablecoins, crypto games, Metaverses, DEXs, and more.

  • Ease of use: Creating coins and developing projects built on Ethereum network is much easier when using ERC-20. Also, due to ERC-20 being around for a long time, there are many scripts and codes written by developers that other people can use to save time coding.

  • Transactions: ERC ethereum tokens are great for making transactions between wallets or payments thanks to their low fees and speedy transfers.

Negatives of ERC-20 Tokens

  • Scams: Creating an ERC-20 is extremely easy and requires little to no technical skill. In fact, some services will create an ERC-20 token for you; you need to input the circulating supply, the token's name, and a few other details.

  • Lost coins: Sending ERC-20 tokens to the wrong address or contract will result in funds lost forever. ERC-223, on the other hand, functions similarly to ERC-20 but will return funds to the sending wallet if the transaction goes wrong. You should always double-check if the transfer you intend to make is valid.

Top ERC-20 Cryptocurrencies

Many companies utilize the ERC-20 standard to create unique dApps that serve various purposes. Below are a few of the largest cryptocurrencies that are ERC-20 based. We’ll provide our in-depth reviews if you’d like to learn more.

CryptocurrencySymbol / TickerHow to Buy
Polygon (MATIC)(MATIC)How to buy Polygon
Shiba Inu (SHIB)(SHIB)How to buy Shiba Inu
Decentraland(MANA)How to buy Decentraland
Aave(AAVE)How to buy Aave
Chainlink(LINK)How to buy Chainlink

Where Do You Store ERC-20 Tokens?

The best way to store ERC-20 tokens is to use a cryptocurrency wallet compatible with the standard. Decide if you want a software or hardware wallet. Software wallets are great if you plan to make transactions often, while hardware wallets are ideal for long-term holding. Also, by using a wallet, you are in control of your funds, whereas leaving it on an exchange means you do not since you have no access to private keys. Not your keys, not your crypto.

These are the top software and hardware wallets for ERC-20 tokens.

Best Software Wallet for ERC-20 Tokens

ProviderWallet Type
🥇 MetaMaskSoftware
🥈 Atomic WalletSoftware
🥉 Trust WalletSoftware

Best Hardware Wallet for ERC-20 Tokens

ProviderWallet Type
🥇 Ledger Nano XHardware
🥈 Trezor Model THardware
🥉 Ledger Nano SHardware


To summarize, ERC-20 is the standard for fungible tokens created on the Ethereum network. It was proposed in 2015 by Fabin Vogelstellar and implemented in 2017. Its main purpose is to allow smart contracts to interact with each other. However, we will likely see the ERC-223 standard take over in the future because of its safety features, like returning coins sent to the wrong contract.


Where can I store ERC-20 tokens?
What is ERC-20?
Is ERC-20 safe?

Dominikas Pupkevicius

Dominikas Pupkevicius

Dominikas is a content and research writer with over 6 years of experience. He is passionate about blockchain technology and believes cryptocurrency is the future of humanity. Dominikas lives in the countryside with his 3 dogs and enjoys long walks.