What are ERC20 Tokens?

In this ERC20 token guide, you will learn practical information about these tokens and the best ERC20 wallets you can use.

Table of Contents

If you’re new to cryptocurrency and Ethereum, there’s a high probability you’ve heard the term ERC20 token used. In order to get started, we’re going to need you to discard any preconceived notions or assumptions you have about Ethereum as an actual currency, and understand that it’s so much more – it’s a blockchain computing platform constructing an entire ecosystem for:

  • Creation and deployment of decentralized applications (DApps), &
  • Smart contracts.

Looking at Coinmarketcap.com, it’s no surprise that Ethereum has established itself as one of the main core actors in the blockchain ecosystem, and it’s mostly due to the creation, facilitation, and powering of smart contracts. Furthermore, the creation and diversity of smart contracts in the Ethereum ecosystem have enabled virtually any developer or person to create and launch their own token or project on the Ethereum blockchain.

Cue ERC20 tokens – the tokens and projects launched on the Ethereum network which follow a fundamental set of principles in order to further uniformity and clarity across the blockchain.

Looking to brush up on what exactly Ethereum is and how it’s bringing value to our present day blockchain ecosystem? Head on over to our ‘Cryptocurrency Guide’ corner to read up on Ethereum, Bitcoin, Bitcoin Cash, Litecoin, Ripple, and more.

1. What are ERC20 Tokens & What Do They Do?

Standing for “Ethereum Request for Comment,” ERC20 tokens simply refer to the requisite technical standard for projects and tokens looking to create and deploy smart contracts on the Ethereum blockchain. At their most basic, ERC20 tokens enable a uniform standard and set of rules governing how tokens behave and function on the Ethereum network – allowing for heightened stability and network cohesiveness.

With the gargantuan number of DApps created and deployed onto various blockchains, it’s extremely important to have at least some degree of uniformity and stability on the blockchain – otherwise, the network would fail to properly facilitate transactions in a timely and effective manner.

And as the leading (and largest market cap) smart contract platform in today’s volatile cryptosphere, developers and projects are storming the ETH network in troves, creating literally tens of thousands of ERC20 token contracts. Etherscan, a popular Ethereum blockchain explorer, notes that as of May 2018, there were more than 83,000 ERC20 tokens in the Ethereum ecosystem.

Now that we’ve tackled what exactly ERC20 tokens are, let’s take a further look at some of their common properties and functions.

2. Common ERC20 Token Properties & Functions

Still confused about ERC20 tokens and their purpose? Let’s take a look at a simple example.

Imagine you have 3 automobiles which are all manufactured and produced by separate companies. You’ll need a unique car key to unlock and start each one, right? The ERC20 token standard is looking to overhaul such need for unique unlocking and identifying mechanisms.

Furthermore, imagine you have two automobiles which were even produced by the same car company. You’ll also need two unique car keys to unlock and start both. Think of ERC20 tokens and the required standard as the “glue” or connecting feature amongst different cars – ultimately enabling drivers to easily transition from car to car with just a single key.

Simply put, the ERC20 token standard is geared towards simplicity and uniformity.

Most notably, in order for a token to be considered an ERC20 token, they will need to have implemented the below six fundamental functions.

totalSupply

Indicates the total supply of tokens and coins in the Ethereum ecosystem, along with how many may be created and mined.

balanceOf

A public constant for storing and returning tokens and coins to each address. Users should keep in mind that such address will be made public in furtherance of blockchain transparency and transaction validation.

approve()

Approves withdrawal addresses attempting to withdraw ERC20 tokens.

transfer()

Sanctions the transfer of ERC20 tokens from one address to another.

transferFrom()

Executes a similar function to ‘transfer()’, however it enables users to automate such transfers – meaning they don’t have to approve all transactions and transfers by hand.

allowance

Also, keep in mind that there are three additional and optional functions which tokens and projects may employ:

  • Symbol: Authorizes tokens to abbreviate their full name in order to separate themselves from other projects and tokens on the Ethereum network. Such symbols are usually three to four (3-4) characters in length and unique.
  • Name: Enables tokens and projects to broadcast the full name of the token.
  • Decimals: Outlines the number of decimal places the token or coin will be calculated to, with the most common number on the ETH network set at 18.

If you’d like to read about the mandated ERC20 token functions further, head on over to https://theethereum.wiki/w/index.php/ERC20_Token_Standard for a comprehensive look.

3. Top 10 ERC20 Token List

Below is the list of top 10 ERC20 tokens, in terms of market cap:

The logo of BNB, a ERC20 tokenBNB

(BNB)

The logo of VeChain, a ERC20 logo VeChain

(VEN)

The logo of OMG, a ERC20 tokenOmiseGO

(OMG)

The icon of MKR, a ERC20 tokenMaker

(MKR)

The icon of NPXS, a ERC20 tokenPundi X Token

(NPXS)

The icon of ZRX, a ERC20 tokenZRX

(ZRX)

The icon of ZIL, a ERC20 tokenZilliqa

(ZIL)

The icon of ICX, a ERC20 tokenICON

(ICX)

The icon of AE, a ERC20 tokenAeternity

(AE)

The icon of BTM, a ERC20 tokenBytom

(BTM)

4. Where Can I Purchase ERC20 Tokens?

For users looking to purchase ERC20 tokens with ease, we generally recommend first starting on a popular centralized exchange with high liquidity – this way, you can ensure your order will be filled within a matter of minutes. Below are just two popular centralized exchanges where you can purchase ERC20 tokens:

  • Binance: Possibly the most reputable of all exchanges in the blockchain ecosystem, Binance is renowned for their security, liquidity, and commitment to building a healthy blockchain community.
  • Bittrex: Based out of the U.S., Bittrex is a top 15 cryptocurrency exchange by volume (so rest easy knowing your order will likely be filled immediately) and one of the core crypto exchanges for U.S. residents.

And, if you’re looking to first purchase Ethereum with fiat (USD, GBP, SGD), head on over to Coinbase.com or CEX.io, which both authorize users to use debit and credit cards to purchase crypto. From there, it’s an incredibly straightforward process to send it to either Binance or Bittrex to purchase your ERC20 tokens.

Where Can I Find an ERC20 Token Wallet?

So now that you know what ERC20 tokens are and their function in the Ethereum ecosystem, you’re probably looking to purchase and store them in an ERC20 compatible wallet. Don’t worry, we have you covered.

5. Best ERC20 Wallets

Now that you’ve purchased several ERC20 tokens, let’s take a look at where you should be storing them.

CoolWallet S

For users looking for security on the go, consider using the CoolWallet S. The CoolWallet S is a one-of-a-kind Ethereum and ERC20 wallet, enabling you to store their ETH, ERC20 tokens, and other cryptos completely offline, and at the tips of your fingers.

The CoolWallet S allows you to add ALL ERC20 tokens onto the wallet.

Pairing with both iPhone and Android, the CoolWallet S eliminates the need for clunky USB cables and other unnecessary connecting pieces and boasts one of the most convenient, painless, and quickest setups.

Furthermore, the CoolWallet S is waterproof, tamper-proof, impact resistant, and cold and heat resistant, ensuring you’re not only protected against hackers and malicious attacks but natural elements as well.

You can read up further on how the CoolWallet S is overhauling traditional Ethereum and ERC20 token wallets by checking out our homepage and FAQ.

 

CoolWallet Bitcoin Wallet System

Ledger Nano S

Supporting the most altcoins and tokens of all cryptocurrency hardware wallets, the Ledger Nano S is one of the most well known of all Ethereum and ERC20 token wallets.

The Ledger Nano S enables users to interact with the Ethereum blockchain via literally any computer (even if corrupted) and reportedly sold their millionth wallet back in January 2018. Additionally, the Ledger Nano S partners with numerous other cryptocurrency and Ethereum wallet interfaces, such as:

A Ledger with a cable on a table

To read up more about Ledger and the countless tokens and projects it supports, head on over to their website.

 

 

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