The basics of the ERC-20

As its name suggests, the native currency of the Ethereum blockchain is Ether (ETH). But ERC-20 tokens also act as currencies on Ethereum. Your blockchain processes your transactions, and your virtual machine executes your smart contracts. erc20 token creator

Ethereum.org’s representation of an ICO or “trustless” sale:

Customers pay the smart contract (the robot in the center).
The robot remits the money to the owner of the contract.
The robot returns the owner’s ICO tokens to customers. Already!

Remember that these tokens are not independent. They reside on the Ethereum blockchain and rely on its distributed computing capabilities.

Smart contract risks

A smart contract cannot be changed once it has been started by the ICO developers. If a smart contract contains bugs or vulnerabilities, you can easily lose your funds, tokens, or both.

Such errors have occurred frequently throughout the history of Ethereum. The most notable example was the $55 million DAO hack, and fixing it required a hard fork of the Ethereum network (which is how Ethereum Classis was created).

Why the need for the ERC-20 standard?

Before the ERC-20 standard emerged, there were many compatibility issues between the various forms of Ethereum tokens. Each token had a completely unique smart contract. In other words, you had to write completely new code for each exchange or wallet, erc20 token generator to host a new token. And support for the growing range of tokens was becoming excessively problematic and slow.

As a solution, the industry came up with a standard protocol for all tokens to follow , now known as ERC-20.

The Token ERC-20 standard has six mandatory parameters for any smart contract, plus three optional (but recommended!). Optionally, you can set the maximum number of decimal places that a token supports. For comparison, Bitcoin allows eight numbers after the decimal point, as well as its symbol (usually a 3- or 4-digit code) and its name.

The six mandatory functions concern the number and transfer of tokens. The first two are used to assign the initial state of token distribution:

The token’s totalSupply function must be set. After reaching the maximum, the smart contract cannot create any more tokens.
The balance0f function allocates an initial number of tokens to any given address, usually the owners of the ICO.
Two transfer methods are also needed to further distribute to users and send tokens between users. They are vital to secondary market functions:

The transfer function moves the tokens from the total supply to any individual user who buys during the ICO phase. The transferFrom function is used to send tokens from one person to another.
Two other functions are required to check functions 3 and 4:

The approval function checks that a smart contract can distribute tokens, based on the remaining supply.
Lastly, the allocation function ensures that one address has enough balance to send tokens to another address.
These 6 easy steps have enabled wallet and exchange providers to create a single code base, which can interface with any ERC-20 smart contract.

ERC-20 Token Applications

ERC-20 tokens have many uses. even just pure cryptocurrencies. It is also possible that ERC-20 tokens fulfill several of these roles simultaneously.

ERC-20 Token Creation

All tokens are created by smart contracts. These smart contracts handle the transactions of the token and represent the balance of each token holder. For example, CoinLaunch’s CoinCreator page allows you to easily create your own ERC-20 tokens.

While an ICO is active, you should receive the ICO tokens at the agreed exchange rate, if you send crypto funds and your details (most importantly your postal address) to your smart contract.

Problems with ERC-20 tokens

The ERC-20 protocol alone is not always sufficient for the purposes of a token. It is just a standard for creating Ethereum-based tokens, and does not guarantee useful, valuable, or even functional tokens.

A token can be further customized, as long as it adheres to the basic principles of the ERC-20. One disadvantage of the ERC-20 standard is that it makes implementing a token technically trivial. As a result, many teams that otherwise would not have been able to release an ICO have been able to. The sheer number of deployed tokens (47,454 and counting!) leads to an abundance of very similar tokens, create erc20 token making the selection process more difficult and confusing for potential investors.

Another problem is that some projects implement the guidelines in an idiosyncratic way, which creates more confusion about how their tokens work. For example, the tokens are sometimes sent to the smart contracts of other ICOs. If that contract has not allowed for this eventuality, then the tokens will be lost. At the end of 2017, more than $3 million was lost this way! The ERC-223 proposal seeks to counteract this defect.

Conclution

The creation of the ERC-20 Token Standard has accelerated growth throughout the ICO space by standardizing features that make it easier for projects to develop tokens. The protocol also brought improved synergy between ICO projects, exchanges and wallet providers . As a response to common issues and vulnerabilities in ICO tokens, the ERC-20 protocol will likely be improved and expanded in the future.