The code is so simple that you don’t need to have any computer science knowledge to understand it. The ERC-20 standard used in smart contracts contains just 6 basic functions that make the token, well… functional. In this article, we will explain each standard and how it is being used in the decentralized ecosystem. The most common standard for Ethereum tokens is currently the ERC-20 standard, but there are also ERC-223, ERC-721, and ERC-777 standards. The common analogy you’ll hear to explain this benefit is that Ethereum is like the iOS or Android for dapps – an operating system that supports the applications and makes them much easier to build. Different types of applications will be tokenized according to different standards, depending on what the application is meant to do.Īs a result of these standards, it is much more straightforward for smart contracts and tokens to interact and, therefore, for developers to create dapps on Ethereum. The simplifying aspect of this process is that Ethereum has set standards for tokenization. Whenever a new application for blockchain technology and smart contracts is developed on top of Ethereum, a new Ethereum token can be created. It is the base layer that supports hundreds of decentralized applications (dApps). You see, Ethereum is a decentralized platform upon which smart contracts can be written (in the Solidity programming language) and executed. With that being said, a basic understand of how Ethereum works can actually make it simpler to understand cryptocurrencies in general. Even if you have a solid technical background, it’s going to take some time and independent research before everything makes sense – unless you’re a genius, anyway. They include the following.As if understanding Bitcoin wasn’t difficult enough, Ethereum adds a whole new level of complexity to the equation. In addition to events, the ERC-20 token that we are creating with Solidty also has a set of methods that require implementation. The Approval event must be called whenever the approve method is called, which we will explore in the next section on Methods. The Transfer event should also be called when a token contract creates new tokens. The Transfer event must be triggered when tokens are transferred, even for zero-value transfers. Events #įor an ERC-20 token implementation, two events are required: Transfer and Approval. methods, events, variables) that need to be implemented. The ERC-20 Token Standard defines requirements for the token smart contracts (e.g. The ERC-20 Token Standard helps developers write Solidity (or any coding language) for token smart contracts. The interface we create will have all of the requirements of the ERC-20 token standard found here. The token smart contract that we will write will inherit from the interface we create. The methods and methods are predefined in something called a smart contract interface. To create an ERC-20 token with Solidity, there are different methods and events that need to be implemented. These token smart contracts can be used to represent value and be held by Ethereum accounts (wallets, other smart contracts, etc.). Tokens can be created with Solitiy smart contracts and sent to the Ethereum blockchain. Each will still represent a part of the larger token.Ī popular implementation of fungible tokens is the ERC-20 token standard. Uniform - fungible tokens are all of the same type and identical in specification, functionality and valuation method.ĭivisible - a fungible token can be broken down into smaller units. An example of this is if I give you one fungible token and you give me one back, then it makes no difference in terms of value to the two of us. Interchangeable - a fungible token can be exchanged with other tokens of the same type. The definition of fungible is "mutually interchangeable".įungible tokens have the following properties: Fungible tokens imply that there is equal value between the assets being considered.
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