ERC20 digital currencies Ethereum based digital currencies.
Ethereum is not just a blockchain like Bitcoin or other blockchain networks.
Rather, Ethereum acts as a platform that runs decentralized applications and various networks, and this means that other digital currencies can be run on it, and decentralized applications (dapps) can also be built on it.
Ethereum has a set of standards, perhaps the most famous of which is the ERC20 standard, which allows developers to create their own digital currencies within the Ethereum network.
What is ERC20 digital currencies?
“ERC20” coins are the most used currencies on the Ethereum network.
Designed to be used to pay for jobs and services on Ethereum, it can be used to pay for goods and services.
Among the most prominent features of ERC20 cryptocurrencies are:
Exchangeability: ERC20 can be exchanged for another ERC20 currency, with the transaction log can be used to identify other digital currencies and mark their transactions.
Transferable: It can be sent from one address to another.
Fixed Supply: A fixed number of coins must be created so that developers cannot issue more tokens and increase supply.
How did ERC20 coins originate?
Ethereum developers note that within their ecosystem, dozens of people have been creating their own digital currencies.
But there was a problem, that it became increasingly complicated for those currencies to interact with each other.
Ethereum decided to create the ERC20 standard, and a set of rules that every new currency on the network must adhere to, which is termed ERC20.
This has led to some digital currencies becoming of great value and some of them becoming among the top 20 digital currencies in circulation.
How to buy and store ERC20 coins:
Many ERC20 currencies are available and tradable on cryptocurrency trading platforms such as "Binance" and "Coinbase".
First, before purchasing these ERC20 currencies, you will need a cryptocurrency wallet that can store Ethereum currencies, such as a "MetaMask" wallet or a wallet supporting Ethereum.
What are the most prominent cryptocurrencies based on the ERC20 standard?
More than 300 cryptocurrencies are based on the ERC20 standard and run on the Ethereum network, and here are some of them:
OmiseGO:
A decentralized network that provides a payment solution that targets banks and other financial institutions, OmiseGO was based on Ethereum in a currency based on the ERC20 standard, Thailand-based OmiseGO raised more than $ 25 million through an initial coin offering (ICO).
0x:
0x is an open protocol that offers the possibility of decentralized trading through a system of smart contracts that decentralized applications can communicate with.
Encapsulated Bitcoin (WBTC):
ERC20 is backed by a 1: 1 value by Bitcoin, which can be used as collateral, boosting liquidity in decentralized finance (DeFi) applications.
Disadvantages of ERC20 Coins:
Low productivity:
The Ethereum network was clogged when decentralized applications faced high demand, such as the game "CryptoKitties" which has since moved to its own blockchain, where as demand and transactions increase, transactions become more expensive.
Slow transactions:
The blocking time is around 14 seconds, so transactions can take up to a minute to process.
This may be appropriate for some uses and too slow for others.
Bonding with Ethereum:
When conducting transactions, Ethereum is required to pay transaction fees.
This can cause additional time and cost.
It is an established fact that 90% of startups fail, and so it is possible that 90% of “ERC20” coins on CoinMarketCap will go to zero.
What are the other standards of Ethereum?
Other Ethereum standards were created for various reasons, here are some of them:
ERC-721: These are non-exchangeable coins, each currency is unique and has its own symbol, resulting in a thriving market for cryptocurrency holdings including trading cards and digital artwork.
ERC-1400: This standard is intended for safety currencies so that digital currencies can be sold as securities, which requires more control over who has access to the cryptocurrency and introduces protocols that know your customer.ERC-223: When a transaction is made, to be paid in Ethereum, this standard allows transaction fees to be paid using the respective digital currencies.
ERC-777 : aims to improve the ERC20 standard by reducing fees and adding new features, and this standard is also backward compatible, which means that it may be adopted more broadly.
The future of ERC20 coins:
Every new blockchain platform that works similarly to Ethereum is being promoted as the next Ethereum killer, but Ethereum has managed to hold its place right behind Bitcoin for the time being.
ERC20 coins are widely used and will continue to expand as long as Ethereum maintains its position behind Bitcoin.
If there was anything that could compete with ERC20 it would be inside Ethereum itself related to new Ethereum standards and updates.
Thanks for letting us know about this.