A Comprehensive Guide On ERC-20 Tokens


Blockchains and cryptocurrencies are gaining popularity as investment products. However, many people are not aware of their technical structure. Most cryptocurrency investors may have heard about the Ethereum blockchain and ERC-20 tokens.

This article is going to answer all questions about ERC-20 tokens such as their function, creation, and utility.

What are ERC-20 Tokens?

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ERC-20 tokens follow a particular standard present on the Ethereum blockchain. This standard is known as the Ethereum Request for Comment or ERC number 20. It is a standard for the fungible tokens issued on the Ethereum blockchain that are smart contract enabled.

It means that every token that has been created keeping in view the ERC-20 token standard can offer products and services by becoming interchangeable with other smart contracts on the network.

Origin of ERC-20 Tokens

Blockchain developers started to use smart contracts on the network in the 2015s. These smart contracts enabled cryptocurrencies to fulfill a given command when predetermined conditions are met. In this manner, developers brought more decentralization to the blockchain networks.

However, there were some issues related to the smart contracts such as privacy and preservation of the minting ability. Blockchains did not have any specified rules or checks that dictated who could create new tokens and if all tokens are going to be uniform.

Who Invented the ERC-20 Token Standard?

Fabian Vogelsteller proposed a new standard in 2015 of creating a new token standard for smart contracts on the Ethereum blockchain. He submitted his proposal for the new token standard on the GitHub page and maintained it as an ERC or Ethereum Request for Comment.

Since it was the 20th comment, the standard came to be known as the ERC-20 standard. The standard has been approved by the Ethereum community and now every token on the project that wishes to become interchangeable must adhere to it.

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Components of ERC-20 Tokens

Every token on the Ethereum blockchain that undertakes the ERC-20 standard, needs to implement a few important components. These components or functions are called methods of ERC. Every smart contract-based token that is an ERC-20 token must have the following functions or methods ingrained into it to qualify. Here is the list of all crucial ERC-20 token protocols:

Total Supply

The developers or issuers of the token need to specify the total supply of their ERC-20 token that is going to be minted or issued by the decentralized application.

Owner’s Equity

The ERC-20 token issued must declare the total amount of tokens that the owner or the co-founders of the projects are going to hold.

Transfer Protocols

Since ERC-20 tokens are based on smart contracts, therefore they must ascertain the conditions that automatically trigger a transaction sending a specified amount of tokens to a predetermined digital wallet address.  

Reverse Transfers

It is another trigger for the ERC-20 token smart contract that results in the transfer of a given number of tokens from a specified digital wallet address.


This trigger enables the users on the blockchain to withdraw a given amount of tokens from a digital wallet using the token with a maximum limit.  


It returns a given amount of tokens to the owner’s digital wallet from the spender against every withdrawal.

What are Events in ERC-20 Tokens?

Here are two main types of events in the ERC-20 tokens:


Every ERC-20 token must specify the conditions for a successful transfer and the event takes place when every transfer has been completed.


It is a log of all approved transactions that ERC-20 tokens such that every transaction for the tokens is properly and automatically recorded. It means the creation of a log filled with approved events.

Optional Features of ERC-20 Tokens

Here are some option functions and features that are added to all ERC-20 tokens but they are not mandatory:

A unique name for the new ERC-20 token such that it can be distinguished from the other options.

A distinct symbol to recognize the ERC-20 token such that it can be easily identified on the cryptocurrency price and another metric leaderboard.

The number of approved decimal points that are applicable to the given cryptocurrency to denote its price.


Some other blockchains have introduced new token standards fashioned after ERC-20 such as Binance Smart Chain (BSC). Meanwhile, the Ethereum blockchain has also introduced new tokenization standards that implement updated operating procedures to streamline and assimilate the token creation process.

Author: Isacco Genovesi

Isacco writes news articles, reviews and guides about cryptocurrencies including technical analysis, blockchain events, coin prices marketcap and detailed reviews on crypto exchanges and trading platforms.

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