ERC-20, short for “Ethereum Request for Comment 20,” is a widely adopted technical standard within the blockchain and cryptocurrency space. It defines a set of rules and functions that enable the creation and management of digital tokens on the Ethereum blockchain. These tokens are often referred to as “ERC-20 tokens.”
The ERC-20 standard plays a pivotal role in the Ethereum ecosystem, as it ensures compatibility and uniformity among various tokens built on the Ethereum network. Tokens adhering to this standard share common functionalities, such as the ability to be transferred, received, and interacted with in a consistent manner across different applications, wallets, and exchanges. ERC-20 tokens have become the foundation for initial coin offerings (ICOs) and decentralized applications (DApps) operating on the Ethereum blockchain. They provide a simple and secure way for developers to create new tokens, fostering innovation and enabling various use cases, from digital assets to voting rights within decentralized organizations.
In essence, ERC-20 simplifies the process of token creation and exchange, promoting interoperability and facilitating the development of a wide range of decentralized solutions on the Ethereum platform. It’s a crucial component for anyone seeking to understand and engage with the Ethereum blockchain and its ecosystem.
On the other hand, ERC-721 tokens, while sharing a similar foundation, diverge significantly. They are non-fungible, with each token being unique and representing distinct assets like digital art, gaming items, and real estate tokens. This uniqueness is essential for use cases requiring individual ownership and differentiation.
In summary, ERC-20 tokens are for interchangeable assets, while ERC-721 tokens are for unique, non-interchangeable ones, serving specific blockchain applications. These standards are fundamental in the Ethereum ecosystem.