Investing in cryptocurrencies and digital financial networks are holding considerable differences from traditional investing. Especially, the early generations are a bit curious about these sudden arrived fresh systems. On the other hand, the investors who are having lack technological backgrounds show a bit of reluctance. Not been much aware of the standards, regulations, and flow of the blockchain network is considered as the primary reason for this reluctance and curiosity. Though digital finance has already spread in a wider area, still investors can join the community as beginners. Therefore, beginners are invited to understand the helpful guidelines, major concepts, and standards of cryptocurrency applications. Let’s discuss one of those; which is known as the ERC20 token standard.
What is the ERC20 Standard?
A large sector of decentralized finance systems is relevant to smart contacts and smart properties. Simply, Smart contracts are a digitalized contract or a script that consists of a set of rules and actions regarding the token creation or further events. ERC-20 is a scripting standard used within cryptocurrency networks. The tokens and smart contracts are functioned according to the guidelines of the ERC-20 standard. Ethereum, Maker, Basic Attention Token, and many digital currencies use the ERC-20 standard. Creating NFTs for initial coin offering (ICO) also has been placed according to the discussing standard. Moreover, there are thousands of distinct tokens which have been issued under the ERC-20 standard. The standard has specific functionalities; if a network is following the standard it must be implemented according to perform below functions.
Functions that should be performed according to the standard.
- Total supply: It should provide information about the total supply
- Balance of: The account balance of the owner is should provide within it
- Transfer: The network should execute transferring a relevant number of tokens to a specified address.
- Transfer from: The network should execute transferring a relevant number of tokens from a specified address.
- Approve: The system must allow the user (spender) to withdraw tokens from the relevant account.
- Allowance: Returning certain number tokens to the owner from a spender.
Drawbacks of ERC20
No doubt the ERC-20 standard has supported the functioning of many financial networks. But according to the blockchain developing communities, ERC20 standard has limited in a certain frame of work. Therefore, they have suggested and come with more sophisticated alternative standards. ERC223, ERC62, ERC827 are some of those alternatives which are developed to address the drawbacks of ERC20. ERC62 standard is capable of increasing and decreasing token supply. ERC827 allows the holder to approve spending via a third party. However, understanding the concepts would be supplementary to investing in digital platforms. Be aware! Learn more and earn more!