CryptoCasinos Blog What Are ERC-20 Tokens?

What Are ERC-20 Tokens?

erc-20 tokens
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Winston Todd

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Main Facts:

  • In the Ethereum blockchain, the ERC-20 standard for smart contracts is widely used. It is a set of guidelines to be adhered to while creating a contract in charge of the specifications and issuance of a new user token.
  • This standard has made the process of developing new coins significantly simpler.
  • In the Ethereum network, numerous ERC-20 tokens can be sent to and kept at the same address, which makes it much easier to manage money for players of crypto casinos.
  • A turning point in the history of cryptocurrencies occurred when it became possible for any developer to release their digital asset without needing to start a separate network.

What Does the ERC-20 Abbreviation Mean?

The official methodology for making proposals to enhance the Ethereum network is called ERC (Ethereum Request for Comments). The proposal’s sequence number is “20”. 

How Did ERC-20 Appear?

In November 2015, a proposal to establish a common standard for user tokens was initially released. It was written by developer Fabian Vogelsteller and Ethereum founder Vitalik Buterin.

ERC-20 served as a template for replaceable tokens, also known as fungible tokens, which are interchangeable tokens with the same value.

Although the Ethereum team’s framework governs how ERC-20 tokens operate, the framework is sufficiently open to permit broader development flexibility.

Why Was the ERC-20 Standard Needed?

For upcoming cryptocurrency initiatives, Bitcoin serves as an example, showing that a separate blockchain must be established before any digital currency can be made available.

Ethereum was able to defeat it. Thanks to smart contracts, each developer can create their own coin and give it unique functionalities within their program.

But, before ERC-20, because each token had a unique smart contract, there was a compatibility problem across diverse tokens. In other words, new code has to be built every time a new coin is made in order for an exchange or wallet to support it.

how erc-20 tokens work

As a result, managing a rising quantity of tokens was difficult and time-consuming. A uniform mechanism was developed for all tokens to address this issue.

The issuance of tokens within the same network was considerably streamlined and unified by ERC-20. Along with smart contracts, this standard established a common framework for building and funding blockchain-based apps. Ethereum became the first blockchain platform in history in this manner.

What Tokens Have the ERC-20 Standard?

ERC-20 is a widely used cryptocurrency standard. In decentralized finance (DeFi) and related fields, it is particularly prevalent. ERC-20 is also utilized for management tokens in well-known cryptocurrency projects. Just a few instances are shown below:

  • Maker (MKR)
  • Tether (USDT)
  • Chainlink (LINK)
  • The Sandbox (SAND)
  • The Graph (GRT)
  • Uniswap (UNI)
  • Axie Infinity (AXS)
  • Aave (AAVE)
  • ApeCoin (APE)
  • Basic Attention Token (BAT)
  • Compound (COMP)
  • OMG Network (OMG)
  • (YFI)
  • 1inch (1INCH)
  • Enjin Coin (ENJ)

Where to Store ERC-20 Tokens?

The wallets Metamask, Trust Wallet, Exodus, and MyEtherWallet are well-known for holding ERC-20 coins. Even though ERC-20 tokens can be stored in the address, the interface of certain wallets only displays the ETH balance. The only thing left to do in that situation is export it to a wallet that fully supports the desired asset.

Where Can I See Details of ERC-20 Transfers?

Any ERC-20 token’s transaction information can be examined in the Ethereum Block Explorer using an application like Etherscan. There, in a separate part, is also on-chain information about all of the standard’s assets. The token page includes a list of token holders, a breakdown of how many tokens were distributed to each address, and a link to the asset’s smart contract.

The Main Characteristics of the ERC-20 Protocol

For any smart contract, this standard specifies three optional (but suggested) parameters in addition to the six required ones.

The requirements include the following:

  • When the complete number of tokens has been issued, totalSupply, which is in charge of it, makes sure that no more tokens may be produced.
  • A specific address’s initial token allocation is specified by balance0f. Typically, the issuer’s address is this one.

Also included in the standard are two descriptions of how to move tokens. The transfer function distributes tokens to users, whereas transferFrom is necessary for asset trades.

To validate the first two token transfer techniques, we still require the following two functions:

  • Allowance is required to confirm that there is enough balance to move tokens to another address. 
  • The function “approve” is used to ensure that a smart contract can distribute tokens based on the total issue.

The maximum number of fractional digits after the decimal point, the token’s ticker, and the name of the token are all optional variables (for example, BTC has 8 such digits – 1.00000000 BTC).

Each ERC-20 smart contract can be communicated from a common code base using a small number of straightforward parameters.

Risks of Using ERC-20 Tokens

ERC-20 tokens, some of which are stablecoins, have some hazards because they are actually smart contracts, notwithstanding how useful they are. For instance, once a smart contract has been started, it cannot be altered. Moreover, defects and weaknesses can be present.

The DAO project hack, which required the Ethereum hard fork to resolve and resulted in the theft of $50 million in investor cryptocurrency, is one of the most well-known instances of this type.

In a few rare instances, con artists adhere to this standard: they purposefully incorporate such parameters into the code of their token’s smart contract, using them to either steal money from holders or carry out the Pump & Dump plan.

ERC-20 Tokens & Crypto Casinos

In the world of crypto casinos, ERC-20 tokens are now a common sort of cryptocurrency. These tokens can be readily transferred between accounts and are compatible with other Ethereum-based applications because they were created on the Ethereum blockchain and adhere to a set of standardized criteria.

The simplicity of integration is one benefit of employing ERC-20 tokens in cryptocurrency casinos. The tokens can be easily integrated into current online gambling platforms since they adhere to a common set of regulations, enabling users to use them to place wagers and receive payments.

The opportunity to design customized tokens exclusively for the online gaming sector is another perk. As an illustration, a few cryptocurrency casinos have produced their own ERC-20 tokens that can be used as in-game money and grant players access to special offers and discounts.

Moreover, ERC-20 tokens provide a high degree of security and transparency. A transparent and unchangeable ledger is provided by the Ethereum blockchain, guaranteeing the integrity and fairness of every transaction. Moreover, the ERC-20 tokens’ usage of smart contracts enables the development of provably fair games, guaranteeing that participants will have a fair gaming experience.

Overall, ERC-20 tokens have grown to be a preferred option for crypto casinos because of their simplicity in integration, security, and transparency. We may anticipate even more cutting-edge ERC-20 token uses in the gambling sector as the industry’s popularity rises.

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