ERC20 Token standard Basics: Beginner’s Guide

The ERC-20 standard was created to expand the possibilities of solving the problem of compatibility of currencies based on the Ethereum blockchain with the...
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Recommended ERC20 Wallet for Storing ERC20 Tokens

Until now, most crypto coins were created on the Ethereum blockchain . This also makes it compatible with ERC20 tokens as a standard.

 

What is an ERC20 Wallet?

For your knowledge, the term “ERC20” refers to Ethereum (ETH), a cryptocurrency. In this instance, the Ethereum blockchain network’s technical standard for creating and utilizing tokens is established by this ERC20 token development.

The standard is distinguished from others by the number 20, which serves as a distinctive ID number.

This ERC20 token standardized functionality such that any tokens that utilize this framework are able to access all ERC-20-compatible services, such as Metamask.

Because the ERC20 token standard fixes compatibility issues, this is also highly helpful for developers who want to construct applications on the Ethereum network.

The ERC20 standard is used by a number of Ethereum blockchain projects to build alternative crypto assets, such as the stablecoins Rupiah Token (IDRT), DAI (DAI), and Binance Coin (BNB).

Many well-known DApps, like Compound (COMP), AAVE (AAVE), and Uniswap (UNI), use ERC20 because of the flexibility it provides for token transactions on their platforms.

What are the Advantages and Disadvantages of ERC20 Tokens?

Below are some of the advantages and disadvantages of ERC20 Wallet Tokens that you need to know.

1. Advantages of ERC20 Tokens

  • Easy to use

This ERC20 wallet token is very easy to use because the Ethereum smart contract is written in the Solidity programming language which is almost the same as JavaScript.

In addition, developers can also code smart contracts with the Vyper programming language, which is similar to Python.

  • Flexible for customization

The advantages of this one depend on business logic and user interaction.

These ERC20 tokens typically allow for the customization of a number of features.

For example, automatic refilling of gas, freezing and unfreezing of tokens, adding a central mint to modify circulating tokens, and so on.

  • A defined roadmap for developers

The ERC20 development standard gives developers a precise blueprint and allows them to create new tokens relatively easily rather than having to build everything from scratch.

  • Token standardization

For information, Ethereum also provides token specifications which include rules regarding interaction between different tokens, including rules for purchasing tokens.

Through universal standards, each user can later transfer new tokens to the wallet and exchange them at once.

  • Liquidity

If Ethereum projects are active and interacting with each other then it will bring more projects and users to the network.

  • Widely accepted

ERC20 and its tokens are easily recognisable on the majority of exchanges and wallets thanks to the protocol’s universality and adaptability to a wide range of exchanges.

Besides, its functionality also makes this token very good for trading platforms/apps.

  • Removed fake tokens

Here, all transactions will comply with approval and the total token supply will streamline the audit process and ensure there are no duplicate tokens in circulation.

In this case, ERC-20 also has the opportunity to become and maintain itself as one of the most popular standards used by many developers throughout the world.

2. Lack of ERC20 Tokens

Even though it has advantages, this token is not free from shortcomings/weaknesses. Here are some of them.

  • Unstable

Through ETH 2.0, the Ethereum blockchain has switched from a Proof of Work (PoW) system to a Proof of Stake (PoS) approach for consensus.

The goal of ETH 2.0 is to overcome all scalability problems, but many changes have occurred and this also takes time.

Besides, this project is not finished yet. System instability is occurring at this time. In this case, some tokens are likely to be at risk of being destroyed when used as payment for smart contracts. Due to this, ERC-233 was born to avoid.

  • Gas costs are expensive

It is important to note, this token relies heavily on the Ethereum blockchain to complete each transaction and there are also gas fees. When traffic is heavy on the blockchain, gas fees will increase.

  • Transferring bugs

There are 2 types of accounts on Ethereum: one is an externally held account controlled by a private key, while the other is a contract account held by contract code.

As for tokens sent from one EOA account to another using the transfer function, it doesn’t cause any problems. However, transferring funds to the contract account would result in a bug resulting in a loss of up to $1 million.

  • Slow transaction

In essence, transactions and the Ethereum blockchain are intertwined. Well, when the network is congested, all transfers on ERC20 will slow down.

Although “Sharding” is expected to solve the problem of slow transactions, it has not been fully adopted on the Ethereum blockchain because it is still in its early stages.

  • Transactions cannot be changed

When users send ERC20 tokens to the wrong address, there is no way available to return the funds.

As a consequence, the token will remain forever trapped in the contract. This also holds true for tokens that hackers have stolen.

  • Low entry point

According to critics, it is easy for anyone to create their own tokens without a clear purpose.

This makes it easy for developers to exploit policies to develop Initial Coin Offerings (ICOs) and fake tokens with useful projects.

Examples of Crypto Using ERC20

The token standard on the Ethereum blockchain is widely used by crypto assets and in this case, ERC20 tokens are the most popular.Here are some instances of ERC20-based cryptos.

  • ChainLink (LINK)

ChainLink (LINK) Is an ERC-677 token that inherits the functionality of the ERC20 token standard.

  • Maker (MKR)

Is a utility token based on the Decentralized Autonomous Organization (DAO) that issues stablecoins on the Ethereum blockchain, namely DAI.

  • Tether (USDT)

Tether (USDT) This is a stablecoin that runs on the ERC-20 protocol so the deposit address is an ETH address. Meanwhile, deposits and withdrawals will be made on the ETH network.

Recommended ERC20 Wallet

So, what ERC20 wallet is recommended for users to store these ERC20 tokens? In this case, users can use Ethereum (ETH) Wallet or Ethereum (ETH) Wallet, namely Trust Wallet.

Quoting the official page, this main mobile Ethereum wallet works with any ERC20, BEP 2 and ERC 721 tokens. In fact, Trust Wallet also supports the main blockchains in the Ethereum ecosystem — Ethereum, Ethereum Classic , and Callisto.

To date, there are more than 20,000 tokens built on Ethereum that can be accessed via the Trust Wallet application. On the other hand, Trust Wallet also provides users with a unified wallet address that can be used to manage Ethereum and all ERC20 tokens.

This means you can use the same address to participate in multiple airdrops and to send and receive Ethereum. Trust Wallet is intuitive and easy to understand and is packed with many useful features.

Trust Wallet also prioritizes user security and anonymity. The main principles are as follows:

  • Local key storage on the user’s device is ensured via client-based infrastructure.
  • Users’ digital assets are safeguarded with bank-grade protection against potential dangers.
  • An application-level authentication system prevents unauthorized access via unlocked devices.

That’s a review of the Erc20 token generator wallet starting from the definition, advantages, examples and recommendations that you can choose from.