What Is ERC-20?

ERC-20 is a technical standard for creating and managing tokens on the Ethereum blockchain. Proposed in November 2015 by developer Fabian Vogelsteller, it defines a unified set of rules that ensure all Ethereum-based tokens can interact seamlessly across wallets, exchanges, and decentralized applications (DApps).

Rather than being a piece of software, ERC-20 serves as a technical specification or guideline. It standardizes how tokens behave, making it easier for developers to build interoperable assets and for users to trade, store, and transfer them safely within the Ethereum ecosystem.

How ERC-20 Works

The ERC-20 standard outlines a set of six core functions that define how tokens operate. These include how tokens are transferred, how balances are tracked, and how total supply information is managed. By following these rules, tokens can communicate consistently across all Ethereum applications.

This standard also defines attributes such as name, symbol, and decimals, ensuring every token maintains a consistent identity and functionality across the network.

ERC-20 significantly simplified token creation by eliminating the need for unique code for each new token. As a result, developers can now deploy digital assets much faster — a key factor behind the rapid growth of ICO (Initial Coin Offering) events and blockchain adoption worldwide.

Benefits and Applications of ERC-20

Interoperability: Ensures that all ERC-20 tokens can be used across Ethereum-compatible wallets and platforms.
Efficiency: Reduces development time and costs for launching new tokens.
Flexibility: Tokens can represent different types of assets, from currencies and vouchers to gold certificates and voting rights.
Adoption: Supported by most DApps, exchanges, and smart contracts, making it one of the most widely used blockchain standards.
Compatibility: Led to innovations such as Wrapped Ether (WETH), which allows ETH to be traded as an ERC-20 token.

Conclusion

The ERC-20 standard revolutionized Ethereum by creating a unified framework for token development. It paved the way for thousands of digital assets, driving the growth of decentralized finance (DeFi), gaming, and tokenized ecosystems. Even years after its introduction, ERC-20 remains the foundation of Ethereum’s token economy and continues to power innovation across Web3.