Ethereum is a public blockchain network that is spread across many computers. Although there are some technical differences between the two, the most major distinction is that Bitcoin and Ethereum serve very different purposes and have very different capabilities. Bitcoin is a peer-to-peer e-payment system that allows for online Bitcoin payments using blockchain technology.
What is the ERC20 token?
ERC stands for Ethereum Request for Comment, and 20 is the proposal identifier number. ERC-20 was designed to improve the ETH network. For Ethereum tokens, the ERC20 token specification has become the defacto standard. To put it another way, most Ethereum contracts today are ERC20 compliant. In this article, we will talk about how to make your own Ethereum token, but first, let’s take a deeper look at the ERC20 standard.
The Ethereum blockchain permits the usage of tokens, which users may buy, sell, and trade. Tokens are blockchain-based digital assets or programmes. These tokens are used to assign value to things like promissory notes, profit participation rights, services, and physical items. As a result, tokens should not be mistaken with cryptocurrencies. Tokens are essentially “Smart Contracts,” which are performed on the Ethereum blockchain in the case of ERC20.
One of the most important ERCs is ERC-20. It has become the technical standard for creating smart contracts on the Ethereum blockchain network, which is used to create tokens. ERC-20 is a set of regulations that must be followed by all Ethereum-based tokens.
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Why ERC20 token is so successful?
- ERC20 tokens are simple to use and deploy.
- The ERC20 standard overcomes a fundamental problem by providing a single, defined set of commands for blockchain-based markets and crypto-wallets to interact with the many tokens they handle. This covers rules for interacting with different tokens as well as rules for purchasing tokens.
- It was the first widely used specification to standardise Ethereum tokens. It was far from the first, but due to its widespread use, it rapidly became the industry standard.
Tokens are blockchain-based assets that may be sent/received and have a monetary value, according to the ERC-20 standard. Many characteristics of ERC-20 tokens resemble those of Bitcoin and Litecoin. The most notable distinction is that ERC-20 currencies run on Ethereum’s blockchain network and use gas as a transaction fee rather than their own.
Before the ERC-20 standard, everyone who generated a token had to reinvent the wheel, which meant that each token was unique. Because there is no defined structure or rules for creating new tokens, if a developer wanted to work with another token, they would have to learn the whole smart contract code of that token.
Adding new types of tokens forced developers to go through the code of each and every token and understand it in order to support those tokens on their platforms, which was particularly difficult for wallets and exchange platforms. It goes without saying that adding additional tokens to any app was a challenge.
Today, the ERC-20 standard is used by wallets and exchanges to incorporate multiple standardised tokens into their platforms, as well as to allow simple exchange between ERC-20 tokens and other tokens. Interaction between tokens has become almost smooth and easy thanks to the ERC-20 token standard.
The ERC-20 standard or guideline is a set of rules for generating new tokens. A smart contract must include six necessary functions and three optional functions, according to the specification.
To begin, give your token a name, a symbol, and a description of how dividable it is by providing decimals. ERC defines a series of more sophisticated required functions, which are described below:
- TotalSupply: This method determines the total supply of your tokens. If this limit is reached, the smart contract will refuse to generate additional tokens.
- balanceOf: This function returns the number of tokens associated with a wallet address.
- Transfer: A mechanism for taking a specific number of tokens from the overall supply and distributing them to a user.
- transferFrom: A different sort of transfer mechanism for transferring tokens between users.
- approve: This method checks if a smart contract is permitted to provide a user with a specific number of tokens based on the overall supply.
- allowance: This method is identical to the authorised method, only it checks if a user’s balance is sufficient to transfer a specific number of tokens to another.
ERC-20 can be compared to an Interface if you are familiar with Object-Oriented Programming. You must implement the ERC-20 interface if you want your token to be an ERC-20 token, which compels you to implement these 6 functions.
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Creating our own token
ERC20 tokens are becoming more widely used and popular in the blockchain industry. As a result, every crypto enthusiast and company will want to create their own feature-rich ERC20 tokens in order to raise cash and swiftly enter the crypto market.
Here’s an overview of the procedures you’ll need to follow in order to create an ERC20 token on the Ethereum network.
- Deciding the Token requirements: The first stage in creating an ERC20 token is to figure out what your Ethereum-based ERC20 token’s primary goal should be. You must also understand how this ERC20 token can benefit your fundraising and crypto company. Then you should make a list of the most important characteristics it should have and prepare accordingly.
- Writing a smart contract: To cross-check the ERC20 standard, you must construct a smart contract in this stage. Smart Contracts are an important element of the Blockchain network, therefore if you’re making an ERC20 token, you’ll need them. Then you should pay attention to it while developing smart contracts. There are six different functionalities available in the ERC20 smart contract. Such as
- Test contract code: You must test the contract code for etherscan verification at this stage. So, once you’ve finished creating the Smart Contract code, you’ll need to compile it to see if all of the functions are working properly.
- Validate the tokens: You can test ERC20 Token transactions after confirming the contract code. The performance of your tokens may be used to validate them. If there are any problems, mistakes, or flaws with your ERC20 token. Then you may quickly make the necessary changes.
- Deployment for sales to crowdfund without fail: This is the final step, in which you must deploy the built code on top of the Ethereum Blockchain. So that you may start a crowdfunding campaign with a fully working ERC20 coin.
Ethereum and ERC20 tokens are the most widely used digital currencies after bitcoin. ERC20 coins are now preferred by many traders and investors. The crypto market is waiting for you, and now is the perfect moment to develop your own ERC20 token and profit from it.
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