If you follow Ethereum, you may have heard of "ERC20". So what does ERC20 token mean and what does ERC20 token do? If you do not know yet, let's find out by reading the article below.
What does ERC20 token mean ?
Well, one of the important token forms representing Ethereum is ERC20. This is also a form of token, and it is also the standard for digital tokens. In most cases, the token is used for the implementation of the next contract and covers a set of rules that all Ethereum-based platforms need to follow.
In simple terms, it is somewhat similar to cryptocurrencies such as Bitcoin and Ethereum. But, other, you understand that Ethereum and ERC20 are not their own coins. Actually, Ether is the Ethereum platform its coin, but ERC20 is a specific cryptocurrency so, others can use this standard to create more ERC20 tokens, they have different token names. More importantly, in order to use ERC20 tokens, your platform needs to have an Ethereum base. Therefore, you cannot use this token on other platforms like Hyperledger Fabric as it can only be issued on Ethereum.
What does an ERC20 token do?
ERC-20 tokens can also be used to represent things like loyalty rewards and reputation points. Imagine, for example, an online travel agency that issues points to users every time they make a reservation through the platform. These points can be used to pay for future bookings. They can also offer holders additional benefits such as VIP services, a share of the fees incurred by booking the platform, and even a say in how the platform is managed. Importantly, points (tokens) can also be traded with other people , a feature that gives them value, not just the ecosystem that created them.
Finally, ERC-20 can be used to represent physical objects like gold or real estate. However, when digital tokens are used to represent physical objects, maintaining the connection between the two is difficult.
I hope this article will help you to learn what does ERC20 token mean and what does and ERC 20 token do. Fortunately, most token developers are ERC-20 compliant, which means that most tokens released through Ethereum initial coin offerings are ERC-20 compliant .
