What is an ERC-20 Token?
Definition and Purpose
ERC-20 (Ethereum Request for Comments 20) is a technical standard for tokens built on the Ethereum blockchain. Introduced in 2015, it establishes a unified framework for token creation, ensuring compatibility across wallets, exchanges, and decentralized applications (dApps).
Key features:
- Standardized rules: Defines functions like token transfers and balance checks.
- Interoperability: Enables seamless interaction between different tokens.
- Developer flexibility: Simplifies the creation of new tokens without reinventing core functionalities.
Why Was the ERC-20 Standard Created?
Before ERC-20, Ethereum tokens used unique smart contracts, causing compatibility issues. Exchanges and wallets had to write custom code for each token, slowing adoption. ERC-20 solved this by:
- Streamlining integration processes.
- Reducing development overhead.
- Encouraging ecosystem growth.
How ERC-20 Tokens Differ from Traditional Cryptocurrencies
| Feature | ERC-20 Tokens | Traditional Cryptocurrencies (e.g., Bitcoin) |
|---|---|---|
| Blockchain | Operate on Ethereum | Independent blockchains |
| Addresses | Use Ethereum addresses | Unique to their own networks |
| Transactions | Processed via Ethereum | Processed on native chains |
| Explorability | Traceable on Etherscan | Tracked via native block explorers |
Network Fees for ERC-20 Tokens
Understanding Gas Fees
Ethereum transactions require Gas, paid in ETH, to compensate miners for computational work. Fees depend on:
- Gas Limit: Maximum units of gas allocated (21,000 for standard transfers).
- Gas Price: Cost per gas unit (set by users; higher prices prioritize transactions).
👉 Learn how to optimize Ethereum gas fees
Why Fees Are Paid in ETH
Since ERC-20 tokens rely on Ethereum’s infrastructure, all fees are denominated in ETH. This ensures:
- Network security through miner incentives.
- Uniform fee structures across tokens.
ERC-20 Token Addresses Explained
All ERC-20 tokens share the same Ethereum address format because:
- They depend on Ethereum’s blockchain.
- Transactions are validated by ETH miners.
- No independent networks exist for these tokens.
Supported ERC-20 Tokens in Atomic Wallet
Atomic Wallet natively supports all ERC-20 tokens. Popular defaults include:
- Stablecoins: USDC, TUSD, PAX, DAI
- Utility Tokens: BAT (Basic Attention Token), OMG (OmiseGO)
- DeFi Tokens: MKR (Maker), LINK (Chainlink)
👉 Explore the full list of supported tokens
Note: Tokens not listed by default appear once deposited to your address.
FAQs About ERC-20 Tokens
1. Can I send ERC-20 tokens to a Bitcoin address?
No. ERC-20 tokens require Ethereum-compatible addresses. Sending to a BTC address may result in permanent loss.
2. Why is my ERC-20 transaction taking so long?
Network congestion or low gas prices can delay processing. Adjust gas fees or check Ethereum Gas Tracker.
3. Are ERC-20 tokens secure?
Yes, if stored in reputable wallets like Atomic Wallet. Always verify smart contracts before interacting.
4. How do I add a custom ERC-20 token?
Most wallets allow manual addition via the token’s contract address, decimals, and symbol.
5. What happens if I send ETH to an ERC-20 address?
ETH sent to an ERC-20 contract address may be irrecoverable. Double-check addresses before transacting.
6. Can ERC-20 tokens be mined?
No. These tokens are pre-minted via smart contracts and distributed as defined by their creators.
Key Takeaways
- ERC-20 standardizes token creation on Ethereum.
- Fees are paid in ETH, not the token itself.
- Always confirm wallet/exchange support before transferring tokens.
- Use tools like Etherscan to verify transactions.
By understanding these fundamentals, you can navigate the ERC-20 ecosystem confidently. For advanced tips on managing crypto assets, click here.