What is an ERC20 Token?

ERC20 is a protocol standard that defines certain rules and standards for issuing tokens on Ethereum’s network.

In ‘ERC20’, ERC stands for Ethereum Request For Comments and 20 stands for a unique ID number to distinguish this standard from others.

Similar to the fact that we have an HTTP protocol for internet, we have a standard protocol for tokens to be issued on Ethereum i.e. ERC20.

To put it in layman terms, if you include certain functions in the token’s smart contract, you are ERC20 compliant. If you don’t include the mandatory functions, you are not ERC20.


So, those tokens on Ethereum’s network checks all the necessary boxes i.e. includes the necessary functions in their token implementation which are deemed as ERC20 tokens.

These are crypto-assets or crypto-tokens which can be traded like Bitcoin or Ethereum or Litecoin but unlike these cryptocurrencies, they don’t have their dedicated blockchain. Instead, they thrive on Ethereum’s blockchain and bring several benefits for the users.