ERC20 token is an interface which defines various functions dictating the requirements of the token.
It does not, however, provide implementation details and has been left to the implementer to decide.
Human-Readable Addresses for the Blockchain World (Part 2)
ERC is basically an abbreviation of Ethereum Request for Comments which is equivalent to Bitcoin’s BIPs for suggesting improvements in Ethereum blockchain.
This is defined under EIP 20, which you can read more about here https://github.com/ethereum/EIPs/blob/master/EIPS/eip-20-token-standard.md.
Ethereum is becoming a platform for choice for ICOs due to its ability to create new tokens and with ERC20 standard, it has become even more accessible.
ECR20 token standard defines various functions which describe various properties, rules, and attributes of the new token.
These include total supply of the coins, total balance of holders, transfer function, approval and allowance functions.
There are other standards such as ERC223, ERC777 and extension of ERC20 called ERC827 are also under development.
Why This Matters for Blockchain Technology
You can refer to the followings links to learn more: https://github.com/ethereum/EIPs/issues/827 https://github.com/ethereum/EIPs/issues/223 https://github.com/ethereum/EIPs/issues/777
Key Points to Remember
- ERC20 tokens ERC20 token is an interface which defines various functions dictating the requirements of the token.
- It does not, however, provide implementation details and has been left to the implementer to decide.
- ERC is basically an abbreviation of Ethereum Request for Comments which is equivalent to Bitcoin’s BIPs for suggesting improvements in Ethereum blockchain.
- This is defined under EIP 20, which you can read more about here https://github.com/ethereum/EIPs/blob/master/EIPS/eip-20-token-standard.md.
Conclusion
ERC20 tokens represents one of the many innovative layers that make blockchain technology so powerful and transformative. As distributed systems continue to evolve, a solid understanding of these core concepts becomes increasingly valuable — not just for developers, but for anyone building, investing in, or working alongside blockchain-powered systems.
Whether you are just starting your blockchain journey or deepening existing expertise, mastering these fundamentals gives you the tools to think clearly about decentralized systems and make smarter decisions in this rapidly evolving space.