ERC-20 stands for Ethereum Request for Comment and is a set of guidelines or instructions that a smart contract working on Ethereum should feature. It is a technical standard to create fungible digital assets on the Ethereum blockchain. ERC-20 assets are represented by various types of assets, aligned to function properly on the Ethereum blockchain, and utilized by different dApps.

If you have not read our previous guides for beginners, go ahead:

• What is cryptocurrency and how does it work?,
• What is blockchain technology and how does it work?
• What is crypto exchange and how does it work?
• Crypto exchange: essentials
  
• Crypto exchange: how to choose crypto exchange

History of ERC-20

One of the Ethereum developers, Fabian Vogelsteller suggested ERC-20 within the Ethereum Improvement Proposal (EIP) submitted by him in November 2015. The main idea of the proposal was to introduce a standardized approach to token creation. The existing token variability at that time had become an obstacle to token implementation. The ERC-20 standard outlined in the proposal aimed to promote compatibility and consistency among various tokens through such core functions as token metadata, token management, and event handling. 

The simplicity and the benefits it brings to Ethereum token interoperability helped the ERC-20 standard to get traction among developers and made its way to mass adaptation. The new rules guideline the way ERC-20 digital assets are transferred and significantly improve the consistency of how their address balances and supply are recorded. 

Benefits of ERC-20

As we have already discussed, the purpose of the ERC-20 standard application is to guarantee interoperability between various assets and token applications on the Ethereum network. Other than such benefits as interoperability and standardization ERC-20 assets offer the following:

• Flexibility. ERC-20 assets could be used in voting systems, supply chain management, identity governance, and smart contracts applications. 
• Security. ERC-20 tokens similar to other crypto assets are secured by military-grade cryptography. 
• Accessibility. ERC-20 assets can be easily managed by different resources and tools available on the Ethereum blockchain.

Conclusion

Right now there are around 400K types of ERC-20 assets on Ethereum. Each type was specifically created for some purpose, based on the goals of the project they represent. ERC-20 tokens are often used in crowdfunding and can be stored on the majority of Ethereum crypto wallets. The most prominent ERC-20 assets are Tether, Polygon, Binance USD, and Shiba Inu Coin. ERC-20 tokens are believed to keep disrupting the Ethereum ecosystem and play one of the crucial roles in its further growth. 

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