Members of the worldwide cryptocurrency community greatly understand of how many different coins are created based on the Ethereum distributed cryptocurrency register. Every day there are more names of currencies appearing using a new cryptocurrency standard – ERC20. Most ordinary users are not familiar with this format and do not understand the difference between ERC20 coins and standard tokens. For this purpose, we begin to consider the advantages and opportunities of the ERC20 standard.
The ERC20 format general overview
Most modern users of the digital currencies market realize that each individual cryptocurrency is a part of an investment fund of third-party projects that are of practical value.
The Ethereum is a distributed register for user data and has a certain value, like useful information or a virtual asset. Such project’s tokens very often do not adhere to any common standards.
Everything can change with the arrival of the ERC20 standard. This specific standard supports cryptocurrency tokens, issued on the basis of the distributed register of the Etherium. Such a common standard increases the ability of currencies to be interchangeable. In addition, it provides stable access to related applications on the platform of a certain cryptocurrency that adheres to this standard.
At first glance, everything may seem quite simple, but all the advantages of the new standard are hidden. By using the format of ERC20 coins, the compatibility of various virtual currencies with new services and projects is simplified. In addition, the introduction of this format of tokens provides an opportunity to obtain a number of auxiliary options, including the right to vote. Most of the projects with personal coins give investors the opportunity to participate in decision-making regarding the future development of the project.
Over the past months, a considerable number of coins have been produced based on the Ethereum Blockchain. These virtual assets are compatible with decentralized applications and projects. But developers have to do a lot of work because in some cases sending coins to a digital wallet can lead to cash losses. This shortcoming developers intend to fix in the near future. Today there is already a solution to this drawback, which is to add coins, and not send them to a digital wallet.
Owners of coins of a new format are able to exercise full control over their own funds. A new token contract, which is close to the new format ERC20, is able to track how many coins it belongs to. Due to the fact that each coin of the new standard is a sub-currency of the Ethereum network, this task does not require much effort. In this case, distribution of coins is carried out using the “smart agreements”.
The new format can have a positive impact on the Ethereum ecosystem. The possibility of using new types of assets in different projects and on different platforms will make them more useful. However, if this does not succeed, the coins will be blocked inside the Ethereum ecosystem.
The creation of a new format for coins is a significant development, but it is still difficult to call the ideal solution.