ERC20 tokens

ERC20 is a standard interface for tokens on the Ethereum blockchain. It defines a common set of rules that all Ethereum-based tokens must adhere to, making it easier to interact with different tokens. ERC means Ethereum Request for Comment, it's fungible (each ERC20 token is are rather unique than identical).

The ERC20 at https://github.com/OpenZeppelin/openzeppelin-contracts/blob/master/contracts/token/ERC20/ERC20.sol is an abstract smart contract. It inherits some functions from the Context, IERC20, IERC20Metadata, IERC20Errors contracts as seen in line 29 on the image below. The contract also allows the deployer to deploy specify the name and symbol for their contract.

Mainly, ERC20 tokens are used by developers to write their own tokens which can then be used as a digital medium of exchange.

There's also the total supply field which is used to hold the value for the total amount of token the contract can hold and supply to its users.

There's also a function to check account balance of a user, and transfer token from one user to another, mint and burn tokens.

Prior to the introduction of ERC-20, the process of creating tokens on the Ethereum network lacked standardization. Developers could create their own tokens, but these tokens were not always compatible with each other. This lack of a unified standard made it challenging to use or exchange tokens across different platforms and applications.

To address this issue, in 2015, a developer named Fabian Vogelsteller proposed the ERC-20 standard. This proposal outlined a set of rules and guidelines that all Ethereum-based tokens should adhere to, ensuring their interoperability and seamless integration across the Ethereum ecosystem.

The Ethereum community recognized the need for a standardized token framework and accepted the ERC-20 proposal in 2017. This acceptance transformed ERC-20 into the de facto standard for creating tokens on the Ethereum network, enabling a more cohesive and collaborative environment for token-based applications and services.

The adoption of the ERC-20 standard has since played a crucial role in the growth and development of the Ethereum ecosystem, allowing for the creation of a vast array of tokens that can be easily integrated, traded, and utilized across various Ethereum-based platforms and decentralized applications.