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Understand the ERC-20 tokens: unlock the potential of cryptocurrency
The cryptocurrency world has exploded in recent years, new technologies and platforms emerging daily. One of the most used blockchain systems is Ethereum (ETH), which also houses a large ecosystem of decentralized applications (DAPP) built on its platform. Among these DAPPs, a token stands out – ERC -20 tokens. In this article, we will immerse ourselves on what the ERC-20 tokens are, their use cases and how they can be used in the cryptocurrency world.
What is an ERC-20 token?
ERC-20 (Ethereum requests for comments 20) is a standard specification for tokens on the Ethereum blockchain. It is designed to allow developers to create new digital assets that can interact with other smart contracts and decentralized applications. The first generation of ERC-20 tokens, also known as ERC-20 token or simply “tokens”, was created by Vitalik Buterin in 2015.
The ERC-20 tokens are built above the public network of the Ethereum blockchain (for example, Ethereum Mainnet) and can be used to represent various assets such as:
- Assets : The tokens can be used as a means of exchange, representing the property or the control of a digital asset.
- Instruments : ERC-20 tokens can also be used as a guarantee for derivative contracts or as challenges of other intelligent contracts.
- Actions DEFI (Finance Decralizes) : Loan protocols based on tokens and decentralized exchanges are only a few examples of how ERC-20 tokens can be used in DEFI applications.
Cases of use of ERC-20 tokens
ERC-20 tokens have many use cases in various industries, including:
- Crypto-monnors : Many ERC-20 tokens have been created to compete with existing cryptocurrencies like Bitcoin (BTC) and Ethereum.
- Digital collectibles : ERC-20 tokens have become a popular means for creators to publish unique digital assets, such as art, collectibles or NFT (non-sudden tokens).
- Gaming : Many game platforms have integrated ERC-20 tokens, allowing players to win awards and participate in various activities.
- Insurance
: Some insurance companies have started to use the ERC-20 tokens to represent the assets of police holders or even as a guarantee for the processing of complaints.
- Social media
: ERC-20 tokens are used by social media platforms like Twitter to monetize their user data.
Popular use cases
Certain notable examples of how ERC-20 tokens can be used include:
- Uniswap (V2) : This decentralized exchange protocol was built using ERC-20 tokens, allowing users to exchange various assets.
- DYDX : This decentralized exchange is powered by the ERC-20 token, allowing traders to execute large-scale businesses.
- Gemini : This decentralized exchange and stablecoin platform uses ERC-20 tokens for its native currency.
Safety and regulations
ERC-20 tokens operate on a public blockchain, which intrinsically means that they are sensitive to security risks such as:
- Pirate attacks : attackers can exploit vulnerabilities in smart contracts or wallet software.
- Loss of tokens : Users can lose their investment due to hacking or other malicious activities.
To mitigate these risks, ERC-20 chip holders should:
- Use renowned portfolios : Invest in material portfolios like the big book or Trezor for secure storage.
- Keep private keys to safety : Use multi-sigle wallets and keep your keys private.
- Check the transactions : Always check the transactions before transferring funds.
Conclusion
ERC-20 tokens offer a wide range of possibilities for decentralized applications, cryptocurrencies and other blockchain-based projects. While the cryptocurrency space continues to evolve, understanding the ERC-20 tokens will become more and more important for developers, investors and users.