ERC-20 and ERC-721: What are they and how do you use them?
ERC stands for Ethereum Requests for Comments and is used by Ethereum developers. In order to execute a token in the Ethereum ecosystem, the developers need to abide by a set of rules established by the ERC. Tokens developed compliant to ERCs called ERC tokens have become popular over the years. The property of the ERC token that attracts its users most is the fact that it can be traded. This exchange is possible only if its value is standard. Let’s look at two well-known ERC tokens and their characteristics.
ERC-20
ERC-20 tokens represent a certain value and come under fungible tokens. Much like currency, they can be interchanged with other ERC-20 tokens as they all are the same. These tokens have the nature of being divisible, meaning you could send someone 0.5 of your token. A majority of the tokens on the Ethereum platform follow ERC-20.
For a token to be considered as an ERC-20 token, it needs to fulfill the conditions set by ERC-20. The primary functionalities of ERC-20 are calculating account balances, determining the total supply of tokens, and the transfer of tokens.
An ERC-20 has characteristics that are similar to a bank’s. It manages a digital ledger of addresses and token balances on the Ethereum platform like a bank handles accounts and its balances in fiat currency.
ERC-721
Unlike the ERC-20, the ERC-721 is non-fungible i.e. most tokens are unique or in limited supply. They are more like collectibles that increase or decrease in value based on their availability. The famous Cryptokitties is an example of ERC-721 tokens. Each kitty has different value and no two tokens are the same.
ERC-721 is a great solution to sectors like finance, real estate, art, and agriculture. These tokens enhance security, simplify the transfer of ownership and help keep a permanent and transparent record. Ownership is simple; a user cannot hold a token in parts but only as a whole.
Both ERC-20 and ERC-721 have beneficial functionalities. They are still a novelty and their use cases are yet to be discovered completely. While building a token, it is important to choose a standard that is based on the use case. Looking to build Ethereum smart contracts that comply with ERC-20 or ERC-721 standards? Blockchain App Factory can help you make the choice and build you an advanced automated smart contract.
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ERC-20 tokens represent a certain value and come under fungible tokens. Much like currency, they can be interchanged with other ERC-20 tokens as they all are the same. These tokens have the nature of being divisible, meaning you could send someone 0.5 of your token. A majority of the tokens on the Ethereum platform follow ERC-20.
For a token to be considered as an ERC-20 token, it needs to fulfill the conditions set by ERC-20. The primary functionalities of ERC-20 are calculating account balances, determining the total supply of tokens, and the transfer of tokens.
An ERC-20 has characteristics that are similar to a bank’s. It manages a digital ledger of addresses and token balances on the Ethereum platform like a bank handles accounts and its balances in fiat currency.
ERC-721
Unlike the ERC-20, the ERC-721 is non-fungible i.e. most tokens are unique or in limited supply. They are more like collectibles that increase or decrease in value based on their availability. The famous Cryptokitties is an example of ERC-721 tokens. Each kitty has different value and no two tokens are the same.
ERC-721 is a great solution to sectors like finance, real estate, art, and agriculture. These tokens enhance security, simplify the transfer of ownership and help keep a permanent and transparent record. Ownership is simple; a user cannot hold a token in parts but only as a whole.
Both ERC-20 and ERC-721 have beneficial functionalities. They are still a novelty and their use cases are yet to be discovered completely. While building a token, it is important to choose a standard that is based on the use case. Looking to build Ethereum smart contracts that comply with ERC-20 or ERC-721 standards? Blockchain App Factory can help you make the choice and build you an advanced automated smart contract.
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