ERC20, a real tokenization behemoth
The altcoin leader Ethereum seems to be on its own card. One of this ecosystem's time is the ERC20 token standard, which greatly shapes the cryptocurrency market. Along with a lot of noise accompanying various ICOs, and at the moment also DeFi, more and more ERC20 tokens are created every day. Every year, however, a new ERC standard is on the horizon - rumor has always been that it will finally be the one that will surely dethrone ERC20.
However, as time shows - the old standard surpasses the new in scalability, interoperability, simplicity and ease of development.
In Kind of a mandatory guide for developers of a new token design. ERC20 is the most popular driver. The basic principles set out in the ERC20 add-ons for the development of an outline of smart contracts to configure themselves to create tokens on the Ethereum network.
ERC stands for Ethereum Request for Comment, which in the literal translation of requests for comments Ethereum - this is technical tasks and organizational documents, memorandum warning. 20 in this name means the number from the entries to document the Ethereum system on GitHub. The community encouraged a number of improvements here, and then joined them in a new tokenization standard.
Right now, ERC20 tokens play a role in the way the Ethereum platform works. Usually they are just a form of value, or "loyalty points" to the project from which they originated. All tokens also operate in the same language, instructions for the Ethereum network - they can be easily shared, exchanged and new wallets. As is not true in this world, this standard also has its drawbacks.
ERC20 problem
The most difficult issue is the bug that causes a loss of money on both sides of the transaction - a critical problem found in the code of smart contracts. In fact, it was because of this error that the Ethereum ecosystem lost millions of dollars. The developer with the nickname "a_mature_dev" explains the mechanism as follows:
“In fact, ERC20 tokens don't quite travel from one wallet to another; only the so-called owner of tokens contained in the smart contract, which is also the issuer of tokens, changes. Simply put, if someone in Monaco buys a Ferrari on my behalf - the Ferrari will still be in Monaco, only the name of the owner will change. Let's assume that a car wants to buy from me "some gentleman" and I agree to sell it, so the name changes again - unfortunately our "some gentleman" is not fully informed about it ...
Many new tokenization standards appeared on the market with attempts to solve the problem - however, none achieved their goal and dethroned ERC20. In October 2019, the network recorded over 200,000 tokens compatible with the Ethereum network in this standard.
ERC77 is coming
In the beginning there was ERC777. Later, in 2018, there were also ERC1155 and ERC1404 that were said to dethrone the most popular standard. If such dethronement has not taken place to this day, it probably will never happen. ERC777 is not perfect.
The introduction of the standard means a significant increase in transaction fees, which also entails an increase in all costs of operations on smart contracts.
There is a pattern in this. This does not mean, however, that the ERC20 is the only standard forever. The creators of Ethereum and its users are very critical of it - and hence it is close to developing a novelty that could threaten the position of ERC20.
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