Ethereum is a decentralized platform on which smart contracts are executed. So the previous definition makes it clear that Ethereum is not a digital currency (the native Ethereum cryptocurrency is called ether). In other words, the Ethereum is a piece of code that could automatically transfer the ownership of the housing to the buyer and the funds to the seller after reaching an agreement, without need of a third party.
In turn, Token is usually defined as one thing that serves as a representation of something else. In blockchain, a token often represents a financial value or a digital asset, similar to how a casino's chips symbolize or represent fiduciary money just to be able to use them on the different machines and gambling.
Having these clear concepts, it turns out that Ethereum tokens are simply digital assets that build at the top of the Ethereum block chain. Developers benefit from Ethereum's existing infrastructure to build their applications, unlike developers who choose to build a completely new block chain. At the same time, tokens strengthen the Ethereum ecosystem by boosting ether's demand, Ethereum's native currency, needed to boost smart contracts over which tokens are issued.
Ethereum tokens can represent anything: from a physical object like gold (Digix), to a native currency used to pay the transaction fees (Golem). In the future, tokens can even be used to represent financial instruments such as actions and obligations. The properties and functions of each token are completely subject to the use that is established for them: they can be used as payment to access a network or for decentralized governance over an organization, among many other possibilities.
Tokens are often issued to the public through a general or open sale called the Initial Currency Offering (ICO). ICO creators will send tokens to others in exchange for ether or bitcoin and also other cryptocurrencies. They may have a fixed supply, a constant inflation rate, or even an offer determined by a sophisticated monetary policy. There have been many ICOs recently and in a short time have completely changed the way projects are funded. There is no mandatory distribution requirement, although you are building a decentralized application ideally would like the chips to be owned by as many people as possible.
TOKEN ERC20
The ERC20 is a standard interface that ensures interoperability between tokens. The ERC20 tokens are simply a subset of Ethereum tokens that fit certain parameters. To fully meet DRC20 standards, the developer must incorporate a specific set of functions into his smart contract which, at a high level, will allow him to perform the following actions:- Get the total supply of tokens
- Get the account balance
- Transfer the token
- Approach spending the token
In general, an ERC20 token is no different from any other token, but also adjusts to the standard Ethereum token.
WHY ETHEREUM NECESSITE A STANDARD TOKEN?
Interoperability. If all the tokens created on the Ethereum network use the same pattern, these tokens will be easily exchanged and can work immediately with Dapps that use the ERC20 standard.What makes a “Standardized” token is that uses a certain set of functions. If developers know in advance how a token will work, they can easily integrate it into their projects with less fear of making mistakes. If multiple tokens behave similarly, calling the same functions the same way, then a Dapp can interact more easily with different submonedas.
As bitcoin and ether, the ERC20 tokens can also be traced to blockchain, which is the largest public book of all transactions that have occurred. This is due to the fact that Ethereum tokens are just a specific type of intelligent contract that ‘lives’ in the Ethereum block chain.
There are currently many projects that leverage Ethereum blockchain and ERC20 standard to issue the required chips to operate their platforms. It is very likely that this market will continue to grow with new and better applications that meet this standard in order to interact with each other.
Source: Criptonoticias
Comments