Basics of ERC20: Beginner’s Guide from B2BinPay

Basics of ERC20: Beginner’s Guide from B2BinPay

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As a result of the Ethereum ecosystem creation, it was possible to anticipate a positive future for crypto niche development and offered completely new opportunities for decentralization, such as the development of decentralized services and programs as well as the use of smart contracts. Using the ERC-20 standard, developers can create tokens on top of the Ethereum blockchain in order to standardize all tokens in the Ethereum distributed ledger and simplify the network.

In this article, we will talk about the standard ERC-20, the essence of its practical application, and what tokens currently work based on this standard. In the end, we will discuss what the fundamental differences between ERC-20 and TRC-20 standards are.

Key Takeaways

  1. The ERC-20 standard was created to extend the possibilities of solving the problem of compatibility of Ethereum blockchain-based coins with the network.
  2. The main difference between networks ERC-20 and TRC-20 is the size of commissions for transactions.

What is the ERC-20 Standard?

ERC-20 is a universal standard for creating tokens on the Ethereum blockchain. Before it, there were hundreds of tokens with different smart contracts and conditions. Developers of wallets and other applications had to write code from scratch to support a particular coin. This hindered the development of new cryptocurrencies and the ecosystem. The ERC-20 standard defines a set of rules that must be met for a token to be accepted and be able to interact with other tokens in the network.

ERC-20 is short for Ethereum Request For Comments. And the number 20 is an identifier that allows this particular standard to stand out from all others. The ERC20 token standard is a certain set of rules addressed to the developers of tokens, not any tokens, but those based on the Ethereum blockchain. And at the same time, the name ERC-20 is assigned to tokens running on the same blockchain. Their main difference from other tokens is the use of only a strictly defined smart contract to track transactions made with this crypto.

It is worth noting that this standard has a number of significant advantages that set it apart from others.


Creating new tokens increases the demand for Ether, which further enhances the security of the entire system, making it less susceptible to a possible 51% attack;

Saving time and resources

It is not necessary to develop a new blockchain for ERC-20 tokens, since they can utilize the existing Ethereum infrastructure instead;

Greater liquidity

The majority of projects utilize ERC-20 tokens as the basis for their operations.


It is expected that all tokens created on Ethereum network will share the same standard, which will facilitate easy interchangeability and the integration of these tokens with other applications within the ecosystem.

What is the Essence of the Practical Use of ERC-20?

As far back as 2013 Vitalik Buterin proposed the concept of Ethereum, a fundamentally new cryptocurrency. By the end of 2015, the network was fully operational. As part of the same project, Buterin develops ERC-20 in collaboration with Fabian Vogelsteller. In their statement, they stated that the crypto community needed a new format that would allow tokens based on Ethereum blockchain to be created.

There are a lot of benefits that have come with the new standard for developers. Having the opportunity to not spend resources on resolving security problems has allowed them to free up resources. Meanwhile, all tether ERC20 cryptocurrency tokens are used by hardware wallets, centralized exchanges, etc. Each of these software tools is required to maintain a specific protocol in order to function effectively.

Until the ERC-20 standard was adopted, different forms of Ethereum tokens were incompatible with each other. Tokens were governed by a single smart contract. A new piece of code had to be written for every transaction and wallet to integrate the new token into the platform. The process of supporting an ever-growing set of tokens was becoming extremely time-consuming and difficult. For this purpose, the platform provided a standard protocol, now referred to as the ERC-20 protocol, for all the following tokens.

The TRC-20 standard is most generally used to conduct transactions with the most popular stablecoin on the USDT market.

Fast Fact

What Tokens Have the ERC-20 Standard?

In keeping with established technical standards, the ERC-20 standard has enabled creators of cryptocurrencies to simplify the entire transaction process. This principle ensures that all new coins created are interchangeable while maintaining their specific purposes. Ethereum’s community officially adopted ERC-20 in 2017. On the Ethereum blockchain, most smart contract tokens adhere to the ERC-20 standard. Here are just a few examples.

1. Uniswap (UNI)

Uniswap is the largest decentralized crypto exchange that runs on the Ethereum ledger. Since it operates on Ethereum, investors can use Uniswap to trade any ERC-20 token.

2. Maker (MKR)

Maker (MKR) is a decentralized protocol that allows you to issue stackable DAI against crypto currencies and real assets. MakerDAO uses smart contracts built on the Ethereum shared ledger. MakerDAO is a cool niche for borrowing and lending without the need for traditional intermediaries such as banks.

3. Chainlink (LINK)

Chainlink plays an important role in the Ethereum distributed ledger. It allows you to add data from the cryptocurrency world to smart contracts. For example, if a smart contract depends on the valuation of a sports game or the value of a dollar, Chainlink can provide this data.

ERC-20 and TRC-20: What is The Difference?

Back in 2018, USDT tokens in the Ethereum blockchain were issued under the ERC-20 standard. This was done in order to make it possible to use Tether in decentralized applications, as well as in various smart contracts. The issuance of tokens impacted speeding up the transaction process, as previously, all the transactions taking place in the Bitcoin network were too slow and time-consuming for users. In 2019, USDT tokens were issued according to the TRC-20 standard on the Tron blockchain network. Tron is a sought-after network and features a lower network fee. This procedure positively impacted the ecosystem and allowed it to take an important step toward development.

So what is the difference between ERC-20 and TRC-20? TRC-20 allows users to  exchange and transfer tokens without going through an exchange platform or using centralized services such as Coinbase or Binance. This means no commissions are associated with transferring funds between different wallets, so many people prefer this method. The ERC-20 infrastructure is a decentralized network that allows user token creation, issuance, and exchange. The network is based on Ethereum and provides a standard set of rules to which all tokens must adhere. This network is considered more reliable and widely used; it has more features, but for a simple transfer of USDT, the TRC-20 network is still more often chosen.


Today ERC-20 and TRC-20 networks are among the most popular networks for building all sorts of applications, as well as for blockchain transactions, which allows combining different solutions for using cryptographic technologies and implementing new solutions to expand the possibilities of blockchain networks in the future. Despite their differences, these standards contribute greatly to the modernization of Ethereum and Tron projects, helping them stay ahead of the competition.

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