Different Token Standards on the Ethereum Blockchain
ERC is an abbreviation for Ethereum Request for Comments. ERCs are Ethereum application-level specifications that include token standards, name registries, library/package formats, and other features. Anyone with Ethereum Blockchain app development can create an ERC token, but the author must explicitly clarify their standard and gain community approval for it.
Common ERC standards define a set of required activities for a token form, allowing applications and smart contracts to interact with it in a predictable manner. The ERC-20 is the most widely used ERC standard to date because it is a type of standard that simplifies the creation, use, and exchange of Ethereum-based tokens.
Crypto enthusiasts, on the other hand, should be aware of the issues that arise when various projects implement restricted functionality from each standard, resulting in smart contracts that are not ERC compliant.
So let's discuss different types of ERC requirements.
Ethereum ERC Token Standards: Types and Applications
ERC-20: The standard interface for fungible tokens
Since 2015, the ERC-20 standard has been the most important type on Ethereum. ERC-20 has emerged as the technological standard for token implementation on the Ethereum blockchain, and it is used for all Ethereum smart contracts. It establishes a set of rules that all Ethereum-based tokens must follow. ERC-20 tokens are digital assets that can be sent and received on the Ethereum blockchain. The main distinction is that ERC-20 tokens are distributed via the Ethereum network rather than their own blockchain.
In 2017 and 2018, the issuance of a large number of different ERC-20 tokens to raise funds for new Blockchain ventures fueled the Blockchain buzz. However, this standard is still in use in 2020 and is an important tool for the Blockchain and Ethereum ecosystems. It has also received support from cryptocurrency exchanges and other service providers.
ERC-721 and ERC-1155 are Non-Fungible Tokens (NFT) Specifications
Non-fungible Tokens (NFTs) are well-known in the collectible and gaming industries, and they are one of the blockchain and crypto industries' most hyped markets. NFTs can be used for much more than just games and collectibles. Developers all over the world are using ERC-721 and ERC-1155 smart contracts to build entire virtual worlds, and we are still in the early stages of mass adoption. NFTs can also be used in a wide range of industries, including art, music, fashion, IoT, and many others. Developers all over the world are using ERC-721 and ERC-1155 smart contracts to build entire virtual worlds, and we are still in the early stages of mass adoption.
For tokenizing unique individual objects and properties in collectibles and crypto games, the ERC-721 standard is currently the most widely used. It includes fundamental features for transferring and tracking NFT ownership.
The ERC-1155 multi-token standard in the gaming industry allows for the management of fungible, semi-fungible, and non-fungible tokens. It's useful in these games because they have both fungible (like life/energy) and non-fungible (like weapons and other collectibles) elements that are all unique.
ERC-725 is a Digital Identity Standard
The developer of the well-known ERC-20 standard, Fabian Vogelsteller, has proposed the ERC-725 standard for Blockchain-based identity. ERC-725, which defines proxy smart contracts, can manage multiple keys and different smart contracts. Identity smart contracts can be used to define machines, objects, groups, and individuals.
Why is a sense of self-sovereign identity so important? Users should be able to own and maintain their digital identities rather than handing it over to centralized organizations. In recent years, we've seen the risks and drawbacks of obtaining a centralized identity, such as data breaches and the illegal sale of user data. So a portable, open identity standard would enable decentralized governance and reputation. Everyone should be able to use their identity across multiple apps and platforms.
ERC-223 is a Standard Established by the European Research
Although this is not a universally accepted digital token, it does address some of the user experience issues that other ERC token specifications have. Many people have sent coins to the wrong wallet address or, worse, to a smart contract, resulting in the coins being permanently lost. While cynical developers may argue that end-users are to blame for sending tokens to the incorrect address, this may limit public acceptance. These unfriendly interface features may turn off non-technical users.
In a nutshell, the proposed ERC-223 s users who accidentally send tokens to a smart contract address and cancels the transaction. Users must pay for gas while saving their ETH.
Amigocoin is currently one of the few projects that use the ERC-223 protocol. It proposes user-friendly UX features that protect users from fund failure, is backward compatible with the ERC-20 token standard and is half the cost of Ethereum to run.
ERC-777 is an Ethereum-Based Cryptocurrency
The ERC-777 digital token suggests many more ways to improve blockchain usability, while the ERC-227 token standard provides bug fixes. This digital token adds many new features to the common ERC-20 token standard. One of the most inventive is the ability to mint or burn tokens, which may be a required feature depending on a project's tokenomics model.
This ERC token form, more than any other, has the potential to make token transfers much easier.
ERC-1400 and ERC-1404 are Security Token Specifications
The ERC-1400 specification was created specifically for Security Tokens, which are actual securities that can be used on the blockchain to represent any real-world asset.
The standard allows for restricted transfers, the addition of transfer material, document library management, and forced transfers. This is possible by combining several ERC specifications, each of which addresses a different aspect of the necessary Security Token functionality. As a result, it has a diverse set of features that enable the legal deployment of Security Tokens.
The ERC-1404 standard is an extension of the ERC-20 standard that allows for the creation of Security Tokens with transfer restrictions in order to meet regulatory requirements.
It allows for the creation of a whitelist, for example. As a result, the issuer has complete control over who can buy and own the token. Token holders (investors) must go through an onboarding process that includes KYC and AML checks. If a token transfer is reversed, it also allows for the use of human-readable messages.
As new Ethereum ERC token standards evolve, each will introduce new features and bug fixes for existing tokens. To ensure that your blockchain platform provides the most value to end-users, you must first decide which digital token to use. Having the tokenomics right, whether you’re launching an STO or tokenizing medical records, is a critical step in launching a successful project.
Disclaimer: All products and projects listed in this article are not endorsements and are provided for informational purposes only. This article is for educational purposes only and is not intended as investment advice. Qualified professionals should be consulted prior to making financial decisions.
Follow Bitget Academy for more insights:
- All You Need To Know About Ethereum Dencun Upgrade - SimplifiedCryptocurrency2024-01-17 | 5 minutes
- Ethereum Value and Price (Part 2)Cryptocurrency2023-08-30 | 5 minutes