The ERC-20 & ERC 721 standards
In 2015, when Ethereum came to life, it brought the world a new possibility of decentralization.
By building dapps and using smart contracts , it enables unbanked and unbanked people to access financial services, such as opening a savings account, getting a loan, or trading their assets.
The ERC-20 standard
As the popularity of smart contracts increased, users began to create contracts that act like tokens. When this became more prolific, keeping track of all the different token encoding standards using Ethereum smart contracts proved to be a difficult task. These early Ethereum smart contract tokens did not contain the same sets of information in the same formats, and this made it more difficult for token ecosystems to interact and synergize with each other.
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Hence the proposal for the . It allows the implementation of a standard API ( Application Programming Interface ) for tokens within smart contracts. It is a standard protocol on the Ethereum blockchain, which allows users to exchange tokens, transfer them, or share them in a crypto wallet.
This standardization allowed programmers to design tokens around a shared set of rules, making them easier to use on the Ethereum blockchain.
The standardized content of an ERC-20 token includes:
token name
Symbol
Decimal (up to 18 places)
totalSupply
balance of
transfer
transferred from
approve
Tolerance
In an ERC-20 token, the first components, the token name, the symbol, and the decimal can be optional.
Components of an ERC-20 token
Token Name — Tells the user the name of the token. For example: Ether, UniSwap, Dash create erc20 token
Symbol: The token’s ticker symbol. For example: XRP, ETH, UNI
Decimal (up to 18 places): This determines how divisible the token is.
totalSupply: indicates the total supply of the token
balanceOf — Provides the balance of the owner’s account
transfer: allows the transfer of a certain number of tokens from the total supply to a user account
Approve — allows the spender to withdraw a specified amount of tokens from a specified account
subsidy: returns a set number of tokens from a spender to the owner
ERC-721
ERC-721 tokens are commonly known as non-fungible tokens or NFTs. NFTs allow developers to tokenize ownership of any arbitrary data or data in any format. This gave the idea of what can be represented as a token on the blockchain.
Like the ERC-20 standard, the ERC-721 also has its own set of standards. They address the following issues: This means that ERC-20 tokens represent a single asset and are tradable, while ERC-721 tokens are not and represent a class of assets. erc20 token generator
An example is Axie Infinity . It is a cryptocurrency game to earn money built on the Ethereum network. Players can earn the Axie Infinity Shard (AXS) Token and Small Love Potion (SLP) by completing quests and fighting other players.
Players can also breed Axies, the game’s characters, for new unique Axies that are owned and managed through the use of ERC-721 tokens. As ERC-721 tokens, the unique Axies can be bought and sold on the market to other users.
Real World Use Cases for NFT
NFTs are not just limited to use with digital collectibles and artwork. There are also use cases for NFTs to be linked to physical items.
An example is the use of blockchain technology to solve challenges in the logistics industry. Since the blockchain is immutable and transparent, this ensures that supply chain data remains reliable, consistent, and authentic.
NFTs benefit this industry as they can represent unique physical elements in our world. By assigning an NFT to a physical item, we can track the product’s metadata about its production, transportation, and sale. Take, for example, a limited edition bag made in Italy. We can assign an NFT to the bag which, when scanned, will reveal metadata timestamps about where and when this bag was created.
As the bag travels and moves through the supply chain, new timestamps are added to the metadata at each stage of the process.
When the bag arrives at the retail store, it will be marked with the receipt date. The exact history of the bag will be available to view and confirm its authenticity and transportation journey. While NFT’s use cases are limited in real-world applications, its value in managing art pieces and collectibles has earned it a foothold in the industry.
