Advantages of the ERC Token
What makes Ethereum different from other cryptocurrencies is that it’s not just a currency.
It’s actually an environment.
The Ethereum network is a large mass of nodes that are connected to each other. This network is known as the Ethereum Virtual Machine.
Anyone can take advantage of this blockchain technology and build their own decentralized applications (DAPPS). These DAPPS cannot be controlled by a single person. Instead, it’s run by several individuals who have purchased a share via Initial Coin Offering (ICO). In buying the shares, you need to use tokens of the DAPP, which you can get in exchange for your Ether.
Ethereum-based tokens can also be traded, bought, and sold. They’ve gotten so big that they’ve slowly become the backbone of the Ethereum ecosystem. ICO firms have also started to use them as their internal currencies.
However, there’s still a lot of things the common people don’t know about it.
What is ERC?
Ethereum Request for Comment or ERC is authored by a community of developers. Since every open source community needs to have an approval, they need to submit a proposal in the form of a memorandum describing behaviors, methods, and innovations that can work within the Ethereum ecosystem.
Then, it is submitted for peer review. After the proposal has been approved, it becomes a standard.
In other words, ERC serves as Ethereum’s system of accepting revolutionary changes put forward by users.
The set of approved proposals or standards, e.g. tokens, are functions which the Smart Contract should implement. The contracts that implement the standard is used via one interface.
Currently, here are the top tokens that run on the Ethereum network:
This is perhaps the most well-known standard in the crypto-community. About 99% of the ICO tokens issued in the Ethereum network uses this standard.
The concept behind it simple enough. It uses a simple set of functions that your token code needs to have. All Smart Contracts that implement this standard are listed to crypto-exchanges without any technical work.
Because the ERC-20 is not a perfect standard for a token, a developer has proposed this standard. The ERC-223 notably provides the chance to avoid losing tokens inside contracts that can’t work with the sent tokens. ERC-223 also consumes less gas, or internal fee, than the ERC-20.
The goal of this proposal is to have a token that’s non-fungible. Because all token supplies are treated in the same manner, it is trading that is made even easier.
What’s the Difference Between ERC Tokens and Standard Cryptocurrency?
What makes ERC tokens interesting is that it’s similar to other blockchain cryptocurrencies. You can trade, buy, or sell them. However, they don’t have their own blockchain as they completely work on the Ethereum blockchain.
How does this affect transactions with ERC tokens?
Like cryptocurrency, when you trade, buy, or sell tokens, you need to pay a certain amount of the fee. Since ERC tokens work on the Ethereum blockchain, you need to pay the fee in Ether. So, you can’t make transactions using ERC tokens if you don’t have Ethereum.
What are the Advantages of Using ERC?
So why are people using ERC tokens when they can simply trade, buy, and sell using Ether?
Here are the advantages of ERC:
- Uniform transactions
ERC consistently handles incoming token transactions in Smart Contracts. Thus, it empowers many developers to make better and more innovative protocols for a more uniform and quicker transactions.
- Efficient processes
ERC tokens are accepted by many exchanges instantly. Thus, any user can make transactions with the use of tokens seamlessly. Because they don’t have to learn anything new, acquisition, storage, and sale of tokens will be quite easy.
- Reduced risk
Since users and developers already know how the token will behave during transactions, they don’t have to worry much. The standard reduces the risk of contract breaking.
Why is the ERC So Popular?
The advantages one can get from standardization allow one to enter an environment where the players are fully aware of their tokens’ behavior, which is always according to the protocol. So more developers and users demand the use of ERC tokens.
There’s no doubt that the impact of ERC tokens is massive. However, they still need some improvements. Nonetheless, developers are confident, that they’ll be able to create the most efficient standard with minor to no glitches.
The main goal — after all, is to facilitate smoother and faster transactions.