A Quick & Simple Guide to Understanding ERC Standards
Whether you’re an aspiring blockchain developer or are looking to understand how Ethereum-based tokens work, learning about ERC standards can be of immense help. To start with, ERC is short for “Ethereum Request for Comments.”
ERC standards, in essence, describe token standards, application-level specifications, name registries, and library formats, among others. They can be written by just about anybody and are initially presented as an “Ethereum Improvement Proposal (EIP).”
A typical EIP would comprise protocol specifications as well as contract standards. The Ethereum community would then review these EIPs, and finalized ones end up becoming ERCs.
Once an EIP becomes an ERC, it gives the entire community of Ethereum developers a set of standards that can be implemented. So how do these ERCs help? They help by making the process of creating smart contracts simpler.
Smart contracts utilize the standards set by these ERCs, which in turn eliminates the need for developers to reinvent the wheel each time they develop a DApp or want to write a smart contract.
Why are ERC Standards Important?
ERC standards are important because they accelerate the adoption of smart contracts. Not only that, but ERC standards also foster interoperability among various DApps built on common standards.
ERC standards also play a key role in helping the Ethereum community adopt new changes and evolve over time. Just like any open-source community that deals with request-approval mechanisms for implementing changes, the Ethereum community relies on EIPs and ERCs that emerge from them.
Prominent ERC Standards
ERC-20 is perhaps the most widely used and discussed standard. Apart from this, we have a few other prominent standards, such as ERC-165, ERC-721, ERC 1155, and ERC 621. For a full list of token standards, you can consider visiting Ethereum’s EIP website here. Each ERC standard’s page will have various sections, starting from a simple summary, abstract, and motivation to specification, implementation, and copyright.
Read on as we give you a brief overview of two popular ERC standards.
ERC-20, like we mentioned previously, is one of the most popular and used standards on Ethereum. It is a standard for implementing tokens on the Ethereum blockchain, and sets a bunch of rules and guidelines that Ethereum-based tokens must abide by. It is worth noting that the tokens generated using ERC-20 standard are fungible in nature. Just like the fiat currency we use.
ERC-721 is the standard for minting non-fungible tokens (NFTs) on the Ethereum blockchain. While ERC-1155 can also be used for NFTs, ERC-721 remains the popular choice for a range of use cases, starting from crypto games to collectables. ERC-1155 is a multi-token standard which is used for managing non-fungible, fungible, and semi-fungible tokens.
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