9 Things to Know about your First ERC20 Token

ERC20 tokens, like Bela, can be pretty easy to understand.

As we swapped Bela from a sovereign blockchain cryptocurrency to an ERC20 token, we had to also bring a community of thousands up to speed on what an ERC20 token is and how it works. We handled nearly 750 support emails, so we know the questions that you will ask and the issues that you will face with your first ERC20 token.

1. What is a token?

In crypto, a coin is a cryptocurrency with it’s own blockchain and a token is a cryptocurrency that is built on top of some other coin’s blockchain. Litecoin has it’s own blockchain, so it’s a coin. Bela depends upon Ethereum’s blockchain, so it is a token.

Every time an Ethereum block is mined, Ethereum transactions are broadcast side-by-side with Bela transactions and thousands of other tokens that also exist on the Ethereum network.

2. What does ERC20 mean?

ERC20 is like an adjective — it describes what kind of token Bela is. All ERC20 tokens are Ethereum tokens, but not all Ethereum tokens are ERC20. ERC20 is the most popular today, but I would predict that some other form of token will rise up over the next few years.

3. There’s more than just ERC20?

Another cool Ethereum token is the ERC721 token. ERC721 tokens cannot be divided into smaller parts. When you own one ERC721, you cannot send .5 of that ERC721 token to someone else. This is monumental for putting things like home deeds on the blockchain — only one person can own the token for a specific deed, and it can’t be split up and sent to multiple owners. There are many more types as well, including tokens that don’t exist on Ethereum.

4. What is so great about ERC20 tokens?

Here are the things that we love about ERC20 Bela over the old Bela coin:

1. ERC20 tokens are compatible with nearly everything in crypto. To get the old blockchain-based Bela coin on an iPhone wallet, we would have to code our own app. To get the ERC20 Bela token on an iPhone wallet, we take 3 minutes to add a commit to Trust Wallet Github, and Bela is now accessible by all iPhone users with the Trust Wallet app.
2. ERC20 tokens are secure. Small blockchain-based coins are easily vulnerable to 51% miner attacks. For someone to run the same attack on an ERC20 token, they’d have to first attack and break through the Ethereum network.
3. ERC20 tokens are fast. Ethereum block times are 15 seconds, so ERC20 block times are 15 seconds. Remember, it’s the same block.
4. As Ethereum developers innovate, their work is automatically ported to all ERC20 tokens. When the Ethereum developers implement a scaling solution on Ethereum, your ERC20 token gets it as well. This is because your ERC20 token rides on top of Ethereum.

5. How can I receive ERC20 tokens?

You need an ERC20 address, which is where you can receive ERC20 tokens.

1. All ERC20 addresses begin with 0x. If it doesn’t begin with 0x, then it is not an ERC20 address.
2. All ERC20 addresses are also Ethereum addresses and can therefore receive Ethereum.

MyEtherWallet and Metamask are great for receiving ERC20 tokens.

Metamask works as an extension to Google Chrome — Very lightweight!

6. I sent ERC20 tokens to my MyEtherWallet or Metamask address, but it’s not showing up?

Some wallets require you to add each new ERC20 token as a custom token. Here are a couple guides for that:

1. MyEtherWallet: https://kb.myetherwallet.com/send/adding-new-token-and-sending-custom-tokens.html
2. Metamask: https://medium.com/hellogold/adding-tokens-to-metamask-60b2fedd5bd9

7. How do I send my ERC20 Token?

Transaction fees are paid in Ethereum, so your wallet needs to have Ethereum in it. You cannot pay transaction fees with your ERC20 token. You will want to get around $2 worth of Ethereum in your wallet, although you may not use it all.

8. What is gas?

Gas is how the transaction fee is paid. Explaining gas needs its own Medium post, so let’s keep it simple. If your wallet asks you to set the gas price (GWEI) and gas limit, use this:

Gas Price: 20 GWEI

Gas Limit: 200,000

99% of the time, that will get your transaction through. Again, make sure you have Ethereum in your wallet before you do this.

9. Are all ERC20 tokens from ICOs?

No. ERC20 tokens are often created for ICOs, but they don’t have to be. We never ran an ICO for Bela, for example.

Are you inspired by ERC20 tokens yet? Come join the Bela community. Bela is an ERC20 token that is used by Belacam: a social-media site where you get paid (in Bela) for the photos you post. Belacam launches to the public in summer of 2018!