Introduction
In the world of blockchain and cryptocurrencies, Ethereum has emerged as a dominant platform for creating decentralized applications (dApps) and smart contracts. One of Ethereum’s most powerful features is its ability to support various token standards, which define how tokens are created, managed, and interacted with. Three of the most widely used Ethereum token standards are ERC20, ERC721, and ERC1155. Each of these standards serves different purposes and offers unique functionalities. Smart contracts and their role in ERC-20 tokens are particularly significant as they facilitate the automation and enforcement of token transactions, ensuring that they adhere to predefined rules without the need for intermediaries. In this blog, we will explore the differences between ERC20, ERC721, and ERC1155 tokens.
ERC20: The Standard for Fungible Tokens
- Definition:
- ERC20 is a technical standard used for creating fungible tokens on the Ethereum blockchain. Fungible tokens are interchangeable, meaning each token has the same value and properties as any other token of the same type.
- Key Features:
- Uniformity: Every ERC20 token is identical, making them ideal for use as cryptocurrencies or utility tokens.
- Divisibility: ERC20 tokens can be divided into smaller units, allowing for fractional ownership.
- Interoperability: ERC20 tokens can be easily exchanged and integrated with various dApps, wallets, and exchanges.
- Common Use Cases:
- Cryptocurrencies (e.g., USDT, LINK)
- Utility tokens for accessing services within a dApp
- Stablecoins pegged to fiat currencies
- Example Code:
solidity
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pragma solidity ^0.8.0;
import “@openzeppelin/contracts/token/ERC20/ERC20.sol”;
contract MyERC20Token is ERC20 {
constructor() ERC20(“MyToken”, “MTK”) {
_mint(msg.sender, 1000000 * (10 ** uint256(decimals())));
}
}
ERC721: The Standard for Non-Fungible Tokens (NFTs)
- Definition:
- ERC721 is a technical standard for creating non-fungible tokens (NFTs) on the Ethereum blockchain. NFTs are unique and cannot be exchanged on a one-to-one basis with other tokens.
- Key Features:
- Uniqueness: Each ERC721 token is distinct, with its own metadata and ownership information.
- Indivisibility: ERC721 tokens cannot be divided into smaller units; they exist as whole tokens.
- Provenance: The history and ownership of each ERC721 token can be tracked and verified.
- Common Use Cases:
- Digital art and collectibles (e.g., CryptoKitties, digital art)
- Gaming items (e.g., virtual real estate, in-game assets)
- Domain names and other unique digital assets
- Example Code:
solidity
Copy codepragma solidity ^0.8.0;
import “@openzeppelin/contracts/token/ERC721/ERC721.sol”;
contract MyERC721Token is ERC721 {
uint256 private _tokenIdCounter;
constructor() ERC721(“MyNFT”, “MNFT”) {}
function mint(address to) public {
uint256 tokenId = _tokenIdCounter;
_mint(to, tokenId);
_tokenIdCounter++;
}
}
ERC1155: The Multi-Token Standard
- Definition:
- ERC721 is a technical standard for creating non-fungible tokens (NFTs) on the Ethereum blockchain. NFTs are unique and cannot be exchanged on a one-to-one basis with other tokens.
- Key Features:
- Uniqueness: Each ERC721 token is distinct, with its own metadata and ownership information.
- Indivisibility: ERC721 tokens cannot be divided into smaller units; they exist as whole tokens.
- Provenance: The history and ownership of each ERC721 token can be tracked and verified.
- Common Use Cases:
- Digital art and collectibles (e.g., CryptoKitties, digital art)
- Gaming items (e.g., virtual real estate, in-game assets)
- Domain names and other unique digital assets
- Example Code:
solidity
Copy code
pragma solidity ^0.8.0;
import “@openzeppelin/contracts/token/ERC721/ERC721.sol”;
contract MyERC721Token is ERC721 {
uint256 private _tokenIdCounter;
constructor() ERC721(“MyNFT”, “MNFT”) {}
function mint(address to) public {
uint256 tokenId = _tokenIdCounter;
_mint(to, tokenId);
_tokenIdCounter++;
}
}
ERC20 vs ERC721 vs ERC1155: What's the difference?
| Feature | ERC20 | ERC721 | ERC1155 |
|---|---|---|---|
Conclusion
ERC20 tokens in the blockchain ecosystem serve as the foundation for creating fungible digital assets, enabling seamless transactions, smart contract functionality, and interoperability across various decentralised applications (dApps). As the ideal standard for fungible tokens, ERC20 has become the go-to choice for cryptocurrencies and utility tokens, facilitating their integration into wallets, exchanges, and dApps. This standard’s uniformity and divisibility allow for widespread adoption, making it a cornerstone in the Ethereum ecosystem and driving innovation in decentralised finance (DeFi), initial coin offerings (ICOs), and beyond. Understanding ERC20 is crucial for anyone involved in blockchain development or looking to leverage the power of Ethereum’s token capabilities.
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