How to create an ERC20 token — A Definitive guide for crypto startups
The recent years have witnessed the rise of numerous cryptocurrencies at an enormous rate. Following the advent of digital currencies, many entrepreneurs and startups have started to adopt these cryptocurrencies on a huge scale. In addition to that, once cryptocurrencies have become increasingly famous, more entrepreneurs began to incorporate digital currencies by creating cryptocurrency tokens. These tokens are mostly offered as a token of gratitude to potential investors as a return for their investment.
This process of providing a service or product in exchange for an investment received is called an Initial Coin Offering(ICO). The preliminary aspect of executing an ICO event is to decide on the token standard. The type of token standard is decided once the underlying blockchain technology is fixed. One such predominant blockchain technology that is mostly used for creating cryptocurrency tokens is the Ethereum blockchain.
Overview of Ethereum blockchain
The Ethereum network was launched back in 2015 amidst a lot of buzz around the developer community. The arrival of the Ethereum blockchain sprouted numerous tokens over the network. The initial stage of token development never included any sort of templates or guidelines for creating them. As a result, there emerged several types of tokens that are slightly different from one another.
Ethereum is regarded as a decentralized blockchain platform that is capable of establishing a smoothly running peer-to-peer network. This network securely executes as well as verifies application codes which are called Smart Contracts. Smart contracts facilitate transactions between two trusted parties without involving any kind of intermediaries. The Ethereum blockchain has become the most efficient blockchain for creating crypto tokens and the Ethereum token standard has emerged as the most effective standard for developing Ethereum based tokens.
Ethereum blockchain brings in high-end flexibility as well as security that makes the cryptocurrency token development process extremely beneficial for startups/entrepreneurs. For creating tokens, most people prefer to go with the ERC20 token development procedure. This is mainly because the ERC20 tokens are comparatively fast, famous, secure, and can be exchanged with other ERC20 tokens.
What are ERC20 tokens?
ERC is abbreviated as Ethereum Request for Comment and the number 20 is the proposal identifier number. The initial ambition of ERC20 was intended to improve the ETH(Ethereum) network. The ERC20 token standard is considered as one of the most significant token standards among the ERCs. This particular token standard is regarded as the technical standard that is incorporated for writing smart contracts over the Ethereum blockchain network as well as used for implementing crypto tokens. The ERC20 token standard comes with a set of rules that every single Ethereum-based token must adhere to.
ERC20 is one of the most significant of all ERCs which is entirely created using the powerful ethereum blockchain. ERC20 is the most common standard used for creating cryptocurrency tokens and it also explains a set of predefined rules that applies to all ethereum-based tokens. These ERC20 tokens are entirely blockchain-based digital assets that come with similar functionalities to Ethereum’s native coin. Such created tokens are capable of holding values and are used for transactions, trading, fundraising, and other crypto payments.
Apart from this, the ERC20 token standard is the most suited standard for proposing enhancements to the Ethereum network. One of the major differences between ERC20 tokens and other cryptocurrencies like Bitcoin is, ERC20 token standards are deployed and developed over the Ethereum Blockchain. On the other hand, other cryptocurrencies are created on their native blockchain. In addition to running on Ethereum’s blockchain network, tokens based on the ERC20 token standard is the usage of gas fee as transaction fee.
Prior to the arrival of ERC20 tokens, anyone who wished to create tokens had to reinvent the entire wheel, which implies that all tokens are different from each other. For example, working with a new token type forces the user to understand the entire smart contract code of that token due to the lack of guidelines for creating new tokens. This was peculiarly hard for wallets as well as crypto exchange platforms and adding new tokens will require developers to analyze every single code and understand it for handling those token types on their platforms.
In addition to these, adding any new tokens to any new application became significantly harder. Nowadays, crypto wallets and exchanges have begun using the ERC20 token standard for integrating several standardized tokens over their platforms. This also eased the exchange between ERC20 and other token types. The arrival of the ERC20 token standard has made technical interactions between tokens almost seamless. Apart from these, the ERC20 standard is applied for several other reasons.
Reasons to create an ERC20 token
The ERC20 tokens, for numerous reasons, are preferred by most entrepreneurs and startups for establishing their own tokens. Below are some of the vital reasons behind the popularity and people willing to create tokens using the ERC20 token standard.
- Ethereum-based tokens can be deployed instantly over the ethereum blockchain in a smooth and seamless manner.
- The ERC20 tokens are entirely distributed & implemented on smart contracts. These tokens are executed in a completely decentralized manner over the Ethereum Virtual Machine(EVM).
- Using the ERC20 token standard, one can figure out the essential problems using the different types of tokens they manage.
- The very first specification to provide an Ethereum based token standard is the ERC20 token standard.
- The blockchain industry has adopted the ERC20 token standard as the predominant token standard and this is mainly due to the overwhelming popularity of the ERC20 tokens in the marketplace.
The above-mentioned are some of the vital reasons behind startups and entrepreneurs preferring the ERC20 token standard. The excessive usage and highly beneficial token standard have become very popular among the crypto ecosystem. As a result, creating an ERC20 token also requires a certain amount of technical nuances.
How to create an ERC20 token?
Considering the versatile use cases and multiple properties that come along with creating a cryptocurrency token, a crypto token can be used to solve complex business problems with a great deal of ease. Having said that, the procedure to create an ERC20 token requires a degree of technical balance along with a spark of coding knacks. Let’s take a glance at how to create an ERC20 token.
- Define token properties: First and foremost, prior to creating tokens, you need to decide on what your cryptocurrency token will do. In order to create a conventional ERC20 token, it is essential to inherit versatile properties of the ERC20 token standard for attracting more investors. Prior to defining the token properties, you should specify some definitive aspects like:
- Total token supply
- Name of the token, symbol, and number of decimals
- Subsidiary functions for checking balances on addresses.
- Smart Contract development: cryptocurrency tokens will be monitored by a smart contract, which is explained as a piece of software that is running over a blockchain. Since Ethereum was the first blockchain to introduce smart contracts, the majority of crypto tokens are developed & deployed on Ethereum. Smart contracts are more enhanced than ICO contracts.
- Run a Chain Test: Before creating a smart contract for a crypto token, it is important to keep in mind that replacing any kind of bug will be quite hard. Hence, it is vital to run multiple tests before deploying them.
- Token deployment: Deploying an enhanced smart contract is quite feasible. Based on the developing tool, the developers will be required to send a transaction along with compiled contract code without mentioning a receiver. Also make sure that the contracted functions are executed flawlessly on a test net prior to deploying them to the mainnet, which is Ethereum.
These are the basic steps involved in creating a cryptocurrency token. Cryptocurrency tokens will be highly efficient when the above-mentioned points are followed in a seamless manner. Working in the cryptocurrency ecosystem demands quality rather than other aspects and the results with utmost quality have a bright chance to have a successful long run.
Ever since the advent of cryptocurrencies, the usage and versatility of crypto tokens have increased dramatically. When considering the main reason behind the usage of crypto tokens, it is notable that there can be only one type of crypto coin on any given blockchain which works as the main cryptocurrency. As far as crypto tokens are concerned, there can be plenty of them and they more often than not serve a particular decentralized application.
Cryptocurrency tokens are capable of migrating between numerous blockchains. Having said all this, creating crypto tokens might be very tedious if you decide to do it alone. It is highly advisable to seek professional guidance. In that regard, it will be advisable to pick out the best token development service provider in the cryptocurrency ecosystem. Having the support of an elite group of professionals will be very much useful in the long run.