What is an ERC-20 token?

An ERC-20 token is a cryptocurrency token built on Ethereum that follows a common technical standard called ERC-20. The standard lists the basic functions every such token must have, such as checking a balance and sending tokens, so that wallets, exchanges and other apps can support thousands of different tokens without custom work for each one. ERC-20 tokens are fungible, meaning every unit is interchangeable with every other unit of the same token.

What is the meaning of ERC-20?

ERC stands for Ethereum Request for Comments, the process used to propose shared rules for Ethereum applications. Number 20 was the token proposal. It was put forward in November 2015 and its formal specification, EIP-20, lists Fabian Vogelsteller and Vitalik Buterin as authors. Its status is final.

An ERC-20 token is not a separate blockchain. It is a smart contract, a program stored on Ethereum, that keeps a ledger of who holds how many tokens. That is the main difference between a coin and a token: ETH is Ethereum's native coin, while ERC-20 tokens live inside contracts on top of it.

What does the ERC-20 standard require?

The standard defines six required functions. They report the total supply, show an account's balance, transfer tokens, let a holder approve another address to spend up to a set amount, let that approved address move the tokens, and report how much of an approval remains. A token may also publish a name, a symbol and the number of decimal places it uses, but these are optional. Every transfer and approval also emits a public record, called an event, which is how explorers such as Etherscan list token transfers.

One known weakness is that the standard gives a receiving contract no way to react to incoming tokens. Ethereum.org notes that tokens sent to contracts not built to handle them can become stuck for good.

What is an ERC-20 address, and do you need ETH?

ERC-20 tokens are held at an ordinary Ethereum address, a 42-character string that begins with "0x." The same address holds ETH and any ERC-20 tokens. Moving a token still costs a network fee, known as gas, and that fee is paid in ETH rather than in the token itself. Wallets often advise keeping a small amount of ETH on hand for this. Our guide to gas fees explains how they work.

Is ERC-20 USDT different from USDT on other networks?

Tether's USDT is a stablecoin issued on many blockchains. Bitfinex lists versions on Ethereum (ERC-20), Tron (TRC-20), Solana, TON, Aptos and others. They are the same brand, but each version lives on its own network, and the "ERC-20 network" label simply means Ethereum.

This is why exchanges ask you to pick a network when you deposit or withdraw. Sending ERC-20 USDT to an address on an unrelated network, such as a Tron address expecting TRC-20 USDT, can fail or leave the funds out of reach. Payments firm BVNK says funds sent over an incompatible network may be lost and cannot be recovered. Always match the network on both sides before you send.

Token values can be volatile, and a token can lose most or all of its value.