To date, most crypto coins were created on the Ethereum blockchain. It also makes it compatible with ERC20 tokens as a standard.
As is known, in recent years, crypto assets have continued to increase in popularity in the world, including in Indonesia.
For those of you who want to know more about ERC20 tokens and the best ERC20 Wallet recommendations to choose from, check out the following review!
ERC20 Wallet: Get Familiar With Token ERC20
For a record, ERC20 is a token that refers to Ethereum (ETH). In this regard, this ERC20 token becomes the technical standard for creating and using tokens on the Ethereum blockchain network. The number 20 represents a unique number ID that distinguishes it from other standards.
This ERC20 token standardizes the functionality so that all tokens using this framework can use all ERC-20 compatible services, such as Metamask.
It is also very useful for developers who want to create applications on the Ethereum blockchain because the ERC20 token standard solves compatibility issues. There are various projects on the Ethereum blockchain that use the ERC20 standard to create other crypto assets, for example several types of stablecoins, including Rupiah Token (IDRT), DAI (DAI), and Binance Coin (BNB).
With the flexibility it offers, ERC20 makes many popular DApps, including Compound (COMP), AAVE (AAVE), and Uniswap (UNI) use this token’s standard for transactions on their platforms.
What are the Advantages and Disadvantages of the ERC20 Token?
Here are some of the advantages and disadvantages of the ERC20 Token that you need to know.
Advantages of Token ERC20
- Comfortable
This token is very easy to use because Ethereum smart contracts are written in the Solidity programming language, which is almost the same as JavaScript. In addition, developers can make smart contracts’ code with the Vyper programming language, which is similar to Python.
- Flexible for customization
It depends on business logic and user interaction. Typically, these ERC20 tokens can be customized to enable a number of features, such as auto refilling of gas, freezing and unfreezing of tokens, adding a central mint to modify circulating tokens, and so on.
- Defined roadmap for developers
This ERC20 standard gives developers a precise blueprint and allows them to create new tokens in a relatively easy way rather than having to build everything from scratch.
- Token standardization
For your information, Ethereum also provides a token specification that includes rules regarding interactions between different tokens, including token purchase rules.
Through a universal standard, each user can later transfer new tokens to the wallet and exchange them at once.
If Ethereum projects are active and interact with each other, it will bring more projects and users to the network.
- Widely accepted
On most exchanges and wallets, ERC20 and its tokens are recognizable because the protocol is universal and adapted to a wide range of exchanges.
Besides, its fungibility also makes this token very good for trading platforms/apps.
- Remove fake tokens
Here, all transactions will be subject to approval and the total token supply will streamline the audit process and ensure that there are no duplicate tokens in circulation.
In this regard, ERC-20 also has the opportunity to become and maintain itself as one of the most popular standards used by many developers around the world.
Disadvantages of Token ERC20
Even though it has advantages, this token also has shortcomings/weaknesses. Here are some of them.
- Unstable
The Ethereum blockchain recently moved the consensus method from Proof of Work (PoW) to a Proof of Stake (PoS) system via ETH 2.0. The goal of ETH 2.0 is to address all scalability issues, but many changes have taken place and that takes time.
In addition, this project is not yet finished. System instability also often occurs. In this case, some tokens also seem to be at risk of being destroyed when used as payment for smart contracts. For that reason, ERC-233 was born.
- Expensive gas cost
For a record, this token relies heavily on the Ethereum blockchain to complete every transaction and there is also a gas fee. When traffic is heavy on the blockchain, gas costs will increase.
- Transfer bugs
There are 2 types of accounts on Ethereum: one is an externally owned account controlled by a private key, while the other is a contract account held by a contract code.
The tokens sent from one EOA account to another using the transfer function do not cause problems. However, transferring funds to a contract account would result in a bug that resulted in a loss of up to $1 million.
- Slow transaction
Basically, transactions are closely related to the Ethereum blockchain. Well, when the network crashes, all transfers on ERC20 will slow down.
Although “Sharding” is expected to solve the slow transactions problem, it has not yet been fully adopted on the Ethereum blockchain as it is still in its early stages.
- Transactions cannot be changed
When a user sends ERC20 tokens to the wrong address, there is no way to refund.
As a consequence, tokens will remain trapped in the contract forever. This also applies to tokens stolen by hackers.
- Low entry point
According to critics, it is easy for anyone to create their own token without a clear purpose.
It makes it easy for developers to exploit policies to develop Initial Coin Offerings (ICOs) and fake tokens with useful projects.
Cryptos That Use ERC20
The ERC20 token is the most popular token standard on the Ethereum blockchain which is widely used by crypto assets. Below are examples of cryptos that use ERC20.
It is an ERC-677 token that inherits the functionality of the ERC20 token standard. This token runs on blockchain middleware as a link between crypto smart contracts, data feeds, APIs, and traditional bank account payments.
- Maker (MKR)
It is a utility token based on the Decentralized Autonomous Organization (DAO) that issues a stablecoin on the Ethereum blockchain, namely DAI.
It is a stablecoin that runs on the ERC-20 protocol so the deposit address is an ETH address. Meanwhile, deposits and withdrawals will be made on the ETH network.
ERC20 Wallet Recommendation
So, what is the recommended ERC20 wallet for users to store this ERC20 token? In this case, users can use an Ethereum (ETH) Wallet, named Trust Wallet.
According to the official website, this premier mobile Ethereum wallet works with any ERC20, BEP 2 and ERC 721 tokens. In fact, Trust Wallet supports the main blockchains in the Ethereum ecosystem – Ethereum, Ethereum Classic, and Callisto.
To date, there are more than 20,000 tokens built on Ethereum that can be accessed via the Trust Wallet application. On the other hand, Trust Wallet also provides users with a unified wallet address that can be used to manage Ethereum and all ERC20 tokens.
This means that you can use the same address to participate in multiple airdrops to send and receive Ethereum. Trust Wallet is intuitive and easy to understand and packed with useful features.
Trust Wallet also prioritizes user security and anonymity. The main principles are as follows:
Client-based infrastructure ensures that keys are stored locally on the user’s device.
Bank-grade security protects users’ digital assets from potential threats.
The application-level authentication system prevents unauthorized access via unlocked devices.
That’s the review of the ER20 token and the recommendation of the ERC20 Wallet that you can choose. Come on, check out other articles about the world of digital assets only at Indodax Academy.
