How do ERC-20 tokens differ from traditional cryptocurrencies?
The difference between ERC20 tokens and other well-known cryptocurrencies, for example, bitcoin or Litecoin, is that they are tied to the Ethereum network, use the address format accepted within this network and are sent using Ethereum transactions. Accordingly, transactions involving ERC-20 tokens can be traced in the block browser.
At first glance, such a transaction may look empty, since zero is specified in the ‘Value' field, but the number of tokens sent (in this case, OmiseGO) can be seen in a separate field.
It is important to understand that ERC-20 tokens are not completely independent – as mentioned above, they are based on the Ethereum blockchain, on whose distributed computing abilities they rely in their work.
What are ERC-20 tokens for?
The scenarios for using ERC-20 tokens are very different. For example, they can act as project shares, certificates confirming ownership of assets, points in loyalty programs or as a cryptocurrency. There are also possible options in which ERC-20 tokens simultaneously perform several such roles.
Among the most famous ERC-20 tokens can be called (this is the so-called ERC20 network): 0x, Aragon, Augur, Aeternity, Aion, Binance Coin, BAT, Bancor, Civic, Decentraland, Dentacoin, DigixDAO, Dragon, District0x, EOS, FirstBlood, Gnosis, Golem, Iconomi, Kin, KuCoin, Kyber, Melonport, Matchpool, Numeraire, OmiseGO, Po.et, Raiden, RChain, Ripio, SingularDTV, Status, Storj, TAAS, TenX, TTron, VeChain, Veritaseum, Viberate, WeTrust, Wings and iExec RLC.
What are the main characteristics of the ERC-20 protocol?
The ERC-20 standard provides six mandatory and three optional (but recommended) parameters for any smart contract. That is why ERC20 Wallet has become so popular.
Mandatory parameters include the totalSupply function, which is responsible for the total issue of tokens, ensuring that it is impossible to create new tokens when the maximum number is reached.
The balance0f function determines the initial number of tokens assigned to a specific address. Usually, this is the address belonging to the organizers of the ICO.
The standard also describes two methods of moving tokens, necessary for their distribution among users and the possibility of making transactions. So, the transfer function provides the transfer of tokens to the user who invested in the project during the ICO; the function
transferFrom is necessary for making transactions between users.
In addition, two more functions are needed to verify the two previous methods of moving tokens. The approve function is used to verify that a smart contract, based on the total issue, can distribute tokens, while the allow function is necessary to verify that there is sufficient balance on the address to send tokens to another address.
Among the optional parameters is the definition of the maximum number of fractional digits after the decimal point (for comparison, bitcoin has eight such digits - 1.00000000 BTC), the name of the token and its symbol.
A set of these parameters allows exchanges and wallet providers to create a single code base that interacts with any ERC-20 smart contract.
Source of information http://cnnplus.wikidot.com/erc20