Ethereum is a decentralized platform on which smart contracts are executed. So the above definition makes it clear that Ethereum is not a digital currency (Ethereum's native cryptocurrency is called ether). Put another way, Ethereum is a piece of code that could automatically transfer homeownership to the buyer and funds to the seller after a deal is reached, without the need for a third party.

Developers benefit from the existing Ethereum token development infrastructure to build their applications, unlike those developers who choose to build a completely new blockchain. At the same time, the tokens strengthen the Ethereum ecosystem by driving the demand for ether, Ethereum's native currency, necessary to drive the smart contracts on which tokens are issued.
To fully comply with ERC20 standards, the developer must incorporate a specific set of functions into his smart contract that, at a high level, will allow him to perform the following actions:

1. Obtain the total supply of tokens

2. Obtain the balance of the account

3. Transfer the token

4. Approve spending the token.
In general, an ERC20 token is no different from any other token but also conforms to the standard Ethereum token. WHY DOES ETHEREUM NEED A STANDARD TOKEN?

Interoperability. If all the tokens created on the Ethereum network use the same standard, those tokens will be easily tradable and can immediately work with Dapps that use the ERC20 standard.

What a "standardized" token is uses a certain set of functions. If multiple tokens behave similarly, calling the same functions in the same way, then a Dapp can more easily interact with different sub-currencies.

Like bitcoin and ether, ERC20 tokens can also be tracked on the blockchain,. This is because Ethereum tokens are just a specific type of smart contract that '' lives '' on the Ethereum blockchain.

Currently, there are many projects that leverage on the Ethereum blockchain and the ERC20 standard to issue the necessary tokens to operate their platforms.

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