ERC20 Token: What It Is, How It Works, and Why It Matters

When you hear about ERC20 token, a standardized type of digital asset built on the Ethereum blockchain that lets developers create tokens for apps, games, and decentralized finance. Also known as Ethereum token, it’s the reason you can hold hundreds of different crypto assets all on the same network. Unlike Bitcoin, which is its own blockchain, ERC20 tokens run on top of Ethereum. They don’t have their own ledger—they use Ethereum’s. That’s why sending a token like Chainlink or Uniswap still costs ETH for gas. This standard isn’t optional—it’s the rulebook every new token must follow to work with wallets, exchanges, and DeFi apps.

Behind every ERC20 token is a smart contract, a self-executing code on Ethereum that automatically handles token creation, transfers, and balances. This contract defines things like total supply, decimal places, and who can send or receive tokens. If the contract has a bug, the token breaks—just like what happened with The DAO hack. That’s why you’ll see posts here about token scams, fake tokens, and why some tokens like Birb or SORA GROK are red flags. Not all ERC20 tokens are created equal. Some are real projects with utility; others are just names slapped on a contract to trick people.

ERC20 tokens are the backbone of blockchain, a decentralized digital ledger that records transactions across many computers, making it nearly impossible to alter innovation. They let you trade tokens on decentralized exchanges like MoonDex (which, by the way, is a scam) or use them as collateral in DeFi lending. You’ll find posts here explaining wrapped assets, token-based governance, and how tokens like BAS or COMAI tie into real-world use cases. But you’ll also find warnings—because the same system that lets you build a billion-dollar project also lets scammers create fake tokens in minutes.

What makes ERC20 tokens so powerful is how simple they are to copy. That’s why there are dozens of tokens with the same name on different chains. It’s also why you need to check the contract address before buying anything. A token named "BIRB" on Ethereum isn’t the same as one on Solana. And if a project promises airdrops or high returns with no clear code or team, it’s probably not legit. The posts below cover real cases—like the APIS airdrop, crypto scams, and how hackers exploit these systems. Whether you’re holding a token or building one, understanding ERC20 is the first step to staying safe and making smart moves.