ERC-20 is like a recipe for creating digital currencies inside Ethereum. All the coins that follow this recipe can be divided, exchanged and used in a way that is compatible with each other. It's the most common type of token and is used for payments, governance, rewards, and more. If you used cryptocurrencies like USDT, LINK or DAI, they were probably ERC-20 tokens.

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ERC-20 is a technical standard for the creation and management of fungible tokens on the Ethereum network and any blockchain compatible with the Ethereum Virtual Machine (EVM). It was proposed by Fabian Vogelsteller in 2015 and defines a minimum interface that smart contracts must implement to guarantee interoperability and compatibility with exchanges, wallets, decentralized applications (dApps) and other contracts. This standard includes essential functions such as transfer (), transferFrom (), approve (), allowance () and Balance of (), which allow you to move tokens between addresses, authorize third parties to operate on behalf of the user, check balances and control spending limits.

Being tokens expendable, all ERC-20s are interchangeable with each other, as with traditional money: 1 token A is equivalent to another token A. This makes them ideal for representing units of value, internal currencies, stablecoins, governance tokens, point systems or rewards. Its modular design and wide adoption have made ERC-20 the most used standard in Web3, providing everything from ICOs (Initial Coin Offerings) to DAOs (Decentralized Autonomous Organizations) and DeFi platforms.

On a technical level, ERC-20 tokens are deployed using smart contracts that manage the logic of issuance, distribution, supply control and updates, and may also include extensions such as pauses, burns, minteo or white lists. Its standard nature has been key to the development of the Ethereum ecosystem, but it also has limitations: it does not include native functionality for non-fungible tokens, nor for batch operations, and it suffers from restrictions related to implementation errors and gas efficiency.

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