Topic · How blockchains work
What is an ERC-20 token?
- Quick fact 1
ERC-20 is a standard interface for fungible tokens on Ethereum.
- Quick fact 2
An ERC-20 token is a smart contract that tracks balances and allows transfers and approvals.
- Quick fact 3
Approvals let other contracts spend your tokens, and can be revoked.
Source: ethereum.org: How to revoke smart contract access to your crypto funds
The short lesson
On Ethereum, anyone can create a token by deploying a smart contract. ERC-20 is the common rulebook those contracts follow, so wallets and apps know how to show and move them.
An ERC-20 contract keeps a list of who holds how many tokens, plus functions like transfer and approve. Many stablecoins and project tokens are ERC-20 tokens.
Three things beginners trip on
- Same address, different asset. Your Ethereum address holds ETH and ERC-20 tokens. Sending a token still needs a little ETH for gas.
- Same name, different contract. Anyone can make a token named after a famous one. The contract address is what matters. Fake tokens are a common scam. See honeypot scams.
- Approvals. When you use an app, you may approve it to spend your tokens. Review and revoke old token approvals.
Other networks have similar standards with different names. The lesson is the same: check the network and the contract before you send.
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Related terms
Go deeper in Lesson 5: What a transaction is
More in How blockchains work
Common questions
Is ETH an ERC-20 token?
No. ETH is Ethereum’s native coin. Wrapped ether (WETH) is an ERC-20 version.
Why do I need ETH to send a token?
Every Ethereum transaction pays gas in ETH.
How do I tell a real token from a fake?
Check the contract address against the project’s official source, not the name or logo.
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Written and reviewed by Joshua Baskin, founder. Last reviewed . How we check facts · Report an error
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