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Ethereum Community and ERC20 also Standards and initiatives in the Blockchain ecosystem

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Ethereum Community and ERC20 also Standards and initiatives in the Blockchain ecosystem

The Ethereum community is an open, very active and numerous community of Blockchain experts, and it proposes improvements and new ideas to advance the exploitation of the technology to its full potential. This is where the most popular and used token to date comes from: the ERC20 token.

Ethereum Community and ERC20 :

ERC20 tokens are used to represent and manage tokens of the fungible type, that is, tokens that can be exchanged with other tokens of the same type since they share common properties and can be divisible. A fungible token is a currency, in its physical version or digital version. If we pay for a service with a ticket, it does not matter if we use a ten-euro bill that we have in our pocket, or if we use a ticket that we have in our bag, or even if we use ten one-euro coins to pay for that service; its value in this context will be the same. The ERC20 token development service standard also defines a common interface to be able to interact with the Smart Contracts that implement these tokens with a series of optional and mandatory functions.

To understand it better, we will cite a practical example of an internal gamification project developed in atSistemas. This project is aimed at stimulating and rewarding the productivity and collaboration of our colleagues. For this, a token based on the ERC20 standard has been created to use it as an internal currency. Every time one of our colleagues makes a significant contribution to a task, they are rewarded with one of those tokens. This methodology is used, for example, to reward participation in certain internal initiatives on social networks or sporting events. Later, the person can redeem those tokens by exchanging them for prizes.

Standards and initiatives in the Blockchain ecosystem :

In the case of ERC20 tokens, they all have virtually identical representation. These gamification tokens are worth the same among all and are divisible. If I have ten Gamification Tokens, I can split them to exchange for a prize worth two Gamification Tokens, and I will keep the remaining eight.

However, to address cases in which it is necessary to differentiate each generated token, there is the ERC721 standard that focuses on non-fungible tokens. Non-fungible tokens, as we have mentioned before, are those that represent something unique that cannot be substituted or exchanged for another, nor can it be divided. In this way, a painting by Velázquez cannot be replaced by another by Van Gogh, at least not directly. Both are paintings, but in their specific context each will have one value or another, and they cannot be divided into parts.

A very successful use of this type of token is that of representing collectibles. World-renowned examples of the implementation of this type of token are cryptomonsters, cryptopants and cryptokit, among others. This type of token has a particularly promising present and future with regard to video games, given the wide variety of resources or premium artifacts that can be acquired and that are unique (such as axes, swords, etc.). These artifacts they can be bought and sold to other users.

There are also initiatives that focus on making the consumption of Blockchain resources more efficient for the standards mentioned above. For example, the ERC721 standard contemplates that, to create each non-fungible token, it is necessary to create a different contract. If we focus on a video game with thousands of artifacts, this will imply developing an equal number of Smart Contracts. And if we want to buy 20 artifacts we will have to do it separately one by one, resulting in the same number of transactions to be executed on the network, with the consequent cost of Gas per transaction. Not being a scalable option in many aspects, we find the ER1155 initiative that promotes the execution of operations on tokens grouped in blocks, which affects the optimization of gas costs by reducing the number of necessary transactions. Similarly, to alleviate some aspects not covered in the ERC20 token generator standard (that of interchangeable tokens, such as digital money), the ER223 initiative aims to prevent the accidental loss of tokens. In other words, it aims to provide protection mechanisms against possible shipments of tokens to the wrong address or contract. If we send particular tokens to a contract that is not ready to receive these types of tokens, they will be “trapped” in the contract and we will not be able to recover them. To this end, this initiative proposes, among other things, the implementation of a token fullback function to give the possibility that the receiving contract can reject those tokens and execute other actions before they are blocked forever. The ERC223 initiative was born with the purpose of responding to this great problem that in the cryptocurrency market has produced the loss of thousands and thousands of euros in equivalence.

Similarly, the ERC20 development initiative allows data to be included in transactions, which traditionally only transfers value or tokens. In this way, we will be able to chain executions in a single transaction and, for example, we will have the possibility of finalizing a purchase process by validating — if we have enough money — the total of our purchase according to the price of each of the articles.

Conclusions :

The tokens in Blockchain they allow us to represent any asset, good, thing or procedure. One of the most obvious uses is the representation of digital currencies; We can create digital currencies from scratch by assigning them names and giving them the corresponding validity and uses in a specific Blockchain implementation. We can represent access rights and shared resources, for example, storage space, processing power of a computer, etc. We can also represent values ​​with intrinsic value, such as gold, a car, energy, oil, etc. This type of representation will allow us to have complete traceability of the life cycle of this type of goods. We can also represent actions of a legal entity, such as a company or a large corporation

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