What are ERC tokens?

Why do we need them? And, what makes them different?

Oct 8, 2021
Edward Wilson

Quick summary

ERC tokens are native to the Ethereum blockchain. Each token has a different use case. An ERC-20 is the standard token and allows for fungible and indistinctive tokens. That contrasts with an ERC-721 which is unique and non-fungible. The final ERC token, ERC-1155, combines fungible and non-fungible tokens in a single standard.  

What is a token?

Tokens are slightly different from cryptocurrencies. A cryptocurrency has its own blockchain, like Bitcoin (BTC) and Ethereum (ETH). Tokens, in contrast, are assets built on an existing blockchain like DAI or UNI.

What are ERC tokens?

An ERC token is native to the Ethereum blockchain. The number next to the token links to the Ethereum Improvement Proposal that introduced that standard. 

Currently, there are three types of tokens: ERC-20, ERC-721 and ERC-1155. 

ERC-20 tokens

The first type of token is ERC-20. An ERC-20 is fungible, meaning they are replaceable by another of their token. This is how money works. $1 in one wallet is equal to $1 in another.   

Before the ERC-20 token became the standard, each Ethereum token would be different. That meant wallets and exchanges would need to write custom code to support them. As a result, there needed to be a universal standard. 

Now, when a new token gets launched, wallets and exchanges no longer need to write custom code.

A few examples of ERC-20 tokens are:

  • Stablecoins (stables): These are tokens pegged to a real-world asset like gold or currency like the US Dollar. 
  • Governance: Holders of governance tokens can vote on proposals to improve the Dapp.
  • Decentralized finance (DeFi): These tokens help power the alternative financial system. 

The other ERC standards have been designed for non-fungible tokens (NFTs).

ERC-721 tokens

Unlike ERC-20 tokens, ERC-721 tokens are unique and indistinguishable. No two ERC-721 tokens are the same. That makes this token perfect for artwork, collectibles, and other similar use cases.

The main difference between an ERC-721 contract and an ERC-20 is the introduction of unique identification. As each ERC-721 token has to be unique, this provides a mechanism to identify the NFT. This number cannot change at any point and is verifiable on block explorers like Etherescan. Examples are a seat number for an event, identification, or the rarity of a piece of art.

ERC-1155 tokens

The final type of token is an ERC-1155. An ERC-1155 token supports both fungible and non-fungible tokens. Blockchain gaming is the sector that needs this mix the most.

In games, players may have fungible items like in-game currency and non-fungible items like rare items. Creating this standard makes exchanges frictionless in-game.

How can you buy and store ERC tokens with Argent 

With an Argent wallet, you can securely buy any ERC-20 token within the app. To do this, go to the invest tab and go onto the token exchange. From there, you can search for any ERC-20 token and make your trade.

You can also buy and store most NFTs (we support ERC-721 today and ERC-1155 too). Any NFT marketplace that has WalletConnect is compatible with Argent. 

When making a transaction, you will need to pay gas which will impact the overall price. 

Further resources

ERC-20 Token Standard by The Ethereum Foundation

ERC-721 Token Standard by The Ethereum Foundation

ERC-1155 Token Standard by Enjin the creators of this standard

A note on bridges and layer-2 protocols by Patrick McCorry 

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