What do you mean by ERC – ◯◯ that you often see with an Ethereum token? Explanation about its mechanisms
When looking at Ethereum tokens, you may find that you often see the notation ‘ERC – ◯ ◯’ in white papers and websites, but do you know its meaning? This article will explain that.
What is ERC?
Ethereum aims to become the standardization of technology as it continues to develop with becoming a platform for applications that operate on a blockchain. Determining the specifications of common tokens and designing accordingly will greatly benefit both the Ethereum community and its users. Thus, “ERC (Ethereum Request for Comments)” was created in the flow of standardization of technology within the Ethereum community.
ERC is a textual description of technical specifications of Ethereum and it essentially is a technology related proposal by Ethereum. If proposed problems or technology is determined to be important, discussion progresses to the point where it becomes adopted as EIP (Ethereum Improvement Proposals), which then becomes part of the official specifications of the Ethereum protocol. For example, the 20th proposed ERC document was officially adopted and named ERC-20, as discussed above. As the topic detailed certain token specifications, it was officially adopted as an important feature that will be used to determine common specifications of tokens.
About frequently used token specifications
From here we will explain ERC-20, ERC-223, and ERC-721 tokens which are widely used among many existing token specifications.
ERC-20 is the technical specification of the token proposed on November 19, 2015. Adopted as EIP-20, many tokens issued on Ethereum will comply with this and as a result, users can now manage their address balance on the same wallet with different kinds of tokens. In addition, users can list these tokens on exchanges with just the token address.
Although ERC-20 tokens are commonly used, there is one serious drawback. That being a transaction sending an ERC-20 token to a contract address will be approved. If users accidentally send ERC-20 tokens to a contract address, they will not be able to get those tokens back, effectively losing them.
ERC-223 was proposed on March 5, 2017 and is an upwards compatible ERC-20 which solved the above problem. Currently, discussions on Github are still in progress and it is not yet officially adopted as an EIP. In order to solve the problem with ERC-20, ERC-223 has a “Token Fallback” function which allows the user to get their tokens returned when mistakenly sending them to the wrong address. This feature can prevent you from losing assets such as when you send mistakenly send ERC-20 tokens.
The above two tokens are Fungible Tokens with fungibility (substitution) that can be used as the same value for any token that is the same token.
The ERC-721 introduced here is a non-fungible token that is an alternative and cannot be substituted. In other words, the token has a unique value such as artwork or characters in a game, and that it is tied to its owner making it impossible to substitute.
Crypto Kitties, which is a game that is ERC-721 token compliant and keeps virtual kittens on the Ethereum blockchain, created a big pandemic on the Ethereum network this year. Each one of the kittens had an identity such as different appearance and personality, and were linked to the user who represents a so called ‘breeding house.’ It was a game well designed under the ERC-721 specification. Along with ERC-223, ERC-721 is not yet officially adopted as EIP with discussions still progressing on Github.
In summary, with the word ERC, there are various proposals; some being officially adopted and becoming EIPs, others still in a draft state while the debate continues on Github. Let’s see what kind of proposals will be officially adopted in the future as specifications for Ethereum.