ERC-20 Tokens You Should Know

There’s been a lot of buzz in crypto news these days about a certain well-known ERC-20 token called Maker (MKR).

As of the writing of this article, MKR was sitting in the third position for the best-performing cryptocurrency of the week after skyrocketing over 64%. This landed it just behind XRP (XRP) and Dogecoin (DOGE) in weekly performance metrics.

But this news has many cryptocurrency newcomers wanting to learn more about just what an ERC-20 token is, what it is used for, and which tokens are worth exploring.

Today we’re taking a closer look at the fundamental difference between a token and a coin and what ERC-20 is all about. We’ll also introduce you to a few of the ERC-20 tokens you should know about — focusing specifically on ERC-20 tokens with real-world implications and everyday use cases.

Token vs. Coin — What's the Difference?

Admittedly, the difference between coins and tokens can get a little fuzzy at times. This is primarily due to the fact that many crypto enthusiasts tend to use the terms interchangeably.

But they are, in fact, very different.

To understand the difference between tokens and coins, we need to first dive into the definition of each.

What are Tokens?

According to Investopedia, “Crypto tokens are a type of cryptocurrency that represents an asset or specific use and resides on their blockchain.”

The keywords here are “represents an asset.”

Just as how the tokens you buy at the state fair represents the real money you paid to get them, and they give you access to rides and other attractions, crypto tokens act as a stand-in for a blockchain’s native coin and give you access to whatever their designated use is on a particular DApp.

What are Coins?

On the other hand, a coin is a digital asset that is native to its own blockchain. Coins are what we most commonly think of when we think “cryptocurrency.” In fact, you can think of them kind of like the fiat currency you use on a day-to-day basis.

Bitcoin (BTC), Ether (ETH), and NEO are all examples of coins, and they each operate on their own blockchains, the Bitcoin blockchain, the Ethereum blockchain, and the NEO blockchain, respectively.

In short, tokens do not operate on their own blockchains but instead are minted and deployed on the blockchain of an existing coin. They are used to act as native currency within the specific DApp for which they were created.

While you might wonder why someone would bother creating a token when they could just create their own coin, the answer lies in how each is created. With a token, there’s no need to start from scratch and deploy an entirely new blockchain.

That would be a massively technical undertaking, not to mention the fact that if every developer created their own blockchain, those networks would likely be weak and prone to attack since it takes a large number of validators (miners) to secure a blockchain properly.

Instead, DApp creators can get most of the benefits of having their own native currency without the complexities of unleashing a new blockchain onto the world. In essence, they can reap the benefits of having their own cryptocurrency for their application, all while enjoying the security that the tried-and-true native blockchain offers.

What is ERC-20

ERC-20 refers to the type of tokens that are created on the Ethereum blockchain. The ERC-20 protocol lays out the rules that apply to all tokens minted on Ethereum and facilitate seamless interactions.

And there are a lot of ERC-20 tokens. Over 387,000, in fact, according to Etherscan.

You can think of ERC-20 as a blueprint for creating fungible tokens that will operate compatibly with the Ethereum blockchain.

ERC-20 Tokens to Know

ERC-20 tokens can be minted for any number of purposes. They could represent voting rights, access to different features of an application, membership in a rewards program, equity, security, payments, and more. They can even represent a physical thing.

Here are just a few of the ERC-20 tokens we think you should know about.

According to their website, the “WePower platform connects corporate energy buyers and energy retailers directly with green energy generators so that all businesses, no matter the size, can easily purchase locally produced green energy at competitive rates and full transparency.”

This blockchain-based green energy trading platform empowers both households, businesses, and investors to connect directly with green energy producers. The WPR token is used as the native currency on the WePower Network and functions as its payment method.

CARR is our own ERC-20 token. Token holders gain membership on CarrChain.com, where they will be part of an automotive rewards program. Members will earn rewards when they choose to buy or sell their used and new cars through Carnomoly.

Beyond buying and selling cars with cryptocurrency, however, CARR tokens can also be used to fund liquidity pools as part of our CarrDefi auto lending solution. While our DeFi pools can be funded with other coins, users who fund loans with CARR will earn a higher rate of return.

Similarly, members who purchase a vehicle using CARR on Carnomaly.com will soon be able to see a 1% savings off the price of their new or used vehicle.

The CARR token initially offered via IEO earlier this year will facilitate the development of new services and platforms that will make up part of the Carnomaly ecosystem and further our goal of bridging the gap between blockchain and the auto industry.

The Basic Attention Token (BAT) is an ERC-20 token designed for the purpose of tracking media viewer’s attention and time on certain websites browsed with the Brave web browser.

BAT creates an ad exchange similar to Google Ads, but in a decentralized manner, connecting advertisers, publishers, and – notably different from other ad exchanges – users also get paid to give their attention to ads.

Status is the first decentralized, encrypted messaging mobile and desktop client. Billed as a privacy-first messenger, Status allows its users to conduct one-to-one, group, and public messaging without third-party surveillance.

Integrated with its own crypto wallet, Status can be used to send global crypto payments seamlessly from its interface. SNT is the ERC-20 utility token minted to incentivize the platform. Users can earn SNT by participating in an expressive sticker marketplace that allows anyone to design and market unique chat stickers, for example.

Previously called OmiseGO, The OMG Network is described as a “trustless, non-custodial, Layer-2 scaling solution for transferring value on Ethereum” on its website. It empowers settlements, payments, loyalty, and rewards points and provides open banking and financial services solutions.

The OMG Network was created by an established payment processor called Omise; it now seeks to streamline the way electronic wallets exchange and issue digital assets.

Perhaps one of the best known ERC-20 tokens, Maker is a governance token, meaning that it grants its holders voting privileges on the development of Maker Protocol. The tokens act just like a voting share would in a traditional company, with voting power being tied to the size of a user’s stake – or the number of tokens they currently hold.

The platform Maker users are responsible for governing is MakerDAO and Maker Protocol. These are a decentralized organization and a software platform, respectively, that are built on the Ethereum blockchain. They enable users to manage and issue the DAI stablecoin.

Considering that DAI was the 25th largest cryptocurrency as of October 2020 with over $800 million in market capitalization, it’s no wonder that the ERC-20 Maker token is such a hot commodity.

In the World of Tokens, The ERC-20 Protocol Continues to Reign Supreme

ERC-20 has been the gold standard for token protocols on the Ethereum blockchain since July of 2015, and it will likely remain so for the foreseeable future due to the sheer amount of tokens that were built on it.

It is not perfect, however. ERC-20 does have some bugs. While other protocols exist, such as ERC 223 and ERC 777, ERC-20 has by all accounts been a reliable protocol to follow for minting new tokens for many years.

It’s proven to be a safe environment in which developers can launch new tokens and build momentum. Some have become so successful, in fact, that they have eventually transitioned from an ERC20 token to their own mainnet.

Suffice it to say, with a foundation as solid as the Ethereum network and so many practical use cases, ERC-20 tokens can be a valuable addition to the wallets of both crypto connoisseurs and newcomers alike.

Buy CARR Now: Carnomaly’s ERC-20 Token

If you’re ready to start investing in ERC-20, consider starting with CARR. Not only will your tokens have real-world value, they’ll give you access to CarrChain: the first online car management platform that rewards you for dollars you spend on your vehicle.

Learn more about CarrChain and our rewards program here, or find the current list of exchanges trading CARR here.

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