What does Ethereum’s ERC-20 standard mean and which wallets support it?
Cryptocurrency Initial Coin Offerings is one of the best ways to crowd fund and kickstart a project. In 2017 it became very popular and a lot of people recognize it as a great way to invest in upcoming cryptocurrency projects.
The beginning of 2018 was pretty turbulent with major corrections taking place. With these events a lot of investors stressed themselves about their money. Most people were focused on their investments in the larger cryptocurrencies and the hype for ICOs calmed down. Still a lot of people are excited about upcoming projects and many Initial Coin Offerings are still taking place.
One thing that stops people from investing in them is that they don’t know a thing about how to participate in them, where to store the new currency and how does an ICO operate. At first sight all of this looks complicated but we from Team Coinstaker got you covered. You need to know few key things to understand ICOs. This article will not cover Initial Coin Offerings but you can read about them in this comprehensive guide.
What is an ERC-20 Token?
ERC stands for Ethereum Request for Comments and 20 is the unique proposal ID number. This is a protocol for proposing improvements to the Ethereum network. This standart defines the rules that need to be met for a token to be accepted and called “ERC-20 Token”. These rules apply to all ERC-20 Coins and are required so they can interact with each other on the Ethereum network.
The major difference between ERC-20 tokens and normal currencies is that ERC-20 coins are hosted by Ethereum addresses, are sent by Ethereum transactions and rely on the Ethereum network. Because of this, sending ERC-20 Tokens costs a fee that goes to the Ethereum Network. If the fee is too low or the contract was incorrectly programmed, contracts my refuse to handle token transfers correctly. That’s why some ERC-20 token addresses look like Ethereum addresses, because they transact on the same network that your Ethereum wallet uses.
Why is ERC-20 Standard so important?
Most Initial Coin Offerings are issued on the Ethereum Blockchain. Over 90% of all ICOs are made on Ethereum’s blockchain so you will need an Ethereum wallet and Ethereum to participate. Hardware wallets are the best solution of course, but there are other available alternatives that are free and convenient.It is important to own your own wallet because with the wallets provided by exchanges you do not own your private key.
This means that you do not entirely own the wallets. Also for participating in ICOs you need the private key, because the smart contract interacts with it. If you send Ether from your exchange wallet, you will most likely lose your Ethereum and the tokens that you are investing in. However not all digital wallets support Ethereum powered tokens. You will need a wallet that is compatible with ERC-20 tokens.
Top 3 best Ethereum Wallets that support ERC-20
- MyEtherWallet and Ledger Nano S / Trezor hardware wallets
As I said, using a hardware wallet is the safest way to store cryptocurrencies. The Hardware wallet is a physical device that is kept offline and can be plugged into a computer. Being offline means that hardware wallets are cold wallets and are the safest type. They are almost hacker-proof because when you send a transaction you need to press a button on the device to confirm it.
Trezor and Ledger Nano S are the best options you have. They support many different coins including Ethereum and ERC-20 Tokens. Each is different than the other with different features so you can research them further. If you want to read a quick guide that goes deeper in explaining your Ethereum wallet options click here. Still the demand for these hardware wallets is incredible so you will probably wait some time to get your own.
Hardware wallets have built-in Ethereum support meaning you can use MyEtherWallet with your hardware wallet. This way you won’t need to update constantly to include all ERC-20 Tokens. MyEtherWallet is the best wallet that supports ERC-20 tokens and it is used as users interface. Using it in combination with your hardware wallet will make security optimal.
Still MyEtherWallet can be used without a hardware wallet and is the best one from the hot wallets out there. It is pretty secure and it is up to you on how careful you are with it. If you are curious about MyEtherWallet and don’t know how to make an account click this “How to join an ICO” guide. It will explain step by step how to make and maintain your MyEtherWallet and also you can read about the procedure on joining an ICO.
MetaMask is a Google Chrome and Firefox extension that allows users to interact with smart contracts in a user-friendly way. An Ethereum wallet is built into MetaMask, making it easy to have an all-in-one solution connected to the Ethereum Network. It is a convenient and safe storage solution that supports all ERC-20 Tokens in existence. Click here if you want to learn more on MetaMask and how it works.
For desktop users Mist is a great option. Mist is the “native” Ethereum wallet client. It has by default built in ERC-20 support and supports upcoming cryptocurrency. The also offer security and convenience features which makes Mist great and it is worth to check them out.
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