Ethereum is a decentralized platform on which smart contracts run. Put another way, Ethereum is a piece of code that could automatically transfer home ownership to the buyer and funds to the seller after a deal is done, without the need for a third party.
On the blockchain, a token often represents a financial value or a digital asset, similar to how casino chips symbolize or represent fiat money only to be used in various machines and games of chance.
With these concepts clear, it turns out that Ethereum tokens are simply digital assets that are built on top of the Ethereum blockchain. Developers benefit from the existing Ethereum infrastructure to build their applications, unlike those developers who choose to build an entirely new blockchain. At the same time, the tokens strengthen the Ethereum ecosystem by driving demand for ether, Ethereum's native currency, needed to power the smart contracts on which the tokens are issued.
From a physical object like gold (Digix), to a native currency used to pay transaction fees (Golem), Ethereum tokens can represent anything. In the future, the tokens may even be used to represent financial instruments such as stocks and bonds. The properties and functions of each token are completely subject to the use established for them: they can be used as payment to access a network or for decentralized governance over an organization, among many other possibilities.
Tokens are often issued to the public through a general or open sale called an Initial Coin Offering (ICO). The creators of the ICO will issue tokens to others in exchange for ether or bitcoin and other cryptocurrencies as well. They may have a fixed supply, a constant rate of inflation, or even a supply determined by sophisticated monetary policy. There have been a lot of ICOs recently and in a short time they have completely changed the way projects are financed. There is no mandatory distribution requirement, although if you are building a decentralized application you would ideally want the tokens to be owned by as many people as possible. ERC20 TOKENS
Standard interface that ensures interoperability between tokens is ERC20 Tokens. The Development of ERC20 tokens are simply a subset of Ethereum tokens that fit certain parameters. In order to fully comply with the ERC20 standards, the developer must embed a specific set of functions in their smart contract that, at a high level, will allow them to do the following:
Get the total supply of tokens
Get the balance of the account
Transfer the token
Approve spending the token
Seamless interaction with other smart contracts and decentralized applications on the Ethereum blockchain are enabled by ERC20 tokens. Tokens that have some (but not all) of the standard features are considered partially ERC20 compliant and might still interact depending on what features are missing.
In general, an [ERC20 token development] (https://www.blockchainx.tech/erc20-token-development) is not different from any other token, but also conforms to the standard Ethereum token. WHY DOES ETHEREUM NEED A STANDARD TOKEN?
Interoperability. If all tokens created on the Ethereum network use the same standard, those tokens will be easily interchangeable and able to immediately work with Dapps that use the ERC20 standard. Token uses a certain set of functions which makes it "standardized. , Developers can easily integrate tokens into their projects with less fear of making mistakes, if they know in advance how a token will work. If multiple tokens behave similarly, calling the same functions in the same way, then a Dapp can more easily interact with different sub-coins.
Like bitcoin and ether, ERC20 tokens can also be tracked on the blockchain, which is the public ledger of all transactions that have ever occurred. This is because Ethereum tokens are just a specific type of smart contract that "lives" on the Ethereum blockchain.
Currently, there are many projects that leverage the [Ethereum blockchain development ] (https://www.blockchainx.tech/erc20-token-development) and the ERC20 standard to issue the necessary tokens to operate their platforms. It is very likely that this market will continue to grow with new and better applications that meet this standard to be able to interact with each other.