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What’s going on with Tether (USDT)? The Fake Stablecoin

Tether is once again a controversial topic. Simply put Tether (USDT) is not a stablecoin. Tether is marketed as a stablecoin that is designed to be pegged to the US dollar at a ratio of 1:1. Yet the value of Tether at times has been below the 1:1 pair as claimed by Tether limited, the Hong Kong based company. One of the benefits of stablecoins is their supposed stability in a land of volatile cryptocurrencies. Especially when there is increased market volatility and volume. As there has been in the past few days, as US equities, particularly Tech stocks have experienced a huge drop, and cryptocurrencies have followed.  Yet Tether seems to fail over and over again. Within the past few days, Tether has lost it’s USD peg twice and withdrawals on Terra Network $LUNA were temporarily suspended on Binance. Report from the past week indicate that Tether has been trading at 76 cents. That’s a bigger drop than Bitcoin and Ethereum in the past week. How does a stablecoin fluctuate and have more volatility than non-stablecoins?

The Terra ecosystem currently contains over 100 nativetly built projects. One of these is the UST stablecoin on both the Ethereum and Bitcoin Blockchains. Tether is the biggest stablecoin, and has a volume of $164.9 billion and market cap of $83 billion in the past 24 hours upon writing this. Interesting to note that the volume of Tether is almost double than the market cap. A self published report by Tether back in 2021 showed the Tether was only backed by cash to the tune of 3.87%.

The token is being utilized as a free source of capital for the companies that own and operate Tether, and the liquidity is poured into commercial paper and treasury bills, deposits and other notes to earn interest for the company that controls it. During good times that means the Luna token has soared, and in bad times, has caused the token to absolutely crash and take Tether (USDT) with it.

The Terra Luna token has cratered over the past week:

Compare the charts of USDT vs USDC. One appears stable, and the other is far from it. In case you need to apply a ruler to your screen, one is a straight line, and the other is someone trying to draw a straight line after drinking 5 cups of coffee.

An upcoming report will dive deeper into Tether and show why it is a deeply flawed stablecoin. The company that operates Tether has been under a number of investigations the past few years and has paid tens of millions in penalties. Additionally, we will take a look at the audit firm that is utilized by Tether. In the meantime, do your own research!

Thodex Trial Officially Started in Turkey

The case against Thodex, the cryptocurrency money exchange that has harmed thousands of users, is now being heard. Twenty-one individuals, including the fugitive CEO of the business, Faruk Fatih Ozer, are on trial in this case.

It is a trial for 21 of them, including Faruk Fatih Ozer, the company’s CEO who is wanted for fugitive arrest, is said to have harmed hundreds of victims through the crypto-money exchange Thodex has Begun. Six detained defendants, Guven Ozer and Serap Ozer were taken to court for the Anatolian 9th High Criminal Court hearing. The parties’ attorneys were present at the court hearing with defendants that were not detained. This hearing began with identifying the defendant’s identity and continues by defending detained defendants.

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It is believed that authorities from the Anatolian Chief Public Prosecutor’s Office launched an investigation following Faruk Fatih Ozer defrauding customers and fleeing to Albania through the Thodex crypto-money application. Within the indictment of 268 pages, 21 individuals, including Faruk Fatih Ozer, the older brother Guven Ozer, and his younger sister Serap Ozer are charged with Fraud, while 2027 are listed as complainants.

The indictment states that Koineks Teknoloji A.S. revealed that $356million TL worth of damages was caused by the crimes committed within the body (Thodex).

In the indictment, 21 defendants were accused of “establishing and directing an organization to be a criminal” Fraud through the use of information systems to obtain funds that originate from credit institutions or banks, and Fraud on executives or merchants and cooperative managers as well as the laundering of property values that result out of crime in the total amount of 12,164 years. The defendants are looking for a sentence of 40,564 years in prison.

Maximus Minting Phase Officially Concludes for the New Maxi Token

The minting phase for Maximus is officially over! The one time 14-day minting phase resulted in the staking of 294,323,603 HEX for the max length of 5555 days. This was around $50.6 million dollars worth of HEX at the time the minting phase ended. The project created a massive HEX stake for the max length of 5555 days. The contract created 42,104 T-Shares and approximately 5,327 individuals participated.

What is Maximus? Maximus was a one time 14-day event where anyone could choose to mint 1 MAXI per HEX pledged to the Maximus Contract. At the conclusion of the minting phase, the smart contract executed a single 5555 day stake with all the HEX used to mint MAXI. Once the stake ends in 15.2 years, users may redeem their portion of the HEX stake principal and earned interest. MAXI is an ERC-20 token on the Ethereum blockchain.

The Maximus contract allowed individuals to pool their HEX in one huge stake, rather than staking individually. The benefits for doing so included savings on gas fees,  a larger maximum yield due to the pooling of HEX to take advantage of the Bigger Pays Better bonus. Additionally Maximus allows for instant liquidity, as MAXI tokens can be bought and sold on decentralized exchanges.

The contract address for Maxi is: 0x0d86EB9f43C57f6FF3BC9E23D8F9d82503f0e84b

The price of MAXI is derived from the price of HEX, and there maybe opportunities in the future as the market price of MAXI on decentralized exchanges fluctuates at either a premium or a discount from the treasury value of MAXI (is based on the estimated amount of HEX and Hedron redeemable per MAXI when the max length stake ends). The following chart illustrates the potential arbitrage opportunities of MAXI in the future.

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How to Protect Your Cryptocurrency from Hackers, Rug Pulls, and Governments

TL;DR

Your crypto should be kept safe, in cold wallets if possible, no matter if you are buying, hodl’ing, investing, or both. In the vast majority cases, losing your tokens and coins is permanent and irreversible.

Use centralized exchanges that have KYC and AML compliance if you want to trade cryptocurrency. The best security is achieved through peer-to-peer trading or decentralized exchanges that have been audited.

You have many options for storing your crypto safely. It is possible to store your crypto on a regulated cryptocurrency exchange. This is a good option for traders and newcomers. You don’t have the keys to your wallet and therefore cannot accidentally misplace them in the hands of hackers.

You can keep your keys in a non-custodial wallet. However, it is more secure to have them in a safe place. Keep your private keys in a safe, offline location, such as a paper or cold wallet.

Audited DApps can be used to increase your security. You should also regularly verify which DApps have permissions to access your wallet. These permissions should be removed as soon as the DApp is finished.

Introduction

The idea of self-sovereignty is at the heart of cryptocurrency. It’s the notion that users can operate their own banks. You can make your funds more difficult to access than the best bank vaults if you secure them properly. You run the risk that someone could steal your digital wallet.

As you travel down the cryptocurrency rabbit hole, it is essential to learn how to properly secure your digital currency. Storage is not the only thing that matters. Many cryptocurrency holders now interact with DApps in DeFi, so it’s important to learn how to safely use your coins.

You wouldn’t let an untrustworthy company handle your money. The same goes for your coins. This is true for crypto exchanges that allow you to trade and purchase it. This guide will discuss the best ways to keep your crypto assets safe no matter where they may be.

Securely Purchasing Crypto

You can buy cryptocurrencies from many different places today. There are many places where you can buy cryptocurrencies. Each choice has its own advantages and disadvantages. Not all options offer the same level of security. Most users prefer to use reputable, central exchanges for the best combination of security and ease-of-use.

Secure Exchanges

Binance is an excellent example of a central exchange that offers high security. This includes increased regulation, Anti-Money Laundering measures (AML), Know Your Customer (KYC), and more. Although exchanges were not without problems in the early days, exchange operators and governments have made significant improvements.

You will need to transfer funds into the custodial wallet in order to use an exchange. Depending on your outlook, giving the exchange responsibility over your coins may provide security. You may feel more secure using an exchange wallet if you don’t know much about wallets or are unfamiliar with cryptocurrency. This will prevent you from losing your crypto or locking yourself out of the wallet.

Some people prefer to have direct control of their money. Perhaps you’ve heard the expression “not your keys not your coins” before. You can’t control your crypto if you don’t own it. For more information, you can visit our storage section.

There are some signs you should look out for if you have decided to use a peer-to–peer service or decentralized exchange. Check for an audit by a trusted source before you use a DEX. Later, we’ll get into audits. Binance also offers a DEX that leverages the company’s reputation and security.

Peer-to-peer services require KYC. It should offer an escrow option. Although it does not eliminate all risks, having funds held in escrow by a third party gives both buyers and sellers more protection against scams.

How to protect your account

To keep your account secure, sign up for the exchange or trading method you prefer. These are the same tips you’d use to protect your online bank account and other sensitive information. It is simple to prevent others from accessing your account or its funds.

Use a strong password that you change regularly. Your date of birth or other identifiable information should not be included in the password. It should be long and unique to the account.

Enabling Two-Factor Authentication (2FA). 2FA with your mobile device, authenticator application, or YubiKey is a secondary level of protection in the event that your password has been compromised. When logging in, you will need to use your password and the 2FA method simultaneously.

Be on the lookout for scams via email and social media. In order to steal your money, fraudsters often impersonate trusted people and exchanges. Unknown sources of software should be avoided as they could contain malware. In 7 Easy Steps, Secure Your Binance Bank Account guide.

How to Secure Your Crypto

After you have purchased or traded crypto, and your account is secured, the next priority should be to place it somewhere safe. A wallet is the only alternative to leaving your crypto on an exchange for later trading. Different wallets have different ownership rights and connections to the Internet. The level of security that you are comfortable with will determine which one you choose.

Avoid Common Crypto Scams

Unfortunately, scammers are attracted to cryptocurrencies. Scammers use cryptocurrencies to scam others. Once the funds have been stolen, there are usually no means of recovering them. Scammers exploit the anonymity of cryptocurrency and the fact that large sums of money are directly controlled by many users.

Always be careful and don’t send money to anyone you don’t know. It is important to verify the identity of any person you send money too. These are the top scams you should be aware of:

1. Phishing – An email may be sent from an exchange asking for personal information or log in. This could be a scammer trying to steal your personal information.

2. Fake exchanges These websites and mobile apps often imitate an exchange’s look. After you have entered your information, scammers will use it to gain access to your real account.

3. Blackmail Scammers may try to send malware that locks your files and demands ransom. You will likely need to send Bitcoin or other currency to pay. The files may not be returned to you after payment.

4. Ponzi and pyramid schemes – A new project may offer you the chance to purchase its coins, or to enter a special deal that requires you to pay crypto. Sometimes, it’s possible to get a deal too good to be true. Make sure you do your research and make sure that the investment is safe.

5. Impersonation You may be posed as a trusted person, official, friend, or other type of representative. You may be asked for crypto or other information you wouldn’t normally give out. They will then ask you for crypto or other information that you would not normally give out.

What is a Private Key?

Like a real key to unlock your cryptocurrency, a private key allows you to spend it. Your overall security is best if you keep your private key safe and have easy access to it. The key is a long number, so it’s impossible to guess. You will get a private key if you flip a coin 256x and write “1” for heads and “0” for the tails. Here’s the one we just created. This encodes the information in hexadecimal (using characters a-f and numbers 0-9).

You can search that number on Google to see that it is the only one appearing (unless it has been copied elsewhere). This should give an idea of the randomness of the number – it is extremely unlikely that anyone has ever seen it before.

This example doesn’t even do it justice. The number of private keys that can be used is almost equal to the number of known atoms. This is the fundamental security principle of cryptocurrencies such as Bitcoin and Ethereum. You can rest assured that your coins are safe as they are hidden in a large, brain-meltingly large number. These are obtained by performing cryptographic magic with your private key to obtain a public key. This key is hashed in order to get the public address.

This article will not go into detail about how it is done. It’s possible to create a public address using the private key. However, it is difficult to do the reverse. You can list your public address online, via blogs and social media. Without the private key, no one can spend the money sent to it.

You lose access to your funds if you lose your private keys. You can only spend the funds if someone else has your private key. It is therefore important to keep your private keys safe from prying eyes.

Seed phrases

It is important to note that today’s wallets rarely only have one private key. They are hierarchical deterministic wallets (HD), which can hold billions of keys. You only need to know a seed phrase. This is a list of human-readable words that can be used for generating keys. This may look something like the following:

Strike sadness, boss daring voice connect holiday Vintage Quantum Pony Stable genuine

If you don’t choose to use one private key, then you will likely be asked to backup a seed phrase whenever you create a new wallet. Key storage will be discussed later. The term keys will be used interchangeably for both private keys as well as seeds when we talk about keys storage.

How to secure your seed phrase

It is very important to protect your 12, 18, and 24-word seed phrase. Anyone with access to this phrase can steal your money and import your keys into their wallet. A JSON file, or private keys that are the exact same as a seed phrase, may be available. Follow our tips to be very careful about managing your keys.

1. It is not recommended to save your seed phrase on a device that has internet access. Your phrase could be compromised if you download a virus, or your computer is remotely hacked. 2. Securer storage online is better The phrase can be stored either physically or offline. You should backup your key, even if it’s stored on a cold storage device (which we’ll talk about later), in case your device fails. 3. Consider the materials you will use and where it will be stored if you are going to keep your phrase physical. It is not a good idea to write the words on paper that can easily be lost or destroyed. It might be a good idea to keep the phrase in a safe place or deposit it with your bank. As the phrase can’t easily be destroyed, some people will engrave it onto metal. Others may use metal letters on a board.

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Hot Wallets vs Cold Wallets

To distinguish cryptocurrency wallets, the terms “hot wallet” and “cold wallet” are used. It’s not the temperature these terms distinguish, however.

Hot wallets are digital crypto wallets . Cold wallets are physical devices which store cryptos within them. Although there are many types of wallets available, the most popular are the hot and cold.

The most popular wallet is the hot one. We’ll discuss a number of reasons why this is so. I will also try to show that cold wallets are better than hot ones.

Hot Wallets

Since the birth of Bitcoin, digital cryptocurrency wallets have existed. There are two types: online or desktop wallets. Although mobile wallets can be considered digital, due to their mobility, they could also be classified as hybrid wallets.

Two of the greatest perks digital wallets offer are their ability to hold any cryptocurrency and that they are free.

Let’s start with the all cryptocurrency holding part. This point is frequently brought up by digital wallet supporters in the “cold wallets” debate.

Once a cryptocurrency has been created, the ICO process is underway, it isn’t functional until it is stored somewhere. Usually, the creators of crypto are also the ones who develop and create wallets for it.

There are many more well-known and mainstream cryptocurrencies, such as Bitcoin, Ethereum, and XRP, that have a variety of digital wallets. Each one offers unique features and customizable customizations. Newer, less well-known cryptos typically have one designated wallet that allows for basic trading and buying functions.

This is an important point in the ” Hot wallets vs Cold wallets” debate. Many people have or want different less popular crypto coins. However, they can’t do this while having, for instance, a warm wallet.

Another important factor is the fact that hot wallets generally come free. It’s easy to find the one that best suits your needs and register it. These devices are not free for cold wallet enthusiasts to enjoy. They cost money which reduces their popularity and decreases their use. Although it is difficult to predict what statistics would exist if cold and hot wallets were both free, that’s impossible.

Cold Wallets

As I mentioned, cold wallets are specially designed devices that have been designated physical currency storage. Just like the hot wallets, cold storage wallets have their cons and pros, so let’s look at them.

The greatest benefit of cold wallets is the ability to always have your cryptos with you . Wherever you go. These wallets can be carried around in your pocket and are small or compact. This allows you to have both comfort as well as privacy while transferring funds.

However, cold wallets have few drawbacks compared to hot counterparts.

First, cryptocurrency cold storage is often very expensive. The average price for a cold wallet is around $100. Depending on how many crypto coins you have, this could either be extremely expensive or very cheap .

Another problem is the limited number of cryptocurrencies that cold wallets can store. Most cold storage wallets can only store the major crypto coins on the market such as Bitcoin, Ethereum and Dash.

These items are also quite costly, which tends to reduce cold wallet usage.

Why cold wallets are better than hot ones

You’re probably wondering if cold wallets are better than hot ones after you’ve read this tutorial. They’re worse than hot ones! There is a simple reason why cryptocurrency cold storage is the best option:

Security.

When it comes to cryptocurrency storage, cold wallets are the standard in security.

This section has been kept out of the hot/cold wallet overviews. This is because I believe it is so vital that it merits a separate section.

The most vulnerable wallets worldwide are hot wallets. The digital wallet stores your security keys in their online servers . These servers are very vulnerable to hacker attacks, fraud attempts and other malicious intent-driven actions. Although most high-profile hot wallet companies and sites have extensive security measures in place, it doesn’t mean that your savings will disappear forever.

There is one solution when it comes to digital cryptocurrency storage. It is insurance. Sites such as cryptobase.com will automatically provide you 100% coverage if they trust you with your cryptocurrencies. This is an rare but reassuring option.

Cold storage wallets have a reputation of being inaccessible. It is a great feeling to know that your codes are safe and secure in this tiny device. These devices are so focused on security that even if your computer was infected with a virus, keylogger, or leacher, your device would still be safe and secure.

Security should always be the top priority when choosing the right crypto storage wallets. It doesn’t matter if you get the best wallet, but security should be your number one priority. Cold storage wallets that are the most secure are the most.

Which is the best storage solution?

There is no single answer to this question. This article would be much shorter if it were. It all depends on how you use cryptocurrency and your risk profile.

An active swing trader, for example, will have different requirements than a long-term hoDLer. If you manage large sums of money, you might want to use multi-signature systems. This means that multiple users must agree before funds can transfer. The easiest option is a hardware wallet. However, you should test them first with small amounts of money to make sure they work. In case your device fails or is lost, you’ll want to have backups of your keys elsewhere.

Online wallets can be used to store small amounts of money that you want to use for goods or services. Your mobile wallet acts as a cold storage account. It is similar to a physical wallet. It should not be a large amount that could cause serious financial problems if it were to disappear.

Custodial solutions will work best for trading, lending, staking and lending. You should have a plan in place for how much money you are allocating, such as a position sizing strategy. You should not invest more than what you can afford to lose in digital currency.

What is a Crypto Rug Pull?

A “rug pull” refers to a scheme in which founders or developers of a project fail to fulfill their promises after receiving funds. The founders simply run away from investors after they receive an investment. This can happen with both crypto currencies and NFT projects.

Different types of crypto rug pulls

These frauds can be avoided by understanding how they are committed. There are two types of rug pulls:

Technical manipulation

These rug pulls are more technical and lure victims into buying tokens that cannot be used but can only purchased. This is done by altering the function of the code to allow transactions to be made using the token.

This consent is required for token transactions. These tokens are worth nothing if they don’t have this approval.

Heists on liquidity

This is the most popular type of rug pulling. The liquidity pool must be available for cryptocurrency tokens to trade. Therefore, the scam coin is often paired with an actual token, usually Ether (ETH). It is then listed on a DEX such as Uniswap or Pancakeswap.

The most common way to create a scam coin is to copy and paste the code from another token and change a few lines. The scam coin is then followed by a social media blitz to promote a project that never happens.

These paired tokens can be temporarily locked up and investors are not able to sell them for a time. People will buy the new token and then exchange their tokens. This drives up the price. Once the price rises enough, scammers will dump their tokens in order to make ill-gotten gains by selling the legitimate token.

The Mint and Move: Large stakes, low integrity

Some scams involve a founder who mints the fake token and then gives a large portion to themselves or buys at a low price pre-ICO. False value propositions lure investors to invest in the project, causing the coin’s value to surge.

This type of project might place emphasis on some sort of deliverable innovation, which gives the scammer a veneer of plausible denial. The con job is very similar to a liquidity scam, but the promises are false.

Developers will start with their withdrawals when the token’s value reaches the desired level. These withdrawals may be gradual. Investors will ultimately be left with the bag.

What to be aware of

We’ve now described the rug pull and what it can be done in various ways. Let’s take a look at warning signs to avoid falling for this trap.

No details are available about the development team

Remember our previous statement about token creators’ anonymity. If there isn’t any information, be alert for signs of trouble. This is especially true for accounts that were created in the recent past.

They only provide vague or ambiguous information in their whitepapers.

To give their audience an understanding of the token’s workings, token developers often include a whitepaper along with their token. If there isn’t a clear strategy or goal, it may be time for other solutions.

Yields and returns are too high

It is possible that either the initial or anticipated yield seem too good to be true.

Marketing is heavily focused on creating hype

The enthusiasm for cryptocurrencies and tokens could be affected by social media and crypto influencers. These patterns could indicate fraud.

The liquidity pool of investors is not locked

It is a common practice for developers once a project is up and running to build trust. This ensures that there is no central authority controlling the liquidity pool. It is often difficult to access or delegated to third parties.

Developers cannot steal tokens from the liquidity pool and reduce the project’s value quickly if it is locked. The lower the likelihood of a rug being pulled, the longer the liquidity pool remains locked.

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Crypto rug pulling in the real world

Let’s take a look at some rug pulling successes that actually took place in the real world.

Compounder Finance

Compounder Finance, which is a Decentralized Finance platform, took 10.8 million USD in 2021 from its customers. The developer team replaced secure, audited contracts by faulty counterparts, which allowed them to abandon the project. This also led to the withdrawal of all their investors’ funds. It could have been a problem that they used Compound Finance as the name of a valid DeFi protocol.

Thodex

After the exchange suddenly closed in April, Faruk Fatih Ozer (the founder of Thodex), fled to Albania in the same year. He allegedly had two billion dollars worth of customer funds. They were able to escape with their 400,000 customer base.

Squid Coin

Recently, enough investors have flocked to the Squid token to increase its value from 628.33 USD to 2,856.65 US Dollars in just 10 minutes. Shortly thereafter, prices dropped to 0.0007 USD. Individuals were left staring at an empty site with no leads about the token’s developers after the commotion subsided.

How to Avoid Crypto Rug Pulls

Your task as a crypto trader is to find ways to avoid the traps set up by others. We have some tips for you.

Review all documentation, code and whitepapers

Rug pulls can be avoided by knowing as much information about the product that you are purchasing. It is important to understand the documentation requirements. Don’t let this put you off. Learn about the history of the project, the reasons behind the decisions, and the ambitions of the developers.

To learn more about , visit their social media pages

Learn as much information as possible about their previous successes. This could help you determine who the token is being issued by. It will help you to understand how developers work.

Check to see if there is any token liquidity

Remember that authentic tokens are worth millions of dollars. This should be a factor to consider when searching for tokens to purchase.

Information about coin holders

Remember that not all coin holders should be devs. This is because the more they own in the company the more control they have over the market.

It’s possible that all the coin holders are developers. This is a sign that the token’s worth is determined only by creators, and not by traders like you.

What is an ERC20 Token?

ERC20 is a protocol developers can use to propose improvements to the Ethereum network. ERC stands for Ethereum Request For Commitment. The proposal identifier 20 is also used.

What is a token?

Tokens are a way to represent anything in Ethereum:

  • Reputation points to the online world of a platform
  • abilities of a character in games
  • Financial assets such as shares in a company
  • a fiat currency like USD
  • An ounce of gold
  • and much more…

What’s the Difference Between a Coin and a Token?

The coins were first. The story begins with Bitcoin, the first blockchain network. Bitcoin, also known as Bitcoin or BTC, enabled people to make peer-to-peer global payments using its native currency. Then, similar blockchains like Litecoin or Dogecoin provided a similar use case.

Coins are all cryptocurrencies that reside on their blockchain networks.

Then, Ethereum was born, and it introduced the concept of blockchain-based decentralized protocols and applications. Although Ethereum has its cryptocurrency called ETH, it can also be used in the same way as Bitcoin. However, Ethereum’s primary purpose is to provide gas for transactions and operations on protocols and apps built on the network.

Developers of these apps can create in-app currencies stored on Ethereum instead of a dedicated blockchain. Ethereum allows users to create additional digital assets stored immutably on Ethereum. Tokens are digital assets or in-app currencies that are created on Ethereum.

A crypto-asset with a dedicated blockchain is technically called a coin, while tokens are all assets created on a third-party blockchain.

Brief History of Ethereum

Before the creation of Ethereum, every cryptocurrency had to have its blockchain. Developers were under pressure to create a blockchain to support their coins or fork existing blockchains.

This was changed by the launch of Ethereum, which was the first project to act as a development platform. This opened up many new opportunities for digital currency and blockchain technology.

Ethereum was a platform that allowed the creation of smart contracts and decentralized applications (dApps), and new tokens. Many different token models emerged quickly, with ERC20 the most prominent and dominant.

This protocol was a new standard for creating new tokens that would run on Ethereum’s Blockchain.

Developers could launch their cryptocurrency with ease, without spending time or money developing a blockchain. Instead, they would create a token and pitch their idea. The token sale would then be followed by creating the blockchain using the money raised through ICOs.

Understanding the ERC Token Standard

ERC20 – The Fungible Token Standard

ERC20 was first implemented in 2015. It allows developers to create tokens that can be used for Ethereum-based protocols or applications. What are you waiting for?

You can think of ‘fungible tokens’ as any regular currency based on blockchain technology. A token can be exchanged with another token because they have the same value. Take, for example, crypto-assets such as UNI and LINK — ERC20 tokens that are part of Ethereum-based protocols Uniswap and Chainlink. Each token is fungible as one UNI token, or LINK token can always be equal to another UNI token or LINK token.

This means that you can exchange these tokens one-to-one. You don’t need to know which UNI token you have because the underlying value of all UNI tokens will be the same.

ERC721 – The Non-Fungible Token Standard

The Blockchain’s use cases expanded, and it became necessary to tokenize and represent the unique data stored on the blockchain. This was the time that ERC721 token standards were created. The ERC721 standard permits you to create non-fungible tokens. Each token has a unique value and acts as a verifiable digital object that cannot be exchanged like ERC20 tokens.

Let’s say you want to represent a piece of digital art on the blockchain. To do this, you can’t use an ERC20 token. To create an NFT artwork, an ERC721 standard token can be used. The NFT of the digital piece can be used to verify the authenticity and ownership of the work quickly.

It is nearly impossible to forge any artist’s original work because the NFT artwork records and identity are immutable. They are stored on a blockchain.

ERC1155 – The Multi Token Standard

ERC20 and ERC721 are two different standards that allow one smart contract only to support one type of token. You will need to create a new smart contract every time you deploy a token. The above standards don’t allow you to create semi-fungible tokens.

The ERC1155 token standards were established. This allows Ethereum developers to create non-fungible, semi-fungible, and fungible tokens by using the same standard. ERC1155 allows you to create one contract that can support multiple types of tokens. This reduces complexity. It was a little too complicated. Let’s simplify this.

Imagine a developer is planning to develop an NFT-based game. They plan to create one token that can be used as in-game currency and multiple tokens that can be used for unique in-game assets like skins, guns, and merchandise. They would need to create new smart contracts for every asset they create if they used ERC20 or ERC721 standards. They could use ERC1155 to create one contract that supports all types of tokens they wish to have in the game.

This does not suggest that any of these standards is superior; they have different applications.

Benefits of ERC20 Tokens

  • Transaction: speed, effectiveness, and globalized.
  • Creation: It is straightforward to make.
  • Interaction: Make it easier to manage interaction with tokens.
  • Contract: The possibility of contract breach is very low.
  • Liquidity:  Greater liquidity of tokens.

The ERC20 token doesn’t have its blockchain and does not require it. It’s launched on Ethereum’s network and uses the same technology differently. These tokens can be used to create tokens and not currencies.

Their role is in their ecosystems, not the “real” world. They have many benefits for both developers and users.

ERC20 is Developer Friendly

ERC20 tokens, for example, empower developers and are one of the essential tokens in the crypto industry. Because they are developed around the ERC20 Token Standard, they are simple to launch and use. ERC20 is important as it establishes standard rules that all Ethereum-based tokens must adhere to. Developers can also use it to predict how their token will work within the more extensive Ethereum system.

According to Etherscan, there are currently 523,099 ERC20 tokens available on Ethereum’s network as of April 2022.

The fact that ERC20 tokens all use the same technology helps simplify understanding of how token implementation works. However, each coin created on its blockchain requires a greater technical understanding. ERC20 tokens have the advantage of increased liquidity, are supported by many exchanges, and come with a lower risk of contract breaking.

ERC-20 Tokens Can be Exchanged and Stored

ERC-20 tokens can also be exchanged because they are built on Ethereum’s blockchain. To store them in your Ethereum wallet, you can also send them to other Ethereum wallets. Exchange addresses are something you should avoid.

Without too many details about why this is so, it’s essential to understand that each coin has its unique address on exchanges. Your Ethereum address will differ from your ERC-20 token addresses. You will not receive the ERC-20 tokens if you send them to an Ethereum address. You can still hold any Ethereum-based currencies in your wallet.

Broad Adoption

ERC-20 tokens are very popular in the cryptocurrency industry. New projects can easily integrate with tokens already supported by several intelligent contracts, wallets, exchanges, etc. There are many resources for developers and documentation.

Endless Possibilities with Ethereum

Blockchain has been more than a technology for cryptocurrencies. Ethereum has made blockchain a much more helpful tool. The Ethereum network has more potential uses than ever before because it can propose new standards for tokens and allow them to be established.

This innovation has made it possible for artists to create unique tokens representing their artwork. It is also possible for creators today to monetize their work and reflect the scarcity of their creations. Game developers can use in-game items to give real-world value and create a new user-governed economy online.

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