The material in this article was written with the expectation of having at least minimal basic knowledge in the field of cryptocurrencies. On your part, you need to understand at least what cryptocurrency is, how and what it is used for, what is ethereum and ether. You should have a basic understanding of what blockchain, smart contracts and decentralized applications are. If you do not possess such information, then before starting to study Ethereum tokens, it is worth taking a little time and sorting out these questions..
On the one hand, a token in the Ethereum network is a full-fledged cryptocurrency, such as you have seen a lot on cryptocurrency exchanges. On the other hand, on the technical side, it is a smart contract written according to the general rules for creating decentralized applications on the Ethereum blockchain. Tokens are programmed for various business opportunities, for example, for the final emission of coins, or for the possibility of taking as collateral, spending on someone else’s behalf (usually with his permission). Tokens are inherent in the use of standards at their core, for example, the popular ERC20 standard, thanks to which tokens are easily placed on any cryptocurrency exchange. Tokens are developed for a specific purpose, for example, for the initial placement of coins (Initial Coin Offering or ICO), to work as a unit of account in the developed service.
Tokens do not differ from other cryptocurrencies on exchanges and live according to the same market rules as bitcoin or ether itself. At the same time, all tokens are very conveniently exchanged for ether, if desired and with the permission of the owner. Any standard Ethereum wallet will be enough for this..
As you can imagine, Ethereum tokens have a lot of cards up their sleeve, but in order to use them, you need to know about them. The thing is that at the current moment of the development of the culture of understanding the cryptocurrency market and the possibilities of smart contracts in particular, customers, and sometimes the developers themselves, do not quite understand what is needed, what is worth, and what is useful to do so that the idea underlying the project for which the token is being made shot in the right direction. Those. so that the token does not turn into another coin that no one needs, but so that it grows with the project and helps it in its development.
In any case, serious-minded developers and customers, through joint discussion, usually come to certain decisions on the issued token, and a new coin is developed for the project’s goals. But it only happens more on the terms of the developers, due to the greater awareness of the issue.
From a technical point of view
The main thing here is to understand that the Ethereum token is a full-fledged program written in a Turing complete programming language. Therefore, any reasonable possibilities that can be formalized with a set of certain rules and algorithms can be transferred to machine code for the blockchain to be executed in the Ethereum virtual machine. A token is nothing more than a kind of smart contracts, and at the same time it is not the most complicated one. There are already a lot of examples of implemented coins and programmers have something to rely on in their development..
For general development, we will explain the structure and functioning of a regular token..
- Currency register – an array of records of the “account->amount “
- Account registration method – new participants in the token settlement must be in the currency register array. Those. this method adds new addresses there with a (usually) zero balance.
- State read method – viewing your balance. May be available only to the account owner or may be available to everyone. Or you can make sure that when registering a new participant, everyone receives a notification reminding him to transfer money to him …
- Method for money transfers – changes in the entries of the currency register in accordance with the authority to access the write-off. Those. only the account owner can write off the amount from his array record and add this amount to another array record that already belongs to another account (this is the whole essence of electronic money – an array and transfers).
- Methods for control – with access only for the owner of the token.
- Methods for additional features – here we will collect at once all the remaining additional features that are hung on tokens. What exactly can be found here just below in the corresponding section.
- Client wallet – any interface that replaces token function calls with a user-friendly and pleasant graphic design with input fields, buttons, checkboxes and explanations. In most cases, a regular ether wallet is used as a wallet for tokens, which perfectly knows how to work with any tokens of the network..
- Token placement and access – such a token is introduced into the Ethereum blockchain and its address, along with the access interface, are published on the pages of sites for potential users.
Thus, a token is an application that functions on the Ethereum network and is accessed by methods programmed inside it. It does only what is implemented by these methods. To access the methods, you can use an ethereum wallet, mist, a virtual machine console, any interface for calling methods of network smart contracts, or an additional program specially written for these purposes, for example, with a web interface.
The functionality described above is sufficient for the token to work. But now there are a lot of tokens and it was very convenient for third-party applications to introduce certain standards to work with them. Those appeared at first behind the scenes, later on their basis standards began to appear under certain names and the use of these standards became not just a rule of good form, but also a requirement for the inclusion of tokens on cryptocurrency exchanges and, accordingly, a requirement from customers.
The standardization is based on agreements on the naming of the currency register, methods and events of the contract. Each method of the standard has a strictly defined set of parameters. In addition to the methods of the standard, a token can contain any additional number of methods that implement its extended functionality..
The following standards are used today:
ERC179 – the most basic functions for reading balance and transferring funds.
ERC20 – based on ERC179. It differs from its predecessor in the presence of a mechanism for the account owner to provide his funds for use by other network members. As you can imagine, such a mechanism makes the token more technically advanced, but on the other hand, such a mechanism is not often needed by someone. Therefore, now there are still new contracts based on ERC179. But ERC20 is now the “most standard” of the standards, and everyone recommends using it so as not to reinvent the wheel and so that there would be no problems with the placement of the token on exchanges..
ERC23 is a new standard based on ERC20 with additional protection against money loss when transfers to contracts not intended for this. There is also additional and optimized functionality for more economical use of GAS for transfers and for token management. Recommended for use.
Typical coin features
As we promised above, we will list the features of tokens that can be added at the request of the customer or in accordance with the urgent need from the idea of the project for which the token is intended:
- Standard – one of the above.
- Pre-issue – release of coins into circulation when a token is added to the blockchain
- Issue on request – the user transfers ether to the contract, in response, a token is issued and transferred to the user’s balance.
- Mining – you can implement the emission of coins by analogy with bitcoin.
- Destruction of a part of tokens – conditional or controlled decrease in the mass of issued tokens, for example, to strengthen the exchange rate of the coin.
- Freezing – suspension of the entire network, individual transactions or individual accounts for a certain time or certain conditions.
- Permissions – the ability to spend money from other people’s accounts with the permission of the owner.
- Exchange – manual or automatic (using oracles) setting the rate of the coin to ETH or other tokens and automatic exchange of the token when transferring ether or other tokens to it. As well as sending third-party tokens or ether from the balance of the contract itself in response to receiving a token from a counterparty. Of course, to send other people’s tokens from the contract, they must be on this contract.
These are just examples of commonly used token extensions. Any formalized task can be programmed, as already noted..
Development process cost
The technology itself is very new, complex and responsible. On the other hand, such solutions are sought for with the sole purpose of helping in the implementation of an idea that can be earned. The price for such a service, by definition, cannot be low..
For clarity, let’s explain using an example from real life. A super-sophisticated, modern, advanced tape recorder (if any are still available) will cost, say, $ 200. It contains technologies that cannot be replicated without the most advanced equipment and highly qualified personnel. But it costs only $ 200.
Simple way to create your own Crypto Coin on Ethereum
Now let’s take a wallpaper machine. It is very simple in design. Like a refrigerator, it just doesn’t freeze, but prints on a wallpaper rental. Its maintenance and repair, and production by and large, can be done by any “handyman of all trades” (he simply does not know about what a craftsman can do in production). But the cost of one supported wallpaper printer is hundreds of thousands of American dollars..
Where is the logic? – Everything is extremely simple: there is equipment for business that helps to make money, and there is disposable equipment for the end user. The same principle plays an important role in the pricing of tokens. Plus, add a small number of specialists here, since the market is new, the complexity of the technology and the peculiarity of responsible work with applications that cannot be changed after implementation. So it turns out that the price of standard tokens, which are written quite simply, will not be low. We will not voice it so as not to create new standards in pricing.
Ethereum network tokens are a full-fledged cryptocurrency. In terms of their technical capabilities, they are very much superior to the same bitcoin. At the same time, the real value of the token is determined by the project for which this token is being sold.
To create your new token, you should have a certain amount of knowledge in this matter in order to get that digital product that is more suitable for the realization of your goals..