I am aware that there is a lot of documentation on ERC20. However because of all the hype about new tokens it is getting hard to find good material that isn't about ICOs.

I am wondering why are there so many ERC20 based tokens? What is the advantage of using a custom token? To the best of my understanding, the ERC20 tokens are validated and mined by Ethereum full nodes.

Can't all systems built using an ERC20 token just use ETH as a currency for transactions?

1 Answer 1


On a custom ERC20 token you can add features that are not achievable using ether only, as long as you add the right methods to your contract.

For instance you can keep a mapping of all owners of your token, and implement a kind of interest rate. You can also control the emission and destruction of token. And in the general case you can add any feature related to your service.

With fiat money, you can compare with cities using parallel local currencies that inflate quickly instead of euros, in order to sustain local consumption.

  • What do you mean by "implement a kind of interest rate"? What do you mean by "add any feature related to your service"? How is using local currency better than using euros? Commented Jan 11, 2018 at 9:54
  • To encourage people to keep your token you could reward them by (wisely) increasing each month their balance of a given percentage, like in a bank. Any feature can be... like any method you can code within your contract. A quickly inflating local money encourage people to consume locally and spend their money instead of keeping it in their bank.
    – Tholoz
    Commented Jan 11, 2018 at 21:12

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