What are token standards?

What you’ll learn :

1. Why token standards are essential for cryptocurrency

2. The ERC-20 token standard

3. How do NFTs come into it? 

4. What other types of token standards are out there?

A globally connected world is only possible with the adoption of shared standards. This can mean how we measure and weigh things, assign financial value, or the best practices across industry, commerce, and technology. The blockchain ecosystem is no different. It needs standards to scale and thrive. The founders of Ethereum understood this, making token standards a fundamental part of their blockchain. But what are token standards?

As civilisations developed worldwide, each came up with its own standards for measuring things. Time is a good example. Despite being so fundamental to our lives, there is no one standard for measuring it.

The first calendars can be traced to Bronze age times based on the passage of the Sun and the Moon, but varying interpretations followed. Mayan, Julian, Hebrew, Buddhist, Gregorian, the list is endless. Though there is now broader agreement on standards for measuring time, there still isn’t a universal system. The same applies to weights and measures.

The Imperial system used in Great Britain was formalised in 1824 and exported across its empire, including America, where it is still widely used today, from the NFL to describing how much a person weighs. 

But at the same time, France, its great European rival, had come up with a different measuring standard, based on the ‘metre’. The British snubbed an invitation to participate in developing that system, so the Imperial and Metric systems fought a battle for dominance, which today still forces painful conversions.

You could fill an encyclopedia, let alone this blog piece, with more examples of competing standards creating friction and making the world less scalable. That point wasn’t lost on Ethereum’s founders, whose ambition was to develop a scalable and friction-free world of digital applications (dApps) using an architecture that included a set of common standards for exchanging value – token standards.