The term “token” popped up and it meant that the coins were not only a type of currency anymore. Tokens started flourishing all of a sudden and all of them had a wide range of functions. ERC20 is simply a subset of Ethereum tags. ERC20 is the standard interface for the token code. It enables seamless interaction with smart contracts and applications enabled on Ethereum blockchain.
Types of Tokens
The security token is also popularly called equity token and tokenized security. The main purpose of this type of token is to act as a stock after the initial coin offering has ended.
These tokens, however, have one big advantage compared to the traditional stocks – they are much easier to buy. Some ICOs offer a relatively small price for their tokens and you can invest really small amounts of money. If everything goes well – you are likely to have a huge return on investment.
Utility tokens do not have the traits of the classic cryptocurrency but serve as the in-platform coins for purchases. This category provides access to the goods & services that the project will launch in the future. Also, they can be used as a type of discount or premium access to the goods & services of the project.