Just like Ethereum makes it possible to build new protocols on top of its blockchain, it also makes it possible to use smart contracts to build new tokens on top of its blockchain. Let’s call these types of tokens “non-intrinsic tokens”. In this regard, broadly speaking, we can think of a token system as just a database with one operation: subtract X units from A and give X units to B, under the condition that: A had at least X units before the transaction The transaction is approved by A Ethereum makes it especially easy to implement such token systems. More specifically, ERC20 token interface provides a standardized way to develop a token that is compatible with the existing Ethereum ecosystem, such as development tools, wallets, and exchanges.
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