A standard is an agreement about shape, not substance. ERC-20 defines the handful of functions a fungible <a href="/glossary/token/">token</a> contract must expose — total supply, balance of an address, transfer, approve, transfer-from — along with the events it should emit. Because thousands of contracts implement the same interface, a wallet that understands one ERC-20 token understands them all.
It helps to be clear about where the balance actually lives. Your wallet does not hold an ERC-20 token the way it holds the chain's native coin; the token contract keeps a ledger of addresses and amounts, and your wallet simply reads your row from it. Moving tokens still costs a fee paid in the native currency, so an address full of tokens but empty of it cannot send anything.
The approve-and-spend pattern is where beginners get caught. Granting an application permission to move your tokens is a separate transaction from the swap itself, and many interfaces default to an unlimited allowance that stays live long after you have finished using the app. Review old approvals and revoke the ones you no longer need rather than leaving open doors behind you.
Finally, the standard is permissionless: anyone can deploy a contract, call it whatever they like and copy a well-known name and symbol exactly. The contract address is the only reliable identifier. Confirm it from a source you trust before interacting — our <a href="/toolkit/how-to-spot-crypto-scams/">guide to spotting crypto scams</a> covers the usual set-ups. Separate standards handle other behaviours, such as non-fungible tokens, on the same <a href="/category/cryptocurrencies/ethereum/">Ethereum</a> base layer.
Key takeaways
- ERC-20 guarantees an interface, not quality, backing or legitimacy.
- You need the chain's native coin to move a token, even when the token itself is what you are sending.
- Token approvals persist until revoked, so an unlimited allowance is a standing permission you left switched on.
ERC-20 — frequently asked questions
Why do I need ETH to send a token I already own?
Because the transfer is a call to the token's contract, and every contract call is executed by the network for a fee. That fee is charged in the chain's native currency, not in the token being moved. A wallet showing a healthy token balance and an empty ether balance is effectively stuck until you fund it with a small amount of ether.
Are two tokens with the same name the same token?
No. Names and symbols are free text chosen by whoever deployed the contract, and duplicates are common — including deliberate copies of well-known projects. The contract address is the real identity. Always confirm that address from the project's own documentation or a reputable data source before adding a token to your wallet or swapping into it.
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