Token standards: what separates ERC-20 from ERC-721
A token standard defines not what a contract does but how it is spoken to from outside. ERC-20 is for tokens that are interchangeable, ERC-721 for those that are not. We explain what a standard guarantees, what it never guarantees, and why compliance with a standard says nothing about whether a token is safe.
In brief
A token standard defines not what a contract does but how it talks to the outside world.
Two tokens speaking the same interface show up in the same wallet and trade on the same exchange. Ethereum's documentation sums up the job of a standard this way:
"Token standards help ensure smart contracts remain composable, so when a new project issues a token, it stays compatible with existing decentralized exchanges and applications."
The two basic kinds
ERC-20 is for tokens that are interchangeable. One unit of yours equals one unit of mine; it behaves like money.
ERC-721 is for tokens that are not. Each unit carries its own identity; it behaves like a deed.
The difference is conceptual rather than technical: one is counted, the other is individuated.
ERC-1155 aims to hold both in a single contract and bundle transactions to cut costs.
What a standard does not guarantee
This section is the reason the article exists.
Following a standard does not make a contract safe. The standard defines the interface: which functions exist and how they are called. It does not define what happens inside those functions.
A contract that follows the standard can still mint more supply later, pause transfers, or block particular addresses. None of that breaks the standard.
So "ERC-20 compliant" is a statement of fact, not a statement of assurance.
Commonly confused
Compliance is not an audit. Following the standard does not mean the contract has been read or reviewed. Those are separate jobs.
Permissions sit outside the standard. Whether the owner can mint more, pause transfers or block addresses cannot be learned from the standard; that requires reading the contract.
A token is identified by its address, not its name. A standard does not make names unique, and any number of tokens can share one. The contract address is the only thing that separates them.
Worth remembering
A standard is a language, not an assurance. "ERC-20 compliant" tells you how a token speaks, not what it does.
Risks
Biggest uncertainty A standard defines only the interface; it says nothing about what the contract does inside, who holds authority over it, or whether it is safe.
Things to watch when applying this:
- Mistaking a standard for safety. This is the most common error. A standard defines the interface, not the intent.
- Acting on a name. You find a token by its contract address, not its name. Dozens of contracts can share one name.
- Assuming the list is complete. Three standards are covered here; others exist and new ones keep arriving.
Sources
This article rests on the sources below. Whether each has a permanent copy is stated next to it.
- #1
Standardın ne işe yaradığının, ERC-20 ve ERC-721 tanımlarının kaynağı.
ethereum.org· no permanent copy· no screenshot· cited 4 times in the text
Evidence chain: 1 sources
Tweets get deleted, sites go down. Below is whether a durable copy exists for each source.
Sources (1)
- #1
Standardın ne işe yaradığının, ERC-20 ve ERC-721 tanımlarının kaynağı.
“Token standards help ensure smart contracts remain composable, so when a new project issues a token, it stays compatible with existing decentralized exchanges and applications.”
ethereum.org/en/developers/docs/standards/tokens/- no durable copy: if the source disappears, this claim loses its basis
- no screenshot captured