Chapter · Master Ethereum
Tokens and NFTs
Anyone can create a token on Ethereum by writing a smart contract. To make wallets and apps understand these tokens, developers follow shared recipes called standards. ERC-20 is the standard for interchangeable tokens, where every unit is the same, like coins or points. ERC-721 is the standard for non-fungible tokens, or NFTs, where each item is unique, like a numbered collectible. Because they follow a standard, thousands of tokens work in the same wallets.
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What this lesson covers
A word of caution
Because anyone can mint a token, most new tokens are worthless or outright scams. A token existing on Ethereum says nothing about whether it is safe or valuable. Always ask who made it, what it does, and whether the contract has been reviewed. Standards make tokens work together, but they do not make any single token a good idea.
What you get asked
What does the ERC-20 standard describe?
ERC-20 is the recipe for fungible tokens. Each unit is the same as any other, which is what you want for a currency-like token.
A unique digital item on Ethereum, like a numbered collectible, is called an ___.
NFT stands for non-fungible token. Non-fungible means one of a kind, so each NFT is distinct rather than interchangeable.
Match each token type to a fitting example
Fungible tokens like stablecoins use ERC-20. Unique items like collectibles use ERC-721. The words fungible and non-fungible just mean interchangeable or one of a kind.
Why is following a token standard useful?
Standards create a common interface. A wallet that supports ERC-20 can handle almost any ERC-20 token right away, which is why the ecosystem grows fast.
The rest of this chapter
Learn how Ethereum works as a programmable blockchain, from smart contracts and gas to staking, Layer 2s, and DeFi.