ERC-20
ERC-20 is the token standard on Ethereum for interchangeable tokens, units that are all identical and freely swappable, the way one dollar bill is worth exactly the same as any other. Most of the coins people trade that are not the network's own native coin, including many stablecoins and project tokens, follow this standard. It exists to answer a simple question: if anyone can create a token, how can every wallet and exchange handle a brand-new one without custom work? ERC-20 is the shared rulebook that makes that possible.
The standard defines a short, fixed list of functions a token contract must provide. These let anyone check the total supply, check a given address's balance, transfer tokens from your own account, and, importantly, approve another contract to spend a set amount on your behalf, then have it pull those tokens when needed. That last 'approve and pull' pattern is what lets you authorize an exchange or lending app to move your tokens for a swap without handing over full control of your wallet. Because every ERC-20 token answers to the same function names, software can treat them all the same way.
ERC-20 matters because it became the common currency of the Ethereum ecosystem and the template others copied. Its predictable interface is why a single wallet can hold a long list of different tokens, why a decentralized exchange can support new ones instantly, and why tokens plug so smoothly into lending, trading, and payment apps. It is a foundational example of how a simple shared standard can unlock an entire economy of interoperable assets.
A stablecoin meant to track one dollar is typically an ERC-20 token. Because it follows the standard, you can hold it in almost any Ethereum wallet, send it to a friend, or swap it on an exchange, all using the same transfer and approve functions every ERC-20 token shares.
ERC-20 tokens are interchangeable by design; for unique, one-of-a-kind items the network uses a different standard, ERC-721.