What is an ERC20 Wallet? – ERC20 Token Standard Explained  

An ERC20 wallet is a digital wallet built for sending and storing ERC20 tokens. 

It is to an ERC20 token what a US bank account is to the US dollar—it helps users store, send, and manage ERC20 tokens.

In a crypto industry flooded with thousands of wallets and tokens, ERC20 wallets stand out as some of the most popular categories, largely for their robust Ethereum ecosystem. This leaves so much to learn about them. 

In this article, we discuss ERC20 wallets in detail, how they relate to the ERC20 token standard, the meaning of ERC20 wallet address, the various types available, and some vital things to look out for when selecting the best ERC20 wallet. 

This will be interesting. 

What is ERC20 Wallet? 

An ERC20 wallet is a software application or hardware device designed to store private keys in an ERC20 token smart contract. This digital wallet lets users send, receive, and trade the ERC20 token they hold in the Ethereum ecosystem. In addition, ERC20 wallets function as an address where tokens are kept and accessible, just like a bank account helps account holders access their fiat currencies. 

What is an ERC20 Wallet Address?

An ERC20 wallet address is a unique 42-character string of alphabets and numbers that uniquely identifies your ERC20 wallet on the blockchain. This string always starts with the prefix “0x” and is what another token holder uses to send or receive tokens directly from you and no one else. 

Here’s how it works: 

Anytime a user creates an ERC-20 wallet, they automatically get a public key that is used to construct the wallet address. This address is the only thing you need to give the sender to get tokens. On the other hand, in order to make sure that tokens are sent to the right place, you need to provide the recipient’s wallet address.           

Understanding the ERC-20 Token Standard

First things first, ERC-20 stands for Ethereum Request for Comment 20. It is a set of technological standards that outlines the guidelines that anyone interested in producing fungible tokens on the Ethereum blockchain must follow. In this context, “fungible” refers to assets that may be traded one-to-one. This means that each token is the same and has the same value as another token of the same kind, just like 1 US dollar is the same in value and property as any other 1 US dollar. 

So, why would anyone want to create a fungible token? 

Individuals and brands do this for many reasons, such as exchanging tokens for value, building a brand, prompting product adoption, or selling rare items. But that’s an entirely different discussion. 

As for ERC-20, this standard allows developers to produce tokens that easily communicate with other Ethereum wallets, network services, and apps. This implies that a new token can be utilized with ease and without encountering compatibility problems across different wallets, exchanges, and decentralized apps (dApps) as long as it complies with the ERC-20 guidelines.

Based on that understanding, any digital asset that complies with the ERC-20 standard is called an ERC-20 token. These tokens may stand for different types of value, like loyalty points, cryptocurrency, or even the right to possess tangible property. For instance, this standard is used to create well-known tokens like Tether (USDT) and Chainlink (LINK).

Bear in mind that Interoperability is the primary benefit of ERC-20 tokens. Any token that’s created based on these guidelines cooperates seamlessly with the Ethereum ecosystem. As a result, users won’t have to worry about technological differences between platforms while sending, receiving, and trading these tokens.

Key Components of the ERC-20 Token Standard

The ERC-20 standard specifies that tokens are created with smart contracts. As a result, the tokens can only be active and transferable after the conditions specified in the smart contracts have been met. 

So, what exactly are these guidelines that tokens must follow to be considered an ERC-20 token? 

A cryptocurrency wallet development company looking to build an ERC20-compatible wallet and token must ensure it possesses certain features to comply with ERC20 standards. These features aid in controlling the Ethereum network’s token creation and transfer processes. The functions include the following: 

• TotalSupply: The TotalSupply function in a token’s smart contract specifies the total number of tokens that will exist. 
• BalanceOf: This function returns the number of tokens a given address (such as a digital wallet) currently holds.
• Transfer: This feature allows users to transmit a predetermined quantity of tokens from their account to a different address.
• TransferFrom: It allows users to move tokens from one address to another on behalf of another person.
• Approve: This feature enables a user to grant permission for a smart contract or other address to withdraw a specific quantity of tokens from their account.
• Allowance: It determines how many tokens can still be withdrawn from a user’s account using an authorized address. 

Now that you have a good understanding of ERC-20, we can proceed to understand an ERC-20 wallet. 

Let’s go! 

Types of ERC-20 Wallets

Users can store their ERC-20 tokens in different types of wallet formats. However, they must consider each wallet’s security, usability, and accessibility to ensure proper management of their tokens.

On that note, the following are the primary kinds of ERC-20 wallets available for managing this unique category of digital assets: 

1. Software Wallets

These are applications that any user can download to their computer or smartphone to store their ERC-20 tokens safely. With ERC20-compatible wallets, users get an intuitive user interface that’s not only convenient but also secure. Everything happens on their digital devices. 

The following are some popular examples of software wallets: 

• MetaMask: You’ve probably heard of this one, as it is one of the most widely used wallets in the Ethereum ecosystem. It is a browser plugin that makes it simple for users to engage with the Ethereum ecosystem. With MetaMask, token holders can communicate directly with decentralized finance (DeFi) applications. The most important feature in this context is that it supports all ERC-20 tokens.
  
• MyEtherWallet: MyEtherWallet’s (MEW) web-based interface allows users to manage Ethereum and ERC-20 tokens without keeping private keys on their servers. For further security, it also connects with hardware wallets.
  
• Exodus: Known for its sleek and easy-to-navigate interface, the Exodus wallet is a user-friendly software wallet accompanied by an integrated exchange function. This function enables users to exchange ERC-20 tokens right within the application.

2. Hardware Wallets

These are actual physical wallets that help store the private keys to ERC-20 wallet addresses offline. Hardware wallets improve security by separating your credentials from potential internet attacks. They are arguably the most secure type of digital wallets because they store keys offline, away from the threats of hackers, viruses, or other cyber attacks. 

The following are the common examples of hardware wallets: 

• Ledger Nano S/X: The Ledger brand portrays itself as one of the safest and most secure ways to store cryptocurrencies and other digital assets. However, they’re on this list because most of their hardware wallets are particularly compatible with the Ethereum ecosystem, making them able to store ERC-20 tokens. Another awesome feature of Ledger hardware wallets is that they integrate seamlessly with other software wallets like MEW.
  
• Trezor: The Trezor hardware wallet offers native support for all ERC-20 tokens and other coins like Bitcoin, Cardano, and Litecoin. This means users can add, receive, and send these coins and tokens to and from one another using the Trezor Suite Application for desktop or web interfaces.
  
• KeepKey: This is another hardware wallet that allows users to manage their ERC-20 tokens on a very simple user interface. The hardware wallet provider recently formed a partnership with MEW to facilitate this seamless integration and migration of ERC-20 tokens. 

3. Mobile Wallets

These are digital applications for storing, managing, and transacting ERC-20 tokens on smartphones. They are very convenient and allow users to perform various activities involving their ERC-20 tokens on the go. Most ERC-20 mobile wallets help users process mobile payments faster with the help of a QR code. The following are some prominent examples: 

• Trust Wallet: Trust Wallet is a self-custodial wallet owned by Binance. It supports all kinds of ERC-20 tokens and even has an in-built exchange platform that makes it easy for users to swap and trade different tokens and cryptocurrencies all on the same platform. Most beginners often find it intuitive to learn the ropes of cryptocurrency and trading.
  
• Coinbase Wallet: This is another self-custody crypto wallet that supports all kinds of ERC-20 tokens and allows users to manage their token holdings right on their mobile devices. Unlike the Trust Wallet, the Coinbase Wallet is structured differently from the Coinbase exchange platform.
  
• Zengo: Although users can’t view their ERC-20 token holdings directly on the Zengo mobile application, the wallet does support the storage of any ERC-20 token. The mobile wallet combines security with ease of use by securing access to ERC-20 tokens with facial recognition technology. 

4. Web Wallets

You guessed it: this category of ERC-20 wallets can be assessed via the web. You don’t need to download a software program or mobile application. Neither do you need to carry them around physically. Instead, you can just log in to the web address via your browser, and you can access your tokens. 

Most of the examples listed above, such as MetaMask and the Coinbase Wallet, have web versions, which qualifies them as Web Wallets.

Related Read: List of Best Crypto Wallets of 2025

Factors to Consider When Choosing an ERC-20 Wallet

Based on the numerous ERC-20 wallet options available, it is important for you to select the most secure and user-friendly option to secure your tokens and manage them effectively and safely.

Looking out for the following important features can help you make the right choice. More so, businesses and brands looking to launch their native ERC-20 wallet should also consider these factors in the development process. 

1. Security

It goes without saying that the primary purpose of the wallet is to safeguard the tokens. Therefore, users must prioritize wallets with standard security features and a track record of ensuring the safety of digital tokens. 

Some of the important security features to look out for include the following: 

• Two-Factor Authentication (2FA): A 2FA feature mandates wallet holders to provide a secondary form of verification anytime they want to access or send their ERC-20 token. This provides an extra layer of security by ensuring that the real token holder receives a notification that keeps them aware of any transfers or changes occurring on their wallet address.
  
• Multi-signature Support: Multi-sig support also reduces the risks of unauthorized access by requiring two or more people to approve an outbound transaction before it can be processed. With this feature, the token holder has to add a second person who will verify every transaction. 

2. User-friendliness

Many members of the crypto community, especially beginners, find it difficult to navigate most crypto platforms and terminologies. Therefore, it is a smart thing to keep the interface of the token wallet simple enough for anyone to perform basic functions like sending and trading ERC-20 tokens. 

Some important features come together to define how friendly a token wallet is. These include: 

• Intuitiveness: This characteristic measures how easy it is for an average user to use the wallet features without getting confused. An intuitive wallet makes it easy for users to send, swap, and manage tokens effectively.
  
• Customization Options: The best ERC20 wallets allow users to use the wallet easily and reconfigure its interface according to personal preferences. This ability makes it easy to store and send ERC-20 tokens.
   
• Accessibility: Finally, the wallet must support multiple languages so that users in different regions can easily manage their ERC-20 tokens.

3. Compatibility

One of the major reasons why the ERC-20 token standard was created is the ability to use these tokens interchangeably. Therefore, it is important for a chosen ERC-20 wallet to be compatible with a wide range of ERC-20 tokens regardless of whether they’re popular or niche tokens. 

In addition, it is always better for the wallet to have built-in exchange functionalities. Finally, if that isn’t feasible, the wallet should at least be able to integrate with other exchanges so that it can facilitate smooth token swaps and liquidity management. This functionality will allow users to trade their tokens better. 

4. Backup and Restoration

It is very common and possible for users to forget their wallet passwords. A good ERC-20 wallet adequately prepares for situations like this by providing reliable backup and restoration options. This means that it has a clear mechanism for helping users regain access to their ERC-20 tokens even when they forget their password. 

The following are some of the best ways to ensure this: 

• Seed Phrase Backup: Most quality wallets assign a mnemonic phrase to the user after opening an ERC-20 wallet so that they have a guaranteed way of accessing their tokens regardless of the situation. This mnemonic phrase usually contains a list of words or characters that the user must enter in the appropriate order to gain entry.
  
• Multiple Recovery Options: These could be cloud backups or the seed phrase backup discussed above. A good wallet must have a combination of these backups to make backup and restoration possible and seamless. 

Conclusion 

With an ERC20 wallet, any person holding ERC20 tokens can easily trade with them or use them on decentralized apps as long as they’re on the Ethereum blockchain. This is due to the standards established on ERC 20. 

The same standards apply whether it’s a software, hardware, mobile, or web wallet. More importantly, if you’re looking to choose one among the numerous options available, you need to consider its security features, recovery and backup options, compatibility, and user-friendliness. In developing one of the best ERC20 wallets, these are the same features every crypto wallet development company should prioritize. 

Frequently Asked Questions (FAQs)