ERC-20 is the technical standard upon which the issuance of smart contracts on the Ethereum blockchain is based. "ERC-20" refers to Ethereum Request for Comment #20, which was a format for standards development used earlier by the Ethereum Foundation.
Tokens are digital assets which represent contracts that can have value. All tokens on the Ethereum blockchain use ERC-20, which allows for tokens to be traded against each other. All transactions in tokens, such as for transfers or changes to a tokens database, take place on the Ethereum blockchain and are paid for in ether.
ERC-20 specifies the following six mandatory standards for use in smart contracts:
And there are three optional, albeit useful, standards: