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We all hear about ERC20 tokens but what are those tokens and most importantly: what are they not? To start with, lets quickly go over some basics: ERC20 tokens exist on the Ethereum platform and that in itself consists out of a blockchain that is capable of storing transactions and a virtual machine that is capable of running smart contracts. Its important to understand that tokens live on the Ethereum blockchain. They benefit from its technology. They arent independent and rely on Ethereums blockchain and platform. The native currency on the Ethereum network is Ether. But besides Ether, it can also support other tokens and these can work like currencies but they can also represent shares of a company, loyalty points, gold certificates and so on But were running ahead a bit. Lets first look at how tokens come into existence. A token can be created by a smart contract. This contract is not only responsible for creating tokens but also for managing transactions of the token and k