With NFTs and airdrops becoming more and more popular, here's a beginner's guide to how these tokens work and where you store them.
It is understandable if cryptocurrency and its associated concepts come off as gibberish in your first attempt at trying out crypto services and products. Like every other new technology, it might take a while to fully come to terms with the technicalities involved, especially if the processes almost always require a hands-on approach. This is why we have created guides detailing the core workings of crypto concepts.
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What Is a Token?
Another thing you need to know about tokens is that they are not held by accounts. Tokens exist in contracts, which function like decentralized databases that map tokens to the appropriate Ethereum address. Also, it is the token contract that governs and specifies the rules that apply to a given token. With this, developers set the name, symbol, divisibility and other important token identifiers.
What Is an ERC-20 Token?
Ethereum core developers concluded that it was not viable to promote a Wild Wild West ecosystem where developers can create different variants of tokens. Instead, they introduced token standards that govern programming on Ethereum and deliver high compatibility.
Considered the most popular token specification on the Ethereum blockchain, ERC-20 or Ethereum Request for Comments-20 was launched in 2015 and has since enabled the standards for creating digital assets that can interact seamlessly. In turn, wallets and other ERC-20 compatible services use this standard to enable their infrastructure to receive, store, exchange and send ERC-20 tokens.
How to Send ERC-20 Tokens
How to Receive an ERC-20 Token
Chances are you have found an interesting Ethereum project and you are looking to receive its native ERC-20 token. If this describes your current predicament, then you are in the right place.
It is advisable to research the compatibility of wallets beforehand. Ensure that your wallet does not only support ERC-20 tokens, but also lists the specific token you intend to receive, especially if you plan on receiving airdrops. In most cases, airdropped tokens are obscure digital assets that are yet to list on exchanges. If this is the case, it is unlikely that exchange wallet addresses would support such tokens.
When it comes to ERC-20 tokens, the recommended wallets are MyEtherWallet (MEW) and MetaMask. Whatever the ERC-20 token may be, you can be sure that they are accessible via these two wallets.
Before opening an account on either of these two ETH wallets, it is important to note that they are self custody wallets. Hence, they will store your private keys on your devices and expect you to write down and store your seed phrase. A seed phrase is a list of 12 random words that you are required to enter whenever you lose access to your wallet or forget your password.
How to Create an Ethereum Address on Metamask
- Visit https://metamask.io/ and locate the extension that is compatible with your browser.
- Click and install the appropriate extension.
- Once downloaded and installed, click on the extension icon and follow the prompts to create and confirm your password.
- Next, accept the term of use and give the extension the go-ahead to reveal your seed phrase. It is advisable to store multiple copies of these secret words in secure locations. Once you have backed up your seed phrase, the account registration process is complete.
- To view your ETH or ERC-20 address, navigate and select the Deposit Ether Directly tab. Then click on View Account to see and copy your address. You can now paste the Ethereum address on airdrop portals requesting an ERC-20 address to receive free tokens.
How to View ERC-20 Tokens on Metamask
So now that you have received airdropped ERC-20 tokens, how do you view them? This is quite straightforward as well, if you follow the following instructions.
- If you cannot find the token when you click the Assets tab, then you might need to add the token manually.
- Click the Add Token tab and select Custom Token to expand the search.
- You are required to enter the token address at the appropriate field. More often than not, the Token Symbol and the Decimal fields autofill. If not, then you might need to find the token project’s documentation to access the details. You can search for the token contract address on Ethereum blockchain explorers like Etherscan or Ethplorer. Better still, you may request the token address directly from the sender. Be wary of airdrops that do not reveal token contract addresses.
- Once you have filled all the fields, click Next and select Add Token to confirm.
How to Receive and View NFT Tokens on Metamask
Due to the explosion of airdrops for ERC-721 standard tokens or what is commonly called non-fungible tokens (NFTs), we have decided to detail some of the processes involved in receiving and seeing them in your wallet.
First, you need to access your Ethereum wallet address as shown above. Once the transaction is confirmed, it is recommended to view the NFT on the mobile app version of MetaMask since collectibles are not visible on the web version for now.
My Ether Wallet (MEW)
Ethereum Transaction ID
As you must have noticed, it is quite easy to set up an ERC-20 address and receive tokens. One thing you must however keep in mind is that transactions involving all ERC tokens require gas fees in ETH. Therefore, ensure that you have enough ETH to pay the fee before executing transactions.