ERC-20
In short ERC-20 is the standard set of functions that fungible tokens on Ethereum and EVM chains implement so wallets, exchanges, and DEXs can handle them.
ERC-20 is the technical standard for fungible tokens on Ethereum, meaning tokens where every unit is interchangeable, like dollars. It was proposed in 2015 and became the template for most tokens on Ethereum and on EVM-compatible chains. Stablecoins, governance tokens, and meme coins on Ethereum are usually ERC-20 contracts.
The standard defines a short list of functions and events: totalSupply, balanceOf, transfer, approve, allowance, and transferFrom, plus Transfer and Approval events. Because every token exposes the same interface, a wallet or DEX can support any new token without custom code. Your tokens are not stored in your wallet; the token contract keeps a ledger of balances, and your wallet just reads it.
For buyers this matters in two ways. First, sending and trading ERC-20 tokens costs gas in ETH, not in the token itself, so you need ETH to move them. Second, the approve function lets you grant a contract permission to spend your tokens, which is how DEX swaps work. An unlimited approval to a malicious or hacked contract can let it drain that token from your wallet later.
The standard only defines the interface, not good behavior. A contract can follow ERC-20 and still include a mint function, transfer taxes, blacklists, or pause switches that the owner controls. Read the verified source on a block explorer, check who owns the contract and what admin functions exist, and review your token approvals from time to time, revoking ones you no longer need. Always use the contract address, not the ticker, since anyone can create a token with the same name.