ERC223 vs ERC20
Most people are aware of what the ERC20 standard for tokens is, but in case you need a refresh: Tokens are meant to represent something of value. These tokens, issued on the Ethereum blockchain, either represent a financial value or exist in some form as a digital asset. In the beginning, compatibility with projects and services was a major issue and concern throughout the community. Thus came the ERC20 token standard, which was supposed to make it easier for tokens to have native support for future projects. ERC20 succeeded in this, with virtually all existing tokens making the switch practically overnight. However, with this solution came other unforeseen problems that needed to be addressed within the community. As such, the new ERC223 standard for tokens was created.
The main improvements that the ERC223 standard implements are:
1. The ability for developers to properly manage incoming token transactions, with additional capability to reject and revert non-supported tokens to their user, which is not possible with ERC20.
2. It eliminates the possibility of losing tokens when transferring tokens to a contract or wallet address. This happens most frequently when users accidentally send ERC20 tokens to a token contract address and not to an ethereum address, causing the tokens to be lost inside the contract and inaccessible to anyone, forever. This is because token contracts only track and distribute money without storing them. Upwards of $400,000 has been lost due to these mistakes. ERC223 resolves this by using a tokenFallback function, which prevents tokens from being permanently held in the contracts. ERC223 also allows users to send tokens to either a wallet or a contract with the same transfer function, much like Ether.
3. ERC223 tokens are backwards compatible with current ERC20 tokens, meaning all the functions and capabilities of the ERC20 tokens will work properly with ERC223.
4. Transfers become just one single transaction, instead of two, costing half as much gas as they did with ERC20 – meaning you get to keep more money in your wallet!
If ERC223 is to become the ‘gold standard’ for tokens, all of the current ERC20 tokens will have to be redistributed in accordance with the ERC223 standard, and all of the would-be outdated platforms would have to update all of their contract addresses and information. This would be a very laborious and time consuming endeavor, which might mean that not everyone will be on board with switching over to ERC223 right away. Another solution could be creating brand new ERC223 tokens that are backed by a contract that holds the old ERC20 tokens. Only the future can tell what the fate of tokens and cryptocurrency alike will be.