What are ERC20 tokens?

Many existing applications could run on Ethereum Virtual Machine EVM has been envisioned, the main use for Ethereum’s technology in 2016 and 2017 was that of companies not having to create their own blockchain, but rather creating their own tokens through a smart contract on Ethereum.
These so-called ERC20 tokens (Ethereum Request for Comments Nr. 20) define six very easy functions:

1. total token amount,
2. how many tokens anyone has,
3. where to transfer tokens from
   and
4. to whom,
5. whether something gets approved or not,
6. and if a certain feature is allowed or not. Instead of companies having to invest into their own blockchain with miners, servers, etc., it now takes half an afternoon to create their own “currencies.” It simply relies on Ethereum’s infrastructure.