Ethereum tokens and are they really just fractions of ether?

techtottechtot Member Posts: 314 ✭✭
Can someone explain if all the tokens on the ethereum chain are really just tied to some portion of the total ethereum value? For example if the OMG token is worth $8, is it really just holding .0266 of an ethereum on the eth block chain? (assuming ether=$300). Meaning does the more tokens on the chain = more total value in the chain, and does the ether total value include all of the tokens combined total value?

this helps me as a miner understand possible future value..

Comments

  • Techman34Techman34 Member Posts: 400 ✭✭✭
    No there is no correlation. ERC-20 tokens can be created on Ethereum by anyone at any time for any reason with no true value correlation. You creat 100 million Techtot tokens tomorrow and have no portion of Eth value associated.

    Now it could be argued that there is additional value created by good projects in the sense that Ethereum is needed to run the tokens and the ICO typically, but there is also value risk from ICO’s that dump the Eth they raised for whatever reasons (e.g. to deposit fiat in the bank or to buy Bitcoin when Bitcoin is rising like crazy, etc.)
  • techtottechtot Member Posts: 314 ✭✭
    I get what you are saying about tokens with no value. But what about all the ones that have value like OMG ($8), EOS ($1.60),etc ? When someone buys those tokens , they are using Ether to pay for them, so it must add value to the network or is ethereum just "keeping track" of them? I found this article, and the summary may explain what I am trying to understand..
    https://medium.com/@greg_10160/do-blockchain-tokens-have-value-6eeb2954e012
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