1

Trying to wrap my head around coins/tokens that uses the Ethereum blockchain.

Let's take for example Refereum that utilizes Ethereum smart contracts and is based off the Ethereum blockchain. Does this imply that they have joined the blockchain of Ethereum so that every transaction that's made on Refereum gets validated and stored on the Ethereum ledger?

If yes, does that also mean that the computers that are mining Ether is at the same time mining the coins of all the other ERC-20 tokens?

Or does Ethereum consist of one blockchain per coin, where the coin-creator themselves have to use PoW or PoS to validate the transactions? If this is the case, can they use another method to validate the transactions or are they bound by PoW as long as Ether is?

1

Does this imply that they have joined the blockchain of Ethereum so that every transaction that's made on Refereum gets validated and stored on the Ethereum ledger?

Correct. All Refereum transactions are actually just transactions involving the ERC-20 contract, which are just Ethereum transactions.

If yes, does that also mean that the computers that are mining Ether is at the same time mining the coins of all the other ERC-20 coins?

Not quite. ERC-20 tokens aren't mined - they're created when the contract is first intialised, and distributed during the ICO. There may be other functions in the token's contract that allow the supply to be changed at a later time. Only ETH is mined.

Or does Ethereum consist of one blockchain per coin, where the coin-creator themselves have to use PoW or PoS to validate the transactions?

If they're ERC-20 tokens, they exist on the main Ethereum chain.

I think the thing to get your head around is that tokens exist only in a smart contract on the Ethereum network. They're not "coins" in the same way that ETH is.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.