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Ethereum Classic Review: The Original Ethereum Blockchain
Although Ethereum Classic is a well known Ethereum fork, there are a number of things that are making this project stand out in its own right.
There are benefits to Etheruem Classic from being a fork. Given the similarities to Ethereum, exchange integration is that much easier and this is what has spurred a widescale adoption of Ethereum Classic and its native ETC token.
However, is it really worth considering?
In this Ethereum Classic review I will attempt to answer that. I will also analyse the long term adoption and price potential of ETC tokens.
What is Ethereum Classic?
Ethereum Classic is a blockchain-based decentralized cryptocurrency platform, and the oldest to run smart contracts, although it isn’t the most well known to include these self-executing autonomous applications.
The Ethereum platform, which is the blockchain that forked to create Ethereum Classic, is probably the best known smart contract platform, but many don’t know it isn’t the oldest.
Etheruem fork from Ethereum Classic. Image Source
Smart contracts on Ethereum Classic are used to give the benefit of a decentralized governance system. Through the use of smart contracts, Ethereum Classic guarantees that there is no possibility of any censorship, manipulation, monitoring, or external interference in its governance system.
This was the original intent for smart contracts, and Ethereum Classic held to it after the June 2020 split in the Ethereum blockchain that created Ethereum Classic. That split occurred as a response to the DAO hack that saw $70 million stolen in a matter of minutes.
Ethereum Classic Fork
The group that championed the fork had as their intention to roll back the blockchain to a point prior to the hack, thus restoring the lost funds. Those championing Ethereum Classic, which is the original Ethereum blockchain all the way back to the genesis block, felt that while it initially seemed right to restore the stolen funds, there was a very good reason not to do so.
According to the ETC Declaration of Independence, there were several grievances held against the founding members of Ethereum, most of which revolved around actions taken that were against the principles of decentralization.
Most importantly though they claimed that a hardfork to restore the lost DAO funds violated two key aspects of what gives peer-to-peer cash and smart contract-based systems value: fungibility and immutability.
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History of the DAO Hack. Image Source
Fungibility is the feature in any money whereby one unit of the currency is equal to any other unit of the currency. So, one dollar is equal to any other dollar, and one Bitcoin is equal to any other Bitcoin.
In the case of Ethereum, the Ethereum Classic backers claim that by rolling back the blockchain one ETH is no longer equal to one ETH. The rollback made the $70 million in ETH stolen not as good as other ETH, and deemed worthy of censorship.
Immutability means that a blockchain in unchanging and inviolable. The transactions that have been deemed valid are those which have been accepted by the network through the mathematical cryptographic protocol.
This allows transactions to be unquestioned, and if this is broken we have to consider that all transactions are now questionable, since a mutable blockchain means any transaction might be modified. This leaves the blockchain open to fraud, and calls into question all of the distributed applications running on top of the blockchain.
Why Ethereum Classic
Despite being overlooked by many, Ethereum Classic consistently has some of the largest blockchain network activity. The activity is on-par with that of Litecoin, and is greater than what we see from Bitcoin Cash.
Why Ethereum Classic. Image via website
In addition to the network activity, Ethereum Classic also has a large number of commited developers. In fact, there are three different developer teams committed to the long-term vision of Ethereum Classic.
Added to all of this are numerous outside funding sources, and a commitment to creating a secure network anyone can use, which helps Ethereum Classic continue to grow a little more each day, each week, and each month.
Guiding Principles of Ethereum Classic
Ethereum classic is run on the principles of immutability, community, and technology. As the longest running smart contract blockchain in existence, you can have confidence that the Ethereum Classic blockchain will continue to exist as a store of value, not be swept away by some errant developers vision.
Ethereum Classic Technology
Ethereum Classic runs on the mathematically verified Ethereum Virtual Machine (EVM) and is a highly efficient means for transferring value and running Internet of Things (IoT) applications. All together this makes Ethereum Classic a highly efficient means of exchange that is capable of connecting all the world’s IoT devices.
In addition, Ethereum Classic has several developer teams working on improving the technology and creating partnerships that will spread Ethereum Classic usage to every area where blockchain technology can be beneficial.
Ethereum Classic Immutability
Any Ethereum Classic account cannot be modified by anyone but the owner. This is a philosophy shared by cryptocurrencies such as Bitcoin and Litecoin. Other blockchains use another philosophy known as governance whereby the holders of the cryptocurrency are able to use economic or social power on the blockchain to vote on changes that affect everyone’s account.
Ethereum Classic’s developers don’t believe in this model. Imagine if banks allowed account holders to vote on account changes based on how much money each person had in their account. It means the richest account holders could vote for changes that effectively took the money from the smaller account holders.
Governance is a system where the rich and powerful, those who have the most fame and notoriety, are the ones who have the final say over the monetary system. Ethereum Classic has been designed so that this will never happen.
Ethereum Classic Community
Even though blockchains are predominantly known as decentralized ledgers, the truth is that many have centralized communities and leadership. This means there are a relatively few number of people making decisions for everyone.
Ethereum Classic has been purposefully structured so this cannot happen. Development responsibilities are spread out among many different parties, which avoids the hidden centralization that other blockchains fall victim to.
The Atlantis Hardfork
Ethereum Classic completed the Atlantis Hardfork on the 12th of September 2020.
As we’ve seen earlier in this article a hardfork is a radical change, and can be done to reverse transactions. Hardforks are also used to fix security holes, and to implement changes or add new features. In the case of the Atlantis hardfork, it is being undertaken to add both security fixes and new features to Ethereum Classic.
According to Ethereum Classic Labs, the Atlantis hardfork is a no-rush update meant to expand functionality and improve compatibility with Ethereum, thus leading to easier collaborations with other blockchains. The hardfork will also improve the stability of the Ethereum Classic network in an effort to avoid the type of 51% attack suffered by Ethereum Classic in January 2020.
The Atlantis Hardfork. Image Source
Basically, the hardfork is being undertaken to implement a number of Ethereum Improvement Proposals (EIPs) that have been agreed to by the community. Some of these have been around for years, and with the hardfork, Ethereum Classic will be pulled up to the latest Ethereum protocol, which will allow for better interoperability between the two blockchains.
Overall there will be 10 EIPs implemented by the hardfork, including enhancements to security, improvements to performance, contracts to improve zkSNARKs, operational code upgrades, and improvements to the stability of the Ethereum Classic network.
The proposal for the hardfork can be viewed on GitHub, but the Simple Summary is:
“Enable the outstanding Ethereum Foundation Spurious Dragon and Byzantium network protocol upgrades on the Ethereum Classic network in a hard-fork code-named Atlantis to enable maximum compatibility across these networks.”
The Atlantis fork is expected to allow for wider interoperability between blockchains and off-chain scaling protocols. It is important to provide this interoperability between blockchains because it is necessary if the traditional banking and payment systems are to be disrupted.
Unlike many other blockchain projects, the development of Ethereum Classic is not under one single team. There is a core team under Ethereum Classic Labs, but there are other groups undertaking parts of the Ethereum Classic ecosystem. All these groups work together to further the growth and adoption of the Ethereum Classic protocol.
Ethereum Classic Labs (ETC Labs)
The team at ETC Labs is where the Core development team resides, and itprovieds the office space for projects as well as developing industry connections, and providing funding for the Ethereum Classic project.
Image via Ethereum Classic Labs
The ETC Labs has office space in San Francisco and Singapore and operates with the long-term goal of accelerating the development of all Ethereum Classic projects as well as supporting the Ethereum Classic ecosystem and community.
The ETC Labs Core team does the bulk of development for Ethereum Classic projects. It is also involved in supporting the needs of the blockchain and providing the necessary tooling for dApp development, mining and blockchain services. The ETC Labs Core team works under a mission statement that values backward compatibility, decentralization, and state immutability.
ETC Cooperative (ECC)
The ECC was created as a financial support for the development of Ethereum Classic. It provides funding for three key aspects of the Ethereum Classic ecosystem, namely marketing, development, and community.
To achieve their objectives they also act as a liason between the different teams, as well as maintaining some of the community-based software, and also reaching out to other Ethereum-based communities.
This branch of the Ethereum Clssic development team is focused on creating a strong Ethereum Classic ecosystem, with immutability as the core foundation of the blockchain. The team primarily consists of math and science driven developers and engineers, some of whom have been with Ethereum Classic since the beginning.
The primary focus of the team’s development is the node client Mantis, which provides a simple connection to the IOHK Daedalus Wallet UI, so that users may easily manage their ETC tokens.
As a fork of Ethereum, the second largest cryptocurrency, and with a history going back to 2020, it’s not surprising to see the size of some of the communities based around Ethereum Classic.
The largest of these is their Twitter presence, where they have 230,000 followers. They participate heavily on Twitter as well, with multiple daily tweets and re-tweets from other notable cryptocurrency projects.
The sub-Reddit for the project is also pretty impressive, with just under 25,000 followers. There is also quite a bit of activity here, with several posts on most days, and numerous replies to many of those posts. It is definitely a vibrant and active community.
A less active space is the Ethereum Classic forums, but that’s likely because people tend to gravitate towards the well-known sub-Reddit for their questions and discussions. Still, the forum has activity on a daily basis, and is far from defunct.
Last, but certainly not least are the Telegram and Discord channels for the project. The former has more than 6,200 users currently, and the latter isn’t far behind, with nearly 6,100 users.
The ETC Token
When ETC launched in July 2020 it was just under $1. The day after it launched it hit its all-time low of $0.452446 and hasn’t looked back. It quickly jumped higher, and reached $3.53 within a week. It couldn’t hold that level though, and slowly crept lower until trading back under $1 by October 2020.
It remained between $0.80 and $2 until March 2020, and then began a rally that saw it climbing in leaps and bounds over the coming months. By May it was over $7 and by the end of that month, it had topped $20. It continued around the $20 level for most of the summer of 2020.
ETC Price Performance. Image via CMC
By September it had cooled somewhat and spent the next two months trading between $10 and $12 for the most part. The rally resumed in November and ETC quickly climbed through the $20 level, then the $30 level, and the $40 level, finally hitting an all-time high of $47.77 on December 21, 2020.
After struggling to maintain higher levels, and briefly topping $40 again in February 2020 the token dropped, spending most of the next six months trading between $15 and $20.
From there it continued to trade lower, not bottoming until it got below $5 in early 2020. It was able to recover by June, nearly tapping $10 again. It slipped in July and August and as of September 2020 is trading at $6.30.
Buying & Storing ETC
If you’re looking to purchase ETC it is available on nearly all the major exchanges, and most of the smaller exchanges as well.
Taking a look at the broader market volume, it appears to be quite high and well spread out across the range of exchanges. This means that the liquidity is not dependent on a single exchange which bodes well for the trading of the token.
Register at Binance and Buy ETC Tokens
Taking a bit of a closer look on the individual exchange order books, they appear to be quite healthy. For example, on Binance the ETC / BTC order book appears to be quite deep and there is strong turnover here. Hence, there is unlikely to be a great deal of slippage on the orders.
Once you have bought your ETC you are going to want to take it off the exchange and keep it in a secure offline wallet. There are a number of wallets that support the token. We have previously covered a list of the best Ethereum classic wallets which will no doubt have the right wallet solution for you.
While there has been a great deal about the development of Ethereum Classic in the press, are the actual results borne out?
One of the best ways to determine raw development output on an open source project is by taking a look at their public code repositories. Hence, I decided to move on over to the Etheruem Classic GitHub.
In their GitHub I took a look at the number of code commits that have been pushed over the past year. Below are the total commits to three of their most relevant repositories.
Commits over 12 months to Select repos
As you can see, there has not been that much activity in these repositories. This is only a mere fraction of the code that is being pushed in the Ethereum GitHub. Admittedly though, there are way more developers working on Ethereum.
You also have to consider that a great deal of the Ethereum Classic development is taking place in other repositories like that of ETC labs for example. You also have a whole host of development that is being done on top of the Ethereum Classic protocol. You can head on over to their website and see all the projects building on it.
Ethereum Classic was created by a group of developers and community members who felt that Ethereum wasn’t staying true to the principles of decentralized cryptocurrencies when the leadership decided to roll the blockchain back in order to return stolen funds to users from the DAO hack.
While it seems noble on the surface, it undermines the very qualities of fungibility and immutability that cryptocurrencies are valued for.
Since the split from Ethereum the Ethereum Classic project has continued to grow and prosper, showing that it wasn’t just a whim that led the founding members to split from Ethereum. Whether it can continue to grow and expand its reach remains to be seen, and such a question is always a big unknown in the new frontiers of blockchain development.
While we aren’t certain Ethereum Classic brings anything new, other than its “Code is Law” philosophy, it brings enough that it can be one of the surviving blockchains once the inevitable consolidation in the space begins.
Featured Image via Fotolia
- Posted in: Analysis, Review
- Tagged in: Atlantis Hardfork, DAO, DAO Hack, EIP, ETC, Ethereum Classic, EVM
Posted by Steve Walters
Steve has been writing for the financial markets for the past 7 years and during that time has developed a growing passion for cryptocurrencies.
Ethereum Classic vs Ethereum (ETC vs ETH): What’s the Difference?
Ethereum is a fork of Ethereum Classic that reversed the results of the DAO hack. The two projects are now run by different development teams with the Ethereum Classic team and supporters believing that a blockchain should stay immutable no matter what.
Ethereum Classic (ETC) is the original Ethereum blockchain and allows for the implementation of decentralized applications and smart contracts. The ETC blockchain is truly immutable and will never be altered.
Yes. Ethereum Classic still has active developers, miners, and a strong group of supporters.
Ethereum Classic vs Ethereum (ETC vs ETH)
A quick look at any cryptocurrency price list shows two different types of Ethereum, one being Ethereum (ETH) and the other being Ethereum Classic (ETC) .
The two cryptocurrencies not only share the same name but also share an interesting story that is one of the most pivotal events in all cryptocurrency history. The battle between Ethereum and Ethereum Classic is one of ethics and ideologies.
Before there were two different Ethereums, there was only one Ethereum. Since then, $50 million was stolen by an unknown hacker or hackers, and this resulted in two distinct camps of people in the cryptocurrency world being formed.
Here’s how Ethereum – as we now know it – came to be, and how it compares to Ethereum Classic.
An Introduction to Ethereum
In broad strokes, both Ethereum and Ethereum Classic are platforms on which various applications can be built.
A smart contract is a contractual state that is stored in the blockchain , and it executes when certain conditions are met. They are controlled and enforced by the blockchain, which serves as an objective and unbiased third party to the transaction.
These smart contracts essentially run the entire ecosystem of Ethereum . Since these contracts are automated and enforced, transactions and applications that run on the Ethereum platform have become very appealing to all sorts of different applications.
These applications, referred to as DAPPs (decentralized apps) have a wide variety of functionalities and purposes, all using the Ethereum platform to function.
To get an idea for the myriad of different DAPPs out there, take a look at the State of the Dapps .
Enter the DAO
The most pivotal moment in the ETC vs ETH split has to do with an organization known as the Decentralized Autonomous Organization, or the DAO.
The DAO was essentially a decentralized sort of venture capital or hedge fund that was going to fund decentralized applications (DAPPs) built on the Ethereum ecosystem.
The way the DAO was set up would give funders the power to say which DAPPs get funding. The investors would have to buy DAO Tokens using Ether as the currency to buy them. The DAO tokens integrated holders into the DAO system and gave them a certain amount of voting power.
The way DAPPs were to get approved had a pretty straightforward process. First, they would have to be white-listed by reputable figureheads in the Ethereum community who acted as curators. Next, the DAPPs would be voted on by those who held DAO tokens. Once the proposal got an approval of 20% in the vote, they would then get a share of the DAO funds required to get started.
The flexible process and seemingly immense potential the DAO offered had gathered a frenzy of people jumping in to get in on the action. Within the first month of the DAO’s formation, it raised over $150 million of ether.
Funders that wanted to exit out of the DAO had access to an exit door called the “Split Function” . This “Split Function” would give the funder the ether they had invested, and give them the option to create their own “Child DAO” , which essentially acted as a smaller version of the DAO. The only stipulation was that the funders had to hold their ether for 28 days before they could spend them. This “Split Function” exposed a giant loophole in the DAO system.
At its peak, although the DAO raised around $150 million by crowdfunding, it had some serious security problems. The structure, particularly the “Split Function”, behind the DAO itself wasn’t particularly air-tight, and on June 17th, 2020, some unknown person or persons took around $50 million. Some people claim it was a hack, but to call it a hack would severely overestimate the technical prowess necessary to break into this poorly guarded platform.
In other words, the system could have been broken into by anyone with a few basic skills.
The DAO Hack – The ETC vs ETH Origin
To exit the DAO, all someone had to do was send a request and the splitting function would then refund the user their Ether in exchange for their DAO tokens, and update the ledger with the transaction and update the internal token balance.
The hacker made a recursive function in the request, which essentially allowed them to repeat the request multiple times for the same DAO tokens before the transaction could be registered.
To further emphasize how big of a loophole this was, keep in mind that the recursive function was able to run and run until a THIRD of the DAOs funds were siphoned out.
At the time, the DAO had a massive percentage (around 14%) of the total amount of Ethereum in existence. With $50 million, about a third of the DAO’s initial funds stolen, the DAO and Ethereum communities went into disarray. They rapidly started scrambling for solutions to this problem.
The majority decision for a solution was that Ethereum needed to create a fork , or stop the blockchain entirely and create something new from scratch. This “something new” is what we now see as Ethereum (ETH). Ethereum Classic (ETC) is, as the name would suggest, the first Ethereum still using the original blockchain.
The decision to fork naturally caused a lot of division and controversy, and although a majority voted to fork the blockchain, there was still a small but significant percentage (roughly 10%) of people that were loyal to the original blockchain. The Ethereum chain that forked was able to get back the $50 million that was hacked.
ETC vs ETH – The Differences
Ethereum (ETH) functions on a brand new blockchain, and the vast majority of miners, users, and protocol from the previous version of Ethereum use this new version.
Ethereum is actually a fork of Ethereum Classic.
Ethereum Classic (ETC) runs on the same protocol doing a similar function, but it does have some distinct differences in its community. The 10% or so people from the original Ethereum are relatively in the shadows and are loyal to the concept of the immutable ledger. ETC primarily has value because of the speculator market, much like many of the other alt-coins out there.
Ethereum (ETH), on the other hand, is more like a software company that wants to grow and could possibly have more hard forks in the future. The leaders of the ETH community are far more public in nature than those in the ETC world. ETH primarily has value due to a mix of the speculator market, but more so due to its use of case scenarios and community support. The Ethereum Alliance , for example, consists of billion-dollar firms such as Accenture, JP Morgan, Microsoft, and UBS. This support, in turn, has added credit to ETH over ETC.
It can be argued that both ETH and ETC have some distinct strengths and weaknesses, but the power largely rests with ETH as it has a market cap of roughly $15 billion, whereas ETC has one of around $1.5 billion.
ETC vs ETH – The Ideological Split
By this point in our discussion, you should have a fairly in-depth understanding of the differences between Ethereum and Ethereum Classic.
To explore further, we start to reveal some of the ideological differences between both communities. These ideological points are important to understand because ideologies attract communities, and the community support behind most cryptocurrencies is what ultimately determines their long-term value.
Although a fork, Ethereum is now the more popular chain.
It’s important to distinguish that Ethereum had no blame in what happened with the DAO , as the DAO ran completely independent of Ethereum. However, the $50 million hacks dismantled the public belief in Ethereum and the price dropped from $20 to $13.
The decision to fork was ultimately based on the fact that the missing $50 million of Ether was still on the hacker’s child DAO, and it couldn’t be accessed for 28 days due to the DAO smart contract. The Ethereum community had one of three options:
- Inaction – Do Nothing: The “code is law” approach was an integral component to many of the immutable blockchain believers that supported Ethereum. These supporters were largely the group that stuck around for ETC. The majority of people weren’t happy with $50 million disappearings, so they decided to take action and cast their votes elsewhere.
- Soft Fork: A soft fork essentially gave holders the choice of whether to update or not. Whatever decision they chose, updated and non-updated holders could still interact. The concept behind the soft fork was to isolate and segregate all the blocks that contained the hacker’s transactions with the goal of stopping them from moving their stolen ether. The Soft Fork posed a problem, as it would result in a “Denial of Service” attack vector. The DoS attack essentially was a manipulation of how miners are rewarded in the Ethereum ecosystem, and for this reason, the community chose to go with the Hard Fork.
- Hard Fork: The main distinction between soft and hard forks is that hard forks did not allow updated and non-updated holders to interact. If you didn’t join the upgraded blockchain, you would not be able to interact with users of the new system.
The community chose the Hard Fork…
The way the hard fork worked is that the ETH we know today split off from the main blockchain at a particular point. This particular point was around block 1,920,000 – right before the DAO hack.
So, how did this solve the DAO attack issue?
The hard fork helped to refund everyone who had invested into the DAO, using what is referred to as a refund smart contract . For every 100 DAO, token holders were given 1 ETH.
Gavin Wood, the co-founder of Ethereum, called this moment “the single most important moment in cryptocurrency history since the birth of Bitcoin.”
By now, you should have some idea of how this event split up the Ethereum community.
Ethereum was first created as a stance against financial corruption. The immutable blockchain was meant to be free from the human tendency to corrupt. The DAO hack (which had nothing to do with the integrity of the Ethereum platform) split the Ethereum community because the decision to hard-fork – and essentially manipulate the blockchain – went against the original purpose of Ethereum in the first place.
Ideologists that were unshaken in their beliefs stuck with ETC, whereas others split off into Ethereum for the sake of the survival and flourishing of the community. There is a natural antagonism between the two groups for this reason. Additionally, many anti-Ethereum people jumped into the ETC camp to further cause disruption in the Ethereum community.
ETC vs ETH – The Issues
In the ETC vs ETH debate, both sides make valid arguments, and each chain isn’t without their faults.
The biggest issues with ETC is that it isn’t backward compatible with the ETH Hard Fork, and that many big players of the Ethereum community are now using ETH. Since ETC isn’t backward compatible with the Hard Fork, users of ETC won’t be able to enjoy the updates being built on ETH, such as Ethereum’s move from Proof of Work to Proof of Stake.
The biggest issues with ETH is that now that the hard fork seal has been broken, many are speculative that there could be more hard forks in the future. Since the Ethereum community could come together to make a substantial change in the price and future of the blockchain, something hailed for its ruthless mathematical objectivity. Some people have become rightfully speculative or downright conspiracy-driven that leaders in the Ethereum community could manipulate a hard fork in the future. This risk adds some volatility to the long-term price.
ETC vs ETH – Final Thoughts
In the battle of ETC vs ETH, the vast majority of crypto supporters have chosen to favor Ethereum. The above issues with ETH are only mentioned for the sake of fairness to both communities, but as a crypto enthusiast, you should be aware of all the available information.
While Ethereum (ETH) may be looked at as a mutation and violation of the principles of immutability behind Ethereum, it also serves as a landmark victory for the Ethereum community being able to come together and handle the worst hack in cryptocurrency history.
An argument can be made that if not for the hard fork, Ethereum, the platform that allows countless innovative and spectacular Dapps to run, might not exist today. As you can see, both camps of the ETC vs ETH argument make solid points.
The power of Ethereum lies in its community since it is a platform that allows others to build projects that could revolutionize virtually any industry. Ethereum Classic, however, is stained with the unfortunate history of the DAO. The core idea behind the DAO could have made a substantial impact on the future of technology, and the core flaws in its security gave birth to a stronger platform.
The sheer market cap size and the strong community behind Ethereum (ETH) foreshadow a bright future. ETC, on the other hand, appears to be slowly shrinking in market cap comparison to the rest of the crypto world and consists more of a combination of immutable blockchain loyalists, ETH antagonists, and general market speculators. But with the addition of Ethereum Classic to Coinbase, it looks as if the ETC vs ETH competition may not be settled just yet.
Ethereum Classic – ETC vs ETH Cryptocurrency Hard Fork Guide?
Ethereum Classic is one of two currencies that use the Ethereum blockchain, with Ethereum or Ether (ETH) being the other one. Find out what you need to know about Ethereum Classic today.
What Is Ethereum Classic?
Ethereum Classic is an open-source, public, blockchain-based distributed computing platform.
The currency emerged after the original Ethereum platform forked into two versions, including Ethereum Classic (ETC) and Ethereum (ETH). ETC was officially released after The DAO hard fork in 2020, which occurred one year after the launch of Ethereum.
Like Ethereum, Ethereum Classic provides a decentralized, Turing-complete virtual machine, the Ethereum Virtual Machine (EVM) as well as smart contract functionality.
Today, you can buy Ethereum Classic (ETC), known as “classic Ether” on most cryptocurrency exchanges. You can store that cryptocurrency in a wallet just like you would hold Ethereum and other currencies.
ETC uses gas, an internal transaction pricing mechanism, to prevent spam on the network and allocate resources proportionally to the incentive offered by the request.
Why Was Ethereum Classic Created?
Prior to the fork, there was one version of Ethereum. It was called Ethereum. Then, there was a disagreement on how to handle the situation created by The DAO.
In May 2020, The DAO, a venture capital fund, was built on Ethereum and raised an enormous amount of money. The DAO raised $168 million to invest in smart contract development. Investors recognized the potential of smart contracts, and believed The DAO – which stands for “decentralized autonomous organization” – was one of the best chances for smart contracts to reach their full potential.
That same month, a paper was released explaining security vulnerabilities in The DAO. Those security vulnerabilities could allow the money in The DAO to be stolen.
Just one month later, in June, a hacker stole 3.6 million Ether (about $50 million at the time) from The DAO. The money was taken from The DAO’s accounts and moved to another account without the owners’ consent – which was one of the notable vulnerabilities mentioned in the May 2020 paper.
Nevertheless, the hacker’s $50 million fund wasn’t immediately withdrawn. It was still sitting in the child DAO. The hacker couldn’t access the funds because The DAO’s smart contract stated that any invested money was unable to be removed for 28 days.
The DAO had lost nearly one third of its investments. The community and investors talked about how to proceed. There were two approaches:
- Part of the Ethereum community wanted to “roll back” the blockchain, move the Ether taken in the exploit to a new smart contract, and allow the Ether to be restored to the owners from whom it had been taken. This would effectively roll back the Ethereum blockchain through a soft fork, which meant that investors could keep their stolen funds.
- Another part of the Ethereum community believed in the immutability of the blockchain; rolling back the blockchain was a fundamental violation of that immutability. Members of the Ethereum community rejected the proposed soft fork based on this principle.
The second group – the group that believed in immutability – rejected the hard fork and continued to use the unforked version of Ethereum. This unforked version of Ethereum became known as Ethereum Classic, while the hard fork version of Ethereum is known simply as Ethereum today.
The Ethereum Soft Fork Versus The Hard Fork
Meanwhile, the majority of Ethereum users agreed that a soft fork was the best way to proceed. A soft fork is like a backwards-compatible software update. Users weren’t forced to upgrade. Updated users could still interact with non-updated users.
However, a soft fork has a major problem: implementing a soft fork would have resulted in a Denial of Service (DoS) attack vector. Typically, Ethereum’s network is protected from DoS attacks (which essentially involve flooding the network) due to the presence of Gas as a transaction cost. The moment a soft fork gets implemented, the attacker could flood the network with transactions with no gas cost. That meant a soft fork was not the right solution – which is why we eventually got a hard fork.
A hard fork, unlike a soft fork, is not backwards compatible. Once a hard fork is used, there’s no going back. Anybody who isn’t using the upgraded version of the blockchain will not be able to access new updates or interact with new users on the system. For all intents and purposes, it’s like you’re using two different currencies – they just happen to be built on the same original blockchain.
Ultimately, all of Ethereum’s major players – including founders Vitalik Buterin and Gavin Wood – moved onto the new chain. However, Ethereum Classic continues to have support – mostly from those who believe in the immutability of blockchain technology above all else. One of ETC’s biggest supporters is Barry Silbert, the CEO of Grayscale.
Problems With Ethereum Classic
The main problem with Ethereum Classic is that it’s not backwards compatible with the Ethereum hard fork. All of Ethereum’s main developers and founding team have moved onto the forked version of Ethereum. That team continues to develop updates and lead marketing for Ethereum (ETH), which leaves ETC out of the loop.
One of the best examples of this issue is when Ethereum (ETH) moved from a proof of work (PoW) to a proof of stake (PoS) algorithm – something that ETC has not done.
There’s also a subset of the internet that considers Ethereum Classic to be a scam. They claim that Ethereum Classic didn’t really have any support after the initial hard fork, but its support was fabricated by supporters of other currencies – like bitcoin maximalists, for example.
Ultimately, neither ETH nor ETC are perfect currencies. However, ETH has far greater support – and a much larger market cap.
Ethereum Classic Today
The price of Ethereum Classic has fluctuated over the years. At launch, after the hard fork, the price of Ethereum Classic fluctuated between $0.75 and $3 per token before dropping to a range of $1 to $2 for the remainder of 2020 and early 2020.
In June 2020, as the crypto market was peaking, Ethereum Classic reached a high of around $23 per ETC. As of October 2020, that price has dropped to around $12 per ETC.
The coin has a market cap of around $1.5 billion, making it one of the top 5 or 10 largest cryptocurrencies in the world.
ETC is still in active development. In October 2020, ETC underwent a technical hard fork to adjust the internal pricing for running op codes on Ethereum’s Virtual Machine (EVM) – similar to the hard fork Ethereum went through one week earlier.
In early 2020, Ethereum Classic went through another hard fork – the “difficulty bomb” hard fork, or “Die Hard” fork designed to increase the difficulty of mining. This had been added to Ethereum’s code in September 2020.
The next major Ethereum Classic update will be a monetary policy change that will change unlimited token emission to a fixed cap monetary policy – similar to bitcoin’s limit of 21 million tokens – giving Ethereum Classic a hard cap of around 210 million.
Ethereum Classic Conclusion
Ultimately, Ethereum Classic is the original, unforked version of Ethereum. It comes with many of the same features and benefits as Ethereum, and it continues to be actively developed to this day. you can learn more about Ethereum Classic at the platform’s official Github page here.
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