Ethereum Classic (ETC)
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As someone interested in the crypto scene, you must be familiar with Ethereum, one of the most popular digital coins, second only to Bitcoin. The network itself is best known for introducing and facilitating the creation of blockchain-based smart contracts.
However, did you know that there are actually two versions of the Ethereum blockchain and that both of them still exist and are very much in function today? That’s right! The split took place in 2016 and gave birth to Ethereum and Ethereum Classic.
If this information was enough to ignite your curiosity, we invite you to stay with us as we’re about to uncover more details on the history, technology, and performance of Ethereum Classic and its native token ETC.
How Does ETC Differ From ETH?
The ETC white paper, while acknowledging that the two versions of Ethereum have more or less the same real-world applications, states three crucial differences between the two: governance, economic, and development structures.
Ethereum Classic believes that for a digital currency to be a lucrative investment it requires good governance. Since cryptocurrencies are differently managed from government-issued ones, governance here refers to the principles behind the coin and its design.
In the eyes of the ETC team, by performing a hard fork, the Ethereum Foundation violated the principles of Ethereum, i.e. decentralization and immutability. In comparison, Ethereum Classic maintains an open, trustless network, avoiding the risks that come with third-party interference.
Design-wise, it seems like ETH and ETC will go their separate ways pretty soon. Up until now, both blockchains have been using the Proof of Work consensus mechanism where transactions are verified with cryptographic proof based on performing a hash function. This is how the networks prevented double-spending.
Ethereum has recently announced they’re planning to switch to the Proof of Stake model where only certain nodes that put their money at “stake” are allowed to validate transactions. The blockchain relies on these nodes because they have the incentive not to err. Ethereum Classic, however, doubts the sustainability of this model which seems to risk the system’s security.
In 2017, Ethereum Classic designed a new monetary model and decided to hard cap the total ETC supply at approximately 210 million ETC or a maximum of 230 million.
The mining reward was set at 5 ETC per block and will be reduced by 20% when the blockchain reaches block number 5 million, and then 20% more at block number 10 million, and so on. The blockchain confirms a new block every 15 seconds.
Ethereum, on the other hand, doesn’t have a supply limit for ETH.
Both Ethereum and Ethereum Classic have developed their own protocols over the years, with both networks having a stellar team of experts behind them.
Ethereum, although self-proclaimed as a decentralized network, is still funded by the Ethereum Foundation which means that a group of individuals still have the final say. Ethereum Classic finds these in loggerheads with the initial ideology behind Ethereum and believes that decentralized platforms have more opportunities to grow.
Finally, the biggest difference between the two networks is that Ethereum Classic focuses more on ETC, the digital token that keeps the blockchain running, and not just on the technology behind the coin. They see decentralization as crucial for the stability of the digital coin.
In the same way, you have Ethereum promoting the incredible potential of blockchain technology for building decentralized self-executing contracts and application, but at the same time forsakes the decentralized nature of its token.
This is why Ethereum Classic considers ETC as a better investment than ETH and proudly and confidently asserts that more and more investors, miners, and developers will turn to ETC in the near future.
Moreover, the white paper lists the following characteristics of ETC as reasons behind its attractiveness and store-of-value nature: scarcity, divisibility, portability, fungibility, verifiability, recognizability, decentralization, immutability, and adaptability.
The History of Ethereum Classic
To get to where Ethereum Classic stands today, we have to go back to where it all began. In 2013, the young Russian-Canadian software developer Vitalik Buterin published the white paper of his crypto project called Ethereum.
Vitalik was a fervent supporter of Bitcoin and blockchain technology and realized early on that this technology has an enormous potential that goes beyond peer-to-peer electronic payments. Ethereum was his attempt to create a computationally programmable blockchain and a platform for building smart contracts and decentralized applications.
Ethereum was a success right from the start! The network had an official token called Ether (ETH) and a utility token called GAS that’s used for transaction costs.
In 2016, an anonymous hacker attacked the network and siphoned $60 million worth of tokens. Ethereum’s team was debating over the right thing to do. They could either do nothing and deal with the loss or perform a hard fork. They voted in favor of the latter.
A hard fork is a major change to the blockchain that creates two separate versions of it. Once performed, users who haven’t “upgraded” their version won’t have access to the system or its functions.
The new version voided the hacker’s transaction, while the original Ethereum protocol, which was rebranded to Ethereum Classic and its coin to ETC, kept the transaction history as it was, staying true to the blockchain’s principles of decentralization and immutability.
Its white paper, Into the Ether With Ethereum Classic, was published in April 2017. The subtitle that defines ETC as “the store of value commodity to power the Internet of Things” refers to the company’s main objective to create a longterm investment asset that will be the substrate for the future IoT in a secure and trustless environment.
Disclaimer: Digital currencies and cryptocurrencies are volatile and can involve a lot of risk. Their prices and performance is very unpredictable and past performance is no guarantee of future performance. Consult a financial advisor or obtain your own advice independent of this site before relying and acting on the information provided.