Although Bitcoin was the first cryptocurrency created, after BTC came several cryptocurrencies that offer additional features, benefits and use cases, and more. For example, Ripple and Litecoin are even faster and their fees are lower. Perhaps the most distinctive innovation was by creating a smart contract-oriented blockchain platform that can be used to launch decentralized applications with Ethereum Dapps.
But did you know that Ethereum started its life as Ethereum Classic? Two very similar yet distinctly different Ethereum variants were born from the same code, but are nothing alike in terms of community support and developer ecosystem today. One of the two is at the center of the DeFi, Dapps and NFT trend, while the other is regularly attacked by 51%. All these reasons and more may indicate that one is a much better platform than the other.
A Brief History of Ethereum: How Did It All Start?
It all started when there was only one Ethereum blockchain and the native cryptocurrency Ether. Users could create persistent, immutable applications on the network. Vitalik Buterin and several other developers created the blockchain, which was established to allow the creation of decentralized applications via smart contracts.
In 2014, Buterin decided to raise funds through a crowdsale that raised 25,000 BTC worth $17 million at the time. The network finally went live in mid-2015.
In mid-2016, Ethereum witnessed one of the most significant attacks in cryptocurrency history — the DAO incident — and it changed the course of the blockchain forever.
In 2016, an application on the Ethereum blockchain (known as DAO) was hacked, which led to the theft of 3.6 million ether (ETH), which was worth around $50 million in 2016. Later, this value increased to billions of dollars. To further understand the seriousness of this attack, there were about 72 million ETH in circulation at the time, so hackers stole about 5% of all ETH in existence.
This has sparked controversy in the cryptocurrency community. Some members of the ETH community believed that Ethereum needed a hard fork to distribute the stolen funds to the victims.
Other members believed that forking the blockchain would create a moral hazard that could lead to further hard forks in the future. They argued that the ETC hard fork hypocritically enabled what blockchain technology should have prevented — subjective human manipulation. As a result, many idealists sided with Ethereum Classic and its associated cryptocurrency ETC. Despite the goodwill of the regulated ETH branch, advocates of ETC categorically rejected the logic that led to the hard fork in the first place. Many of these individuals believed that any change to a blockchain ledger (even those with good intentions) went against their values of the “code is king” mentality that many people associate with the blockchain in the first place.
Eventually, the network split into two different blockchains and the original chain was renamed Ethereum Classic after 87% of the community voted for the hard fork to happen. While the two blockchains go on different paths, they continue to share the same blockchain record together before the hard fork.
The first Ethereum Classic block was created on July 20, 2016, and from then on any updates to the Ethereum blockchain are no longer compatible with ETC.
The original Ethereum blockchain was renamed “Classic”, while by consensus the newly forked Ethereum replaced the existing Ethereum. However, some members of the community refused to leave the Ethereum Classic blockchain.
In other words, the two emerging blockchains differed only in one way: one still contained a record of the attack and the stolen ETH, while the other essentially rewinded the clock as if the hack never happened. The regulated blockchain retained the Ethereum nickname, while the original/unmodified blockchain became known as Ethereum Classic.
What is Ethereum Classic (ETC)?
Ethereum Classic is an open-source blockchain that is the result of a blockchain split that occurred from an attack on the original Ethereum network. The split resulted in two separate blockchains, Ethereum Classic and the new Ethereum. Now, ETC is the native currency of Ethereum Classic, which is used to power transactions and smart contracts on the network.
In addition to securing the network, the hard fork also resulted in all stolen funds being returned to their original owners. Since the split, there have been constant upgrades to the Ethereum Classic network. The main purpose of Ethereum Classic is defined as a focus on immutability, popularly expressed as “code is the law”.
The Ethereum Classic protocol is essentially a clone of the original Ethereum protocol. Both Ethereum Classic and Ethereum are smart contract platforms that allow users to build decentralized applications (DApps) on their own blockchains, and while later Ethereum has developed a significantly wider array of functionality over time, they remain similar from a general functional perspective. The chains are the same up to 1,920,000 blocks (where the attack took place). They leave only after this block. As a result, any major updates to the Ethereum protocol (including Ethereum 2.0) after this point are not reflected in the Ethereum Classic protocol and vice versa.
A harbinger of a change of mind, Ethereum Classic has recently gone through several protocol upgrades aimed at making the protocol more compatible with the Ethereum protocol. The last two Ethereum Classic protocol upgrades — Atlantis (in 2019) and Agharta (in 2020) — mark the Ethereum Classic community’s intention to build technological bridges between Ethereum Classic and other communities, including Ethereum.
What is Ethereum (ETH)?
According to Ethereum.org, “Ethereum is open access to digital currency and data-friendly services for everyone, regardless of background or location. This is the community-created technology behind cryptocurrency ether (ETH) and the thousands of apps you can use today.”
Ethereum is a technology used for many things, including digital currency, global payments, and applications. It is also decentralized and open to anyone with an internet connection.
Ethereum’s DeFi system is 24/7, meaning you can send, receive, borrow, earn interest and send money any time of the day, anywhere in the world. However, Ethereum is not just a digital currency, it can also represent everything you own in the form of an NFT.
You can also use Ethereum without giving up any personal information, all you need is a wallet. However, today we have to give up the control of our personal data with the internet that we know and love.
The Future of Ethereum Classic
One of the major concerns of Ethereum Classic is that it can only process 15 transactions per second. This is an important limitation in terms of scalability. Security is likely to remain an issue in the network’s smart contracts, as the blockchain has already suffered an attack that has resulted in millions of dollars being stolen.
Over the years, investors have lost their trust in ETC due to the attacks that have occurred. Until Ethereum Classic reworks its code and improves its security to prevent future breaches, the network will face many challenges ahead.
Ethereum Classic vs Ethereum
Ethereum and Ethereum Classic are the same code, just split into two separate paths. But how these two paths have evolved over the years has significantly shaped the speculative value of each asset. There is little difference as they are so similar, but the differences it contains are extreme.
After the hard fork, several differences emerged between Ethereum and Ethereum Classic. The ETC community argues that they stick to the idea that a blockchain should never be modified and that the network should run on the original blockchain. Therefore, in order to understand whether Ethereum Classic is a good project, it is necessary to understand the difference between Ethereum and Ethereum Classic very well.
As of Q3 2022, the market capitalization of the Ethereum Classic network is approximately $4.5 billion, the ETC network is capped at approximately 210 million token supply. The Ethereum network, on the other hand, has an unlimited supply, but the platform has a maximum annual supply of 18 million ETH.
When comparing ETH and ETC as of the fork, Ethereum is the clear winner so far. Ether’s market capitalization as of the third quarter of 2022 is $200 billion. Ethereum’s developer ecosystem is constantly evolving, which explains many factors behind the rise in Ether.
So far, the Ethereum network has attracted decentralized finance protocols to be built on top of the blockchain, including layer-2 scaling solution Polygon. Non-fungible token (NFTs), which are attracting many new investors in the market, are also mainly built on the Ethereum blockchain.
The major difference between the two protocols is the consensus mechanism, which will soon be updated from proof-of-work to proof-of-stake during the next ETH upgrade known as Ethereum 2.0. The network will soon witness an improvement in scalability to allow faster, larger and more efficient transactions to take place.
Ethereum vs Ethereum Classic Comparative Table (Q3 of 2022)
As a result
ETH has developed itself in every way after the fork and has become the locomotive of altcoins. ETC, on the other hand, makes a small update whenever it has the opportunity, without dealing with the 51% attacks against it. It seems that making the victims of the DAO disaster happy has paved the way for ETH. Kidding aside, ETH supporters are happy to make the right decision about Fork with their current position.