What is Ethereum Classic (ETC)?
ETC is the native coin of the Ethereum Classic blockchain. Ethereum Classic is considered to be among the longest-running smart contract platforms. It was launched in 2015 as the legacy Ethereum blockchain, and split in 2016, following a community dispute.
The Ethereum Classic crypto network is based on the principles of “Code is Law” and “Build Unstoppable Applications”. It aims to maintain complete decentralization and does not alter its protocol. All smart contracts launched on Ethereum Classic run as they are programming, without external interference. The current ETC price can be seen in the graph above.
How Did the Ethereum Classic Hard Fork Occur?
Ethereum Classic is the original open-source Ethereum network that was developed by Vitalik Buterin and Gavin Wood back in 2015. However, the new network that emerged, Ethereum (ETH), is currently the dominant one in the market. ETC and ETH were forked in July 2016.
The precedent for the split was first set a month prior, in June 2016, with The DAO hack. The DAO was the first decentralized autonomous organization in blockchain history, hence the name.
The DAO launched in April 2016. During its creation period, the platform raised 12.7M ETH, which was valued at $150 million at the time. This amounted to roughly 14% of the overall Ether supply. As a decentralized network, The DAO was open-source and made its code available to community contributors.
In June 2016, an anonymous paper was published that revealed a code vulnerability. Before the developers were able to patch the issue, hackers took advantage of it and over several days stole 3.6 million ETH. Although the team was able to recover roughly 70% of the funds, there were debates as to how to recover the remaining sum.
One of the proposals was to revert the blockchain to the timestamp before the hack occurred due to the system delay that prevented the hackers from extracting the funds for a month. However, many community members felt that a backward-compatible hard fork goes against the principles of Code is Law.
The hard fork occurred at block #1920000, on July 20th, 2016, after many community debates and a governance vote. The new network with the reverted hack went on to become ETH, while ETC continued on with the same blockchain history.
Upon the launch of the newly split chain, Ethereum Classic was valued at around $2. The asset has experienced many fluctuations over the years and can be considered volatile. Its value experienced a sudden increase in 2021, with the ETC price exceeding $175 in May.
What Are the Main Features of Ethereum Classic?
The cryptocurrency used by the Ethereum Classic ecosystem is specifically known as Ether. As the original version of Ethereum, for a large part, the ETC crypto network adheres to the initial protocol. However, since the hard fork, certain protocol changes were made regarding its tokenomics.
Unlike ETH, the Ethereum Classic coin supply has a maximum limit that’s capped at 210,700,000 ETC, making the asset deflationary. This means that the Ethereum Classic price is likely to increase as the supply becomes more scarce.
Ethereum Classic is primarily used to deploy new smart contracts. The key principle of the platform is that the smart contracts are not altered or censored in any way after they’re launched to ensure network integrity and adhere to the principles of Code is Law. Users are also able to utilize ETC for crypto transactions.
ETC uses the Proof-of-Work (PoW) consensus mechanism to mine new blocks. Miners receive transaction fees as rewards for their work. The rewards are programmed to progressively decrease over time. However, since the Ethereum Classic price is influenced by the asset being deflationary, the reduced rewards may not strongly impact the value.
How Does Ethereum Classic Differ From Ethereum (ETH)?
The key differences between ETC and ETH lie in the ideology of the two platforms. Proponents of ETC believe that Ethereum abandoned the core principles of Code is Law by initiating the hard fork post-The DAO hack.
The updates that have occurred to the ETH blockchain since the hard fork do not apply to ETC. For example, ETC has not implemented the EIP-1559 upgrade which introduced an automated fee distribution as well as fee burning. Furthermore, while ETH is planning to shift to the Proof-of-Stake (PoS) consensus algorithm, Ethereum Classic will remain PoW.
While the comparatively low Ethereum Classic price may appear more appealing, there are several reasons why investors may prefer ETH. The history of The DAO hack has left the chain with some negative connotations. It has also been subject to various attacks.
Ethereum Classic has historically ranked significantly lower than ETH in terms of market capitalization. The ETC price has generally followed the market trends that were set up by ETH as the second-biggest cryptocurrency in the world.