Ethereum Classic (ETC) shouldn’t be confused with Ethereum (ETH), although it is true that they are identical until a dispute that led to divorce. Ethereum Classic is a smart contract platform, as well as a cryptocurrency, forked from Ethereum. We will look at the reasons for their diversion and start a whole new project.
What exactly is Ethereum Classic?
Ethereum Classic is exactly like Ethereum since it has a common ancestor. It’s a blockchain that allows for additional applications to be created on top of it. These applications, known as decentralized or dApps, utilize code known in the field of smart contracts in order to let people exchange property, money, or any other item worth having without the need for a middleman.
ETC is the primary currency blockchain of the Ethereum Classic. Ethereum Classic network is also able to allow apps using the network to launch their own cryptocurrency, which includes NFTs.
Who came up with Ethereum Classic?
A computer programmer from Canada and Russia are, known as Vitalik Buterin, wrote the white paper of this project. Ethereum Classic began to be created on the 20th of July, 2016, in the event that a group of developers had a disagreement with the way it was moving forward on the Ethereum blockchain was developing. The disagreement resulted in hark fork of Ethereum and resulted at the beginning of the Ethereum Classic.
What was the reason for the disagreement?
At first, there was no Ethereum. A group is known as the DAO (short meaning Decentralized Autonomous Organization used Ethereum to set up what was effectively the first venture capital fund. Every day, people could invest in ETH as a collective decision-making group, making collective decisions on how to distribute the assets of the group and take part in the profits. The project raised more than $100 million via the sales of tokens.
However, there was a flaw in the fund’s software which was discovered and exploited. Millions of dollars of ETH were withdrawn from funds, and traders became panicked. The developers had 28 days to devise solutions before hackers could withdraw the tokens, which constituted the largest amount of the market capitalization of Ethereum at the moment.
The most well-known solution was to design a fork that could reverse the hack and offer the victims the money they lost. While this received the support of Buterin and the other big players, it also triggered protests from those of the principle of blockchain that you should not alter the ledger. The blockchain goes in the same way, with the theft intact.
The majority of people who believed in maintaining the same system remained on the original platform and changed its title into Ethereum Classic. Most miners, developers, and users shifted their focus to the forked platform, which kept its Ethereum name.
How does Ethereum Classic work today?
The ETC blockchain is based upon POW aka Proof of Work consensus mechanism, which means that users worldwide use equipment and software that validate transactions on the blockchain and keep it safe. In exchange, miners earn ETC.
Users are able to send ETC to one another, in the same manner, the way bitcoin as well as Ethereum network users can send BTC or ETH, for instance. Users can also make use of ETC to connect with applications within Ethereum Classic.
However, it is true that the Ethereum Classic ecosystem isn’t quite as vibrant as Ethereum as well as other smart contract platforms, like Solana. As of the 20th of February, 2022, the Ethereum Classic network saw no activities on decentralized finance apps.
Furthermore, The relatively low levels of usage have led to issues. To ensure security, blockchains depend on a large number of users operating the network. When there are not enough users active in the blockchain, it makes the network vulnerable to malicious attacks. Between 2019 and 2020, it was reported that the Ethereum Classic Network was impacted by several “51 percent attacks” in which hackers gained control of a large portion of the computing power on the network. In doing this, they were able to alter the ledger, also known as double-spending, and gain additional ETCs.
But, ETC devotees continue to develop the network and update the code. In December of 2020, the ETC’s core developers updated the network in the hope of making 51% of attacks financially impossible. The most recent update will be known as the Mystique hard fork, which will take place in 2022.
Since Ethereum Classic’s development continues independently, it differs in a few ways from Ethereum. Particularly in contrast to Ethereum, the latter has no plans to change its existing verification of work consensus system to proof of stake. Additionally, Ethereum Classic will have an overall supply of approximately 220 million coins, unlike ETH, which is not limited in its supply. The company also completed the development as well as the deployment of sidechains, while Ethereum was still in the process of experimenting with the idea.
Future of Ethereum Classic
Ethereum, the parent project and one of the first smart contract platforms, is working to shift its consensus mechanism from proof of work to proof of stake(POS). Ethereum community has planned this change in December 2020 amidst growing criticism over intense energy usage by the POW mining process. Ethereum will completely transition from POW to POS after is ‘The Merge’ upgrade anticipated to implement in Q2 2022. In contrast to the Ethereum decision, the Ethereum classic community, which is already against any alteration in the base code of Ethereum, has no plan to switch to an eco-friendly POS algorithm. The top cryptocurrency Bitcoin also has no plan in the future for bringing a change into its base approach.
Ethereum classic network is expected to grow rapidly once the Ethereum blockchain completely shifts from POW to POS. Many miners working with Ethereum will be forced to switch to another POW coin to continue using their pricey equipment for benefits. Ethereum Classic is one of the most favorable projects for these miners and easiest to migrate to. As per the Cointelegraph, a huge number of miners are expected to migrate to the ETC network once ETH wraps up using the POW algorithm. Owning to this hype, ETC volume across exchanges has grown up by more than 50% in the past few days, as per Coinmarketcap. And the price of ETC has skyrocketed by a whopping 80% in the past seven days.
While Ethereum’s switch to POS will give significant exposure and increased activity in almost silent Ethereum classic blockchain, many rivals are leading ahead in bringing cutting-edge technology to serve the growing needs of smart contracts. ETC would need to improve its network to support and attract dApps developers to use the Ethereum Classic blockchain.
Gargi Sinha is working as Senior Journalist at Confea. She has completed her Masters in Journalism from Delhi University. She has interest in crypto and blockchain technology.