What Is Ethereum Classic (ETC)?
Ethereum Classic (ETC) is a hard fork of Ethereum (ETH) that launched in July 2016. Its main function is as a smart contract network, with the ability to host and support decentralized applications (DApps). Its native token is ETC.
Since its launch, Ethereum Classic has sought to differentiate itself from Ethereum, with the two networks’ technical roadmap diverging further and further from each other with time.
Ethereum Classic first set out to preserve the integrity of the existing Ethereum blockchain after a major hacking event led to the theft of 3.6 million ETH.
Who Are the Founders of Ethereum Classic?
Ethereum Classic is in fact the legacy chain of Ethereum, and its true creators are therefore the original Ethereum developers — Vitalik Buterin and Gavin Wood.
A contentious hard fork on Ethereum occurred in July 2016, when participants disagreed over whether to revert the blockchain to cancel out the effects of a major hack. This impacted The DAO, a decentralized autonomous organization (DAO) which had raised approximately $150 million in an initial coin offering (ICO) several months earlier.
Ethereum Classic came into being as the network which did not revert the chain. Developers state that there is no “official” team attached to the project, and that its “global development community is a permissionless 'do-ocracy,' where anyone can participate.”
What Makes Ethereum Classic Unique?
Ethereum Classic’s main aim is to preserve the Ethereum blockchain as it originally was, without artificially countering the DAO hack.
Its appeal was first to those who disagreed with Ethereum’s response, but the legacy network has since gained a wider fan base, which include major investors such as Barry Silbert, CEO of investment firm Grayscale.
As a voluntary organization, the developers of ETC do not aim to turn the network into a for-profit entity. Users pay transaction fees as with Ethereum, and miners collect them based on work done as per the proof-of-work (PoW) mining algorithm.
Unlike Ethereum, Ethereum Classic has no plans to convert to a proof-of-stake (PoS) mining algorithm, while multiple developers continue to work on future improvements such as scaling solutions.
How Is the Ethereum Classic Network Secured?
The Ethereum Classic network is secured using proof-of-work, but as a minority chain, it has suffered regular attacks itself.
These include several 51% attacks to gain control of mining hashrate and execute spurious transactions and double spend coins, the most recent of which occurred in August 2020.
How did Ethereum Classic fork?
Faced with a difficult choice, Ethereum’s developers sought to ask users how the project should proceed in light of The DAO attack.
This meant Ethereum’s developers would eventually code an alternative software with a patch designed to revert the loss of funds. By publishing the code, Ethereum’s developers believed they were effectively asking the public to make a decision, as users could reject the patch.
Since the code directly impacted Ethereum’s transaction history, anyone who decided to continue running the old software would be left transacting on a separate blockchain.
For a few days, it seemed like such a split would be avoided. Then, a new group of developers began maintaining the old ethereum code, a development that encouraged miners to devote computing power to secure the blockchain and collect the new cryptocurrency created.
What’s the difference between Ethereum and Ethereum Classic?
Ethereum and Ethereum Classic were initially based on the same code, but Ethereum Classic has since differentiated its technology.
Perhaps the biggest difference is the Ethereum Classic community has vowed to continue using proof-of-work mining (the system pioneered by Bitcoin) to secure its blockchain.
As of 2020, Ethereum uses proof-of-work as well, but its developers are pursuing a roadmap that will eventually find the software switching to a different model.
Also of note is that Ethereum Classic has adopted a fixed monetary policy. The total amount of ETC that can be created is capped at 230 million ETC, meaning scarcity factors into its value.
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Cryptocurrency