Exploring Ethereum Classic: The Unchanged Ethereum Blockchain

Discover the origin, evolution, and future of Ethereum Classic. Unearth the key differences and thought-provoking aspects of this intriguing blockchain platform that's rooted in original Ethereum code, but walks its own path.

Cryptocurrency enthusiasts and investors alike have likely heard of Ethereum Classic (ETC), an alternative path of what was once a single blockchain. Ethereum Classic is an open-source blockchain that emerged from a notable hacking incident, setting it apart from its more famous sibling, Ethereum.

Key Takeaways

  • Open-source and Decentralized: Ethereum Classic is a decentralized, open-source blockchain-based platform that runs smart contracts.
  • Rooted in Original Ethereum: Ethereum Classic is the original Ethereum blockchain, maintaining the code as conceived by Vitalik Buterin and the Ethereum Foundation in 2015.
  • The DAO Hack: The notorious DAO hack in 2016 led to the division of the original Ethereum blockchain into two: Ethereum Classic (ETC) and Ethereum (ETH).
  • Philosophical Differences: While Ethereum reversed the hack by way of a hard fork, Ethereum Classic chose to uphold the principle of blockchain immutability.

Understanding Ethereum Classic (ETC)

Ethereum Classic operates as a blockchain platform facilitating smart contracts. Smart contracts are automated contracts that execute transactions without the need for intermediaries. For instance, the purchase of an asset can be entirely automated without the need for trust, as the smart contract ensures the payment and transfer of ownership.

Consider this example:

1Joe wants to buy a book from Liz. A smart contract on Ethereum Classic automates the payment retrieval from Joe and the book delivery from Liz, eliminating the need for either party to trust each other directly.

### How Did Ethereum Classic Come into Existence?

Ethereum Classic came about following a significant hacking event, which caused a rift in the Ethereum community. Here’s a brief timeline of events:

  • 2015: Ethereum was launched with the aim to enable decentralized applications (dApps) via a new blockchain platform.
  • 2016: The DAO, a decentralized investment fund, was hacked; about one-third of its funds were stolen.
  • July 2016: To return the funds to the investors, the majority favored creating a new fork, resulting in Ethereum (ETH).
  • Ethereum Classic (ETC): A faction of the community who opposed altering the blockchain remained on the original chain, now known as Ethereum Classic.

The Ethereum Classic Community and Vision

Since branching off, Ethereum Classic has seen numerous updates and retains a vision of functioning as a global payment network using smart contracts, striving to become a digital store of value.

Financial Insights: Ethereum Classic by the Numbers

As of May 27, 2024:

  • Maximum Supply: 210.70 million ETC
  • Circulating Supply: 147.26 million ETC
  • Market Capitalization: $4.69 billion

Similar to Bitcoin, Ethereum Classic allows transactions of value and can run self-executing smart contracts.

History of Ethereum Classic: Echoes of the Past

The foundation of Ethereum Classic is steeped in its rich history as Ethereum. Created by Vitalik Buterin, Ethereum aimed to be a platform for decentralized applications utilizing its native token, Ether (ETH). The DAO hack, which siphoned off 11 million ETH, led to a controversial decision to reverse transactions, forming a new blockchain (Ethereum) while untouched records continued on Ethereum Classic.

Ethereum Classic has since continued to upgrade its network, maintaining the original philosophy of immutability in blockchains.

Concerns Around Ethereum Classic

Despite its functional design, Ethereum Classic faces challenges, primarily revolving around scalability. Currently, the network supports 10-20 transactions per second, much less efficient than traditional payment networks.

Future Prospects for Ethereum Classic

Ethereum Classic’s future is less certain compared to Ethereum, primarily due to its smaller community and lesser market traction. However, it still holds a valuable place among traders and developers, continuing to provide robust blockchain functionalities.

Ongoing Development and Compatibility

An important note is that ETC maintains a rigorous improvement proposal process and continues to adopt upgrades. The network also plans integration efforts to stay compatible with Ethereum’s updates.

Ethereum Classic vs. Ethereum: The Divergence

While both networks share a common origin, they have key differences:

  • Consensus Mechanism: Ethereum Classic retained the Proof-of-Work (PoW) system, making ETC mineable, whereas Ethereum moved to Proof-of-Stake (PoS) post-merge.
  • Token Supply: Ethereum has no cap on tokens, while Ethereum Classic is capped at 210.7 million coins with periodic reduction events termed ‘fifthening’.
    graph TD
	    A[Ethereum inception 2015] -->B[DAO Hack 2016]
	    B -->C{Split decision}
	    C -->|Support hard fork| D[Ethereum (ETH)]
	    C -->|Reject hard fork| E[Ethereum Classic (ETC)]

Tokenomics of Ethereum Classic

Approximately 95% of ETC will be mined by 2059 with the next block reward reduction (fifthening) expected in June 2024.

Block Reward Reductions: The Fifthening This structure reduces rewards by 20% every two years:

  • Last reduction: 2022 (2.56 ETC)
  • Next reduction: June 2024 (2.048 ETC)
  • By 2059: 95% of ETC mined

Candid Questions about Ethereum Classic

Does Ethereum Classic Have a Future?

Ethereum Classic continues to show resilience. Despite the fluctuations in the crypto market, it maintains a consistent user base. The future depends on its ability to remain relevant amidst continually evolving blockchain technologies.

Can Ethereum Classic Reach $10,000?

Predicting cryptocurrency prices is challenging. While ETC could potentially reach significant highs, it’s equally conceivable that its value could plummet. Smart investing involves caution and awareness of volatility.

Is Ethereum Classic a Good Buy?

This depends on individual risk tolerance and market conditions. Potential investors must consider long-term and short-term strategies alongside market performance.

The Bottom Line

Ethereum Classic emerged from a pivotal moment in blockchain history, adhering to a principle of unchangeability. While Ethereum moved on with reversals and upgrades, Ethereum Classic remained, preserving the original blockchain. Whether as a store of value or a basis for decentralized applications, Ethereum Classic continues to play a significant role in the cryptocurrency ecosystem.

Note: The information contained in this article is for educational purposes only and does not constitute financial advice. Always do your own research before making investment decisions.

Thursday, June 6, 2024