Ethereum vs. Ethereum Classic: The Definitive Guide
Cryptocurrency has become a global phenomenon over the past few years, and with its popularity come more options for investors.
Among these is Ethereum which has quickly become one of the most popular cryptocurrencies. But what about Ethereum Classic? This lesser-known option may be worth considering for those looking to invest in digital assets.
This guide discusses Ethereum vs. Ethereum Classic and helps you decide which might be best for you.
Smart Contracts and Ethereum
Cryptocurrencies have been around for over a decade and have established themselves as a viable alternative to traditional fiat currencies with unique advantages. However, cryptocurrencies are much more than just digital versions of cash. They are also immutable, meaning they cannot be altered or censored by any government or institution. This unique property has made cryptocurrencies immensely popular with those who value privacy and freedom from a central authority.
The importance of Ethereum also lies in the fact it serves as a platform that allows plenty of flexibility in creating financial platforms, games, and more projects that can all run on the blockchain. This is thanks to something called “smart contracts,” which both Ethereum and Ethereum Classic support.
Smart contracts are one of the most promising applications of cryptocurrencies. A smart contract is a self-executing contract that automatically verifies and enforces the terms of an agreement.
Thanks to Ethereum’s impact on the industry, cryptocurrencies are now being used for various applications beyond financial transactions. Ethereum has paved the way for a new class of decentralized applications that have the potential to revolutionize industries. According to the market cap value, it’s the second-largest cryptocurrency in the global crypto market, just below Bitcoin.
ETC vs. ETH Clash: Creation of the DAO and the Hack
The distributed autonomous organization (DAO) is a decentralized entity that runs on Ethereum. It was launched in 2016 to provide a new way for people to fundraise and invest in blockchain projects. The DAO raised over $150 million from investors, making it the largest crowdfunding campaign in history. However, the project was plagued by technical issues and was eventually hacked, leading to the loss of millions of dollars worth of Ether.
The hack polarized the Ethereum community and resulted in a hard fork, splitting the Ethereum blockchain into two separate networks: Ethereum and Ethereum Classic.
Despite its rocky start, the DAO remains an important experiment in decentralization and has helped shape the Ethereum network’s development.
What Is a Hard Fork and How It Started ETH vs. ETC Rivalry?
A hard fork changes the cryptocurrency protocol that makes previously validated blocks or transactions no longer part of the main blockchain (or vice-versa). It requires all users to upgrade to the new version of the protocol software. Put simply, a hard fork is a permanent separation from the previous blockchain version, and the latest version will no longer accept nodes running preceding versions.
Hard forks can happen on purpose (planned) if developers want to update the software or make other changes that are not backward compatible. They can also happen unintentionally (unplanned) if there is a disagreement amongst miners about what should be considered valid.
Unintentional hard forks can lead to the creation of two different cryptocurrencies, as seen with ETH and ETC. Some argue that hard forks are necessary for cryptocurrencies to evolve, while others worry about potential security risks. It’s important to note that not all hard forks result in creating a new cryptocurrency; sometimes, the forked chain becomes an altcoin.
Ethereum vs. Ethereum Classic: Approach to Hack and Hard Fork
The hard fork was necessary to fix the DAO exploit, which had allowed attackers to steal over $60 million worth of ETH. While the separation succeeded in fixing the DAO vulnerability, it also created a lot of controversy and debate within the Ethereum community.
Some members believed that the hard fork went against the principles of decentralization and immutability, while others believed it was necessary to protect user funds. As a result of the hard fork, Ethereum Classic was created as a separate blockchain. Ethereum Classic has continued to maintain the original blockchain, while Ethereum has implemented several upgrades and changes.
So, what is Ethereum Classic? It’s the original Ethereum blockchain, with illegal transactions made in the hack still maintained on the blockchain.
While both blockchains are similar, they have since diverged in their philosophy and approach to governance. As a result, the two communities have become increasingly divided, with each community supporting its own blockchain.
Ethereum Classic vs. Ethereum: What Are the Differences?
At first glance, Ethereum Classic and Ethereum may appear to be the same digital currency. After all, they share a common history and many of the same features. However, there are some important differences between these two blockchain-based platforms.
Ethereum has grown into the world’s largest decentralized platform for building dapps (decentralized applications) and smart contracts. It is also home to various financial platforms, including many of the world’s most popular crypto exchanges. With its growing community and ecosystem, Ethereum shows no signs of slowing down anytime soon.
Ethereum Classic, since the fork, has maintained the cryptocurrency as a separate blockchain with its own community and development team. The Ethereum Classic team has made numerous improvements to the platform, including increasing the block size and adding support for on-chain scaling solutions. As a result of these efforts, Ethereum Classic has become a viable alternative to Ethereum, with a growing user base and ecosystem.
ETC and ETH currently use a proof of work (PoW) consensus mechanism to validate transactions. However, ETH has significantly progressed in implementing the proof of stake (PoS) upgrade. PoS is a more energy-efficient consensus mechanism that allows users to stake their tokens to confirm transactions instead of computing power. This process is known as staking, requiring users to lock up their tokens for some time. In return for risking their tokens, users receive rewards in the form of newly minted tokens.
Ethereum 2.0 is currently in the phase of moving to PoS completely. According to Vitalik Buterin, one of the co-founders of Ethereum, the complete merge is expected sometime in August 2022. At that time, The Beacon Chain, Ethereum’s parallel network, which is currently operating on the PoS consensus mechanism, will be entirely integrated with the main network.
Once Ethereum 2.0 is live on the mainnet, ETH will transition from PoW to PoS. This upgrade will make Ethereum more scalable and energy-efficient, which could help increase its adoption in the future.
The main difference between Ethereum and Ethereum Classic is that ETC, on the other hand, has no plans to implement PoS. The ETC team believes PoW is a more secure and decentralized consensus mechanism. As a result, Ethereum Classic will likely continue using PoW for the foreseeable future.
Supply and New Tokens
What’s the difference between Ethereum and Ethereum Classic token supplies? This will interest new investors as the potential circulating supply will dictate the price of these cryptocurrencies.
Ethereum doesn’t have a cap on the number of issued ETH, and currently, there are more than 121 million coins in circulation. However, the implementation of Ethereum Improvement Proposal (EIP) 1559 changed how transaction fees work and how the supply increases. Some portion of the ETH transaction fee is now permanently removed from circulation.
The upgrade has reduced the potential ETH inflation and could potentially make it deflationary. So far, more than 2.4 million ETH were burned due to this update, and the number continues to rise.
ETC, like Bitcoin, has a limit on the total number of tokens. There will be only 210.7 million ETC in circulation, and at the time of writing, 64% of tokens were already issued.
Ethereum Classic vs. Ethereum: Price and Market Cap
There is also a noticeable difference between ETH and ETC in price. Comparing the use cases of these two projects shows strong reliance on Ethereum as a more popular platform, which is also reflected in the price of tokens.
Currently, the price of ETH is around $1.790. This is close to a one-year low for the token after reaching the all-time high of about $4,860. As the price of stocks dropped, the cryptocurrency industry followed, and it’s currently in a bear market. However, this doesn’t change the fact that ETH has a daily volume of $12 billion. Even if you compare Ether’s yearly low prices, the lowest price of ETH in 2022 is more than twice the value of the 2021 annual low.
Ether is currently the only token close to Bitcoin’s market cap. It’s at $216.7 billion, with Tether just below it at $72 billion.
So, is Ethereum Classic a good investment? It remains to be seen, but according to its current performance, not so much.
ETC is selling for $21.2 at the time of writing this article. It had an impressive all-time high price of $168.98 in June 2021, but in 2022, it couldn’t breach the $80 price. There’s no denying that fewer projects are built on Ethereum Classic and that it’s less used as a payment method than ETH. It also has a market cap about 100 times smaller than ETH’s. ETC is currently at $2.8 billion.
Differences in Development
Differences between Ethereum and Ethereum Classic can also be observed in the way the teams behind them operate.
The Ethereum Foundation is a non-profit organization that funds the development of Ethereum. The Foundation is supported by a variety of different organizations and individuals, including major tech companies like Microsoft and Amazon.
Ethereum Classic, on the other hand, receives funding from the ETC Cooperative, a public charity funding its development. The ETC team relies on donations from the community to support their work.
The Ethereum Foundation has a more formal structure than the ETC team, with different departments working on specific aspects of the Ethereum platform. The ETC team is more decentralized, with developers working on various projects.
Ethereum’s History as a Gambling Platform
Ethereum has been used for a wide range of purposes, including gambling. Due to its decentralized nature, Ethereum offers many advantages over traditional online gambling platforms.
Perhaps most importantly, it’s much more difficult for casinos to rig games or otherwise cheat players when using Ethereum. In addition, payments made on Ethereum are often faster and cheaper than those made with fiat currency. As a result, Ethereum has become a popular platform for online gambling, with a growing number of casinos accepting it as a payment method. Some casinos only accept Ethereum, offering their players an additional level of security and anonymity.
Ethereum vs. Ethereum Classic: Final Thoughts
Investors need to do their research before investing in any cryptocurrency. However, if you’re looking for a platform with more projects built on it and that is more widely accepted as a payment method, then Ethereum is the better investment.
Ethereum 2.0 is also around the corner, potentially increasing its value even further. If you’re looking for a more risky investment, then Ethereum Classic could be a good choice. The price of ETC is currently not performing as well as ETH, so there’s potential for more growth. However, it’s important to remember that ETC is not as widely used as ETH and does not have the same level of development.
Does Ethereum Classic have a future?
While not as profitable as Ethereum, ETC is still performing better than 95% of other cryptocurrencies on the market. Currently, it’s in 28th place according to market capitalization, and its price is still to recover from the 2022 crash.
Is Ethereum Classic worth buying?
Should I buy Ethereum or Ethereum Classic is one of the most commonly asked questions by cryptocurrency investors.
While ETC is not as widely used as ETH, it still has a solid team and development. In addition, the price of ETC is currently not performing as well as ETH, so there’s potential for more growth. However, keep in mind that ETC is not as widely used as ETH and does not have the same level of development.
Will Ethereum Classic go up with Ethereum?
If we look at Ethereum vs. Ethereum Classic performances over the years, there isn’t a direct correlation between the prices. ETC performs better than other altcoins, but ETH has performed significantly better than ETC in 2022.