Do you know what Ethereum Classic is and how it differs from Ethereum? This article will explain this cryptocurrency, its benefits, use cases, and all you need to know about buying it.
What is Ethereum Classic (ETC)?
Like its namesake, Ethereum Classic (ETC) is an open-source, public blockchain that originated from a hard fork of Ethereum in 2016. A hardfork is a new cryptocurrency and blockchain that is created from the heart of another platform. The result of a hard fork split is usually two blockchains with the same origin but in two incompatible versions. Therefore, even if Ethereum and Ethereum Classic look the same, they are different.
The main reason for this hard fork was a disagreement of the team over a project called the DAO. However, the project itself wasn’t the problem. It was in June 2016 when this project was hacked, and almost $50 million worth of Ether was lost.
The main challenge happened here when the Ethereum community had to decide what to do with this situation. Some suggested accepting the hack as an immutable event and letting the hacker keep the stolen funds. The others decided to alter the blockchain history and restore the funds to the original owners.
The team that decided to reverse the hack created a new Ethereum version, Ethereum Classic, whose native token is called ETC. The new version is built on the Ethereum Virtual Machine (EVM), a Turing complete virtual machine designed to facilitate transactions. It also features a decentralized consensus mechanism called Proof of Work, where miners compete to solve mathematical problems and add new blockchain blocks. This ensures that all nodes agree on.
Let’s take a deeper look at how Ethereum Classic works and what features it has.
Ethereum Classic (ETC) Key Points
There are several ways you can use Ethereum Classic (ETC). Here are some of the use cases:
- Blockchain and Smart Contracts: Ethereum Classic operates on a blockchain and offers a platform for executing smart contracts.
- Open Source: Since Ethereum Classic is an open-source platform, its software code is publicly available for scrutiny and development by anyone interested.
- Nakamoto Consensus: It employs a modified version of Nakamoto consensus, similar to the original Ethereum (ETH). This consensus mechanism relies on miners to validate and secure transactions.
- Store of Value: ETC can be used as a store of value, much like Bitcoin (BTC). A store of value is an asset that maintains or preferably grows one’s purchasing power over time. Thus, ETC can store your savings over a significant period.
- Censorship Resistance: ETC can be used as a censorship-resistant currency, as it is not controlled by any central authority or intermediary. ETC transactions are verified by a network of nodes that follow the original rules of Ethereum, which cannot be changed or reversed by anyone. ETC can also be used to access censorship-resistant decentralized applications, such as social media platforms, news outlets, or whistleblowing sites.
- Utility token for decentralized applications: Ethereum Classic native token, ETC, can be used as a utility token for decentralized applications built on the Ethereum Classic platform. These applications can provide various services and functions, such as VPNs, travel booking, gift cards, gaming, gambling, and more. ETC can be used to pay for these services or participate in these applications.
- Payment: Large corporations, such as Amazon and Microsoft, are now considering Ethereum Classic as a means of settling transactions without the need for financial intermediaries.
Ethereum Vs. Ethereum Classic
Although Etherehm and Ethereum Classic share a common origin, there are differences that set them apart:
Ethereum Classic adheres to the principle of immutability, which means that the history of the blockchain cannot be changed or reversed by anyone. Ethereum, on the other hand, decided to alter the blockchain history to restore the funds that were stolen by a hacker from a project called The DAO. This decision led to a hard fork that split the Ethereum community into two camps
Ethereum Classic has a lower level of security than Ethereum, as it has a smaller network of nodes and miners that validate transactions and secure the network. Ethereum Classic has also suffered from several network attacks, such as 51% attacks, which allow malicious actors to double-spend or censor transactions.
Ethereum has a higher level of activity than Ethereum Classic, as it has more users, developers, applications, and transactions on its network. Ethereum is also more innovative and experimental than Ethereum Classic, as it is constantly introducing new features and upgrades, such as the transition to proof-of-stake consensus and the integration of sharding and scalability solutions.
Ethereum Classic has some different technical parameters than its namesake, such as the minting limit, the block time, and the block reward. It also has a fixed supply of 210.7 million ETC, while Ethereum has no hard cap on its supply. Additionally, Ethereum Classic has an average block time of 13 seconds, while Ethereum has an average block time of 15 seconds. Ethereum Classic has a constant block reward of 3.2 ETC per block, while Ethereum has a variable block reward that depends on network congestion and fees
Ethereum Classic has a lower market performance than Ethereum, as it has a lower price, market capitalization, trading volume, and liquidity. As of May 2023, the market cap of ETC was around $2.5 billion with 141.2 million coins in circulation. On the other hand, the market cap of ETH was $225 billion with almost 120 million coins in circulation.
The cryptocurrency’s value is one of the most essential things that most investors care about. As of September the ETH price is $1,636 and ETC is trading at $15. However, no one knows which might be a better investment in the future. If you want to decide to buy ETH or ETC, it is better to read the price predictions and research more about the condition of each coin on the market.
Ethereum Classic Risks
Like all other cryptocurrencies, there are also some risks associated with investing in Ethereum Classic. It’s important to understand that cryptocurrencies are highly volatile, meaning that their value can fluctuate rapidly. That’s the same challenge with investing in Ethereum Classic (ETC). Since it is not a stablecoin, its price may change daily, or even hourly!
Therefore, it’s important to stay informed about market changes to make the most informed decisions about buying and selling. Additionally, Ethereum Classic’s decentralized structure can make it more vulnerable to cyber-attacks that might compromise the blockchain’s integrity.
Despite these risks, this cryptocurrency is recognized as one of the top cryptocurrencies and is increasingly used in real-world applications.
While risks are involved in trading or investing in Ethereum Classic, there are also many advantages, including increased privacy, quicker global transactions, the ability to be used in the backend of ERP systems, and freedom from institutions. Whether you’re a developer looking for an innovative platform to create applications or an investor seeking to explore new opportunities, Ethereum Classic provides an exciting and reliable blockchain experience that offers numerous benefits.
The primary purpose of Ethereum Classic is to allow developers to create smart contracts or self-executing programs on the blockchain based on a predefined action. Furthermore, Ethereum Classic token (ETC) can be used as an investment. However, deciding between ETH and ETC depends on their condition in the market. Therefore, do more research whenever you want to buy either of them.
Each cryptocurrency might have an advantage over another. To compare Ethereum Classic with Ethereum, we should mention that at the moment, Ethereum is performing better than Ethereum Classic as in Ethereum 2.0, the consensus mechanism of the blockchain is changed to a Proof-of-Stake mechanism, which is more efficient than the old Proof-of-Work this platform used before. On the other hand, Ethereum Classic still uses the same old mechanism.
It was the disagreement that Ethereum community had due to the hack to the decentralized autonomous organization (DAO) project. Each group suggested different action, which led to this split.
Ethereum Classic is considered a new cryptocurrency compared to Ethereum. Since it doesn’t have many demands, therefore, it is cheaper than ETH. However, the ETC price has made it a good option for new investors who want to start with minimum investment. Meanwhile, investing in a cryptocurrency shouldn’t be done only on their price. If you want to have a profitable investment, you should do more research about the cryptocurrency you want to buy.