Ethereum is a world-famous blockchain platform that forms the foundation of thousands of decentralized applications. Lesser known is its older variant, Ethereum Classic, a platform that continues to function as a parallel chain.
Ethereum forked from Ethereum Classic following a decision by the community to migrate to a new chain in a bid to restore stolen funds after the hack of a flagship Ethereum application called The DAO in 2016. Nonetheless, a section of the Ethereum community was not convinced and continued mining and transacting on the old chain, which became known as Ethereum Classic.
Three years later, the Ethereum vs Ethereum Classic battle has toned down because Ethereum Classic has struggled to compete with Ethereum, whose currency, ETH, is the second-most valuable coin in the crypto space. It also has the pivotal backing of Vitalik Buterin, Ethereum’s co-founder, and other key members who originally came up with the concept of Ethereum in 2015.
The DAO Hack in Summary
The Decentralized Autonomous Organization (DAO) represented a novel concept for a venture fund to support decentralized applications (dApps) built on the Ethereum ecosystem. DApps are an indispensable part of the Ethereum ecosystem. Through The DAO, funders would have a say in the Ethereum projects that got funding. The investors would simply have to buy DAO tokens and gain voting power. Incredibly, The DAO raised over $150 million in ETH within the first month.
The DAO hack resulted in the theft of 11.5 million ETH. As a result, many in the Ethereum community saw it fit to perform a rollback on the chain to reverse the transactions through a hardfork. This meant that those who had invested in The DAO would receive their funds back as if nothing had happened.
However, this was an affront to the concept of blockchain immutability. Blockchain immutability means that the public ledger is a record of transactions that cannot be changed unless through consensus. If they rolled back the hacked transactions now, what would prevent them from doing the same in the future? Buterin and the Ethereum community who came up with the idea argued that Ethereum was still in relative infancy and this fork was necessary. Still, some weren’t convinced and insisted on immutability, thus creating Ethereum Classic.
The ETC vs ETH Battle
At the time, Ethereum Classic seemed like a viable competitor for Ethereum. It continues to maintain the original ideals of decentralization, immutability, and security. Despite the general shift and efficiency campaigns, Ethereum Classic will retain its proof-of-work consensus algorithm even as Ethereum transitions to a proof-of-stake consensus algorithm, where there will be no mining.
In general, the fundamental issue with ETC is its lack of backward compatibility with Ethereum, which is why many developers have opted for ETH.
Ethereum Classic vs Ethereum in Price
The native currency for Ethereum Classic is ETC, while Ethereum’s is ETH. While they have the same source code, there is a huge disparity in the market cap. ETC represents less than 5% of ETH’s market capitalization. As of this writing, ETC’s price is $4.81 in contrast to ETH’s $180. Just comparing the prices makes the contrast in valuation clear. It is therefore fair to conclude that Ethereum has emerged as the dominant player from the hardfork.
As of this writing, ETC’s price is $4.81 in contrast to ETH’s $180. Just comparing the prices makes the contrast in valuation clear. It is therefore fair to conclude that Ethereum has emerged as the dominant player from the hardfork.
Ethereum & Ethereum Classic prices.
Tabular Comparison of Other Technical Differences
|Ethereum 2.0||Ethereum Classic|
|Consensus Mechanism||Proof of stake (POS)
but currently PoW
|Proof of Work (PoW)|
|Emissions||Low as it transitions to POS||Higher per token mined,
as it has stuck to POW
|Security||High fault tolerance
(costlier to hack)
|33% fault tolerance|
|Monetary Policy||Flexible monetary policy (block
reward 2 ETH, diminishing
gradually). The supply cap
changes as well.
|Fixed monetary policy with
a fixed supply cap.
|Daily Trading Volumes||$8.8 billion||$636.3|
Both platforms use Solidity as their preferred programming language. This language facilitates the building of application programs and scripts for IoT devices and autonomous smart contracts.
Ethereum Classic seems to have taken the approach of Bitcoin even in its consensus mechanism because its membership is largely composed of sticklers to full decentralization. Above all, they ensure that the network lives up to its original ideal of blockchain immutability. Meanwhile, Ethereum proponents seem inclined toward creating an inexpensive yet scalable ecosystem that can handle higher throughput in the long term.
Ethereum Classic Atlantis Hardfork
Even so, the Ethereum Classic community has taken steps to ensure that the chain is interoperable with Ethereum via a system-wide software upgrade called Atlantis. The hardfork was executed at block height 8,772,000 on Sep 12, 2019, based on a community-wide consensus, with the politics of immutability and interoperability taking center stage.
Like other hardforks, node operators were required to upgrade their clients to abide by the rules of the network. On June 11, 2019, stakeholders agreed on the hardfork’s timetable. The specifics were that the ETC Kotti and ETC Morden testnets would be activated at blocks numbers 716,617 and 4,729,274, respectively, and later, the hardfork would be implemented at block 8,500,000.
Later, ETC labs adjusted the schedule during an Ethereum Classic Improvement Protocol (ECIP) finalization call on June 20. ETC labs then announced that the hardfork would shift to block number 8,772,000 for more participation during the implementation.
10 ECIPs were part of the Atlantis hardfork, with an emphasis on improving performance, interoperability, and security. To activate the upgrade, there were additions of opcodes, precompiled contracts, zk-SNARKs, and enhanced security. The Zk-Snarks upgrade is a core feature of ECIP-196. ECIP-161 is another significant one, as it will remove empty accounts to “de-bloat” the network.
Generally, the hardfork was a wide-ranging effort, involving Ethereum Classic community members in the details, scope, and timing. ETC Labs collaborated with ChainSafe Systems, ECC, Parity, and IOHK to complete the technical development of the main client, Classic Geth.
By September 12, major exchanges Coinbase, Poloniex, Binance, Bittrex, Kraken, Shapeshift, and OKEx had updated their software to accommodate Atlantis.
On the GitHub proposal for Atlantis, the goal is “establishing and maintaining interoperable behavior between Ethereum clients[, which] is essential for developers and end-user adoption, yielding benefits for all participating chains such as ETC and ETH.”
Prospects of the Ethereum and Ethereum Classic
Ultimately, any cryptocurrency investor is concerned with the respective prospects of the two platforms. From both the perspective of both developers and investors, Ethereum has better prospects. The primary clincher is its valuable backing from influential developers like Vitalik Buterin.
Also, from last month’s trading volumes, it is evident that ETH is the more active investment asset. The fact that Ethereum is transiting to the Serenity-Beacon Chain testnet, set for January 2020, means it will be more scalable and handle dApps more efficiently.
Generally, the fortunes of the two platforms depend on the public usage of dApps on the blockchain. Although Ethereum records better transaction volumes, it leaves much to be desired, given the potential of the underlying technology and smart contracts.
Let’s look at a tabular summary of the pros and cons of the two platforms:
In an interesting observation, some people see a possible complementary future between Ethereum and Ethereum Classic. All that is required is for Ethereum to process higher volumes of low-value transactions. To be more efficient, it may use the Ethereum Classic network in the back-end to aggregate and settle them with a higher finality on a relatively frequent basis.
The fixed monetary policy of ETC could provide sound monetary services to Ethereum, which can reciprocate by making the former more scalable. That said, this is a long-shot scenario and would need explicit collaboration.
Trading Ethereum and Ethereum Classic
As mentioned earlier, Ethereum is very much the dominant player between the two. Even after the hardfork, Ethereum Classic developer activity is low. Still, ETC coins are available for trading, and profitability depends on the market cycles.
Ethereum will continue being the bigger version in the foreseeable future, although the two platforms could both benefit from an increase in developer activity. Moving forward, Ethereum Classic probably will probably have a better future with more interoperability with ETC, hence the importance of the upgrade. Xena Exchange offers investors a dynamic marketplace to seamlessly trade Ethereum (ETH) pairs like ETH/USDT and even its derivative ETH/USD. Whether spot trading or derivative trading, Xena Exchange is secure, is easy to navigate, and boasts low fees. With integrated infrastructure, traders can access charts from their web or desktop terminal, back-test their trading strategies, and even deploy bots. Additionally, there are tons of educational materials and several proprietary indicators only found at Xena Exchange. The detailed and easy-to-read trading information on Xena Exchange makes it an ideal place to kick off your trading experience.