Ethereum (ETH) and Ethereum Classic (ETC) are both platforms on which various applications can be built, but few know that the original Ethereum to be released was ETC. But, before we get into such details, let’s take a closer look at the nature of Ethereum as a whole and analyze the concept of smart contracts which lie at the heart.
The unforgettable case of DAO at the cornerstone of the Ethereum fork
The key aspect of Ethereum is the ability to create and implement smart contracts. A smart contract is a contractual statement which is stored on the blockchain, and it executes the demands when certain conditions are met. They are controlled and enforced by the blockchain which serves as an objective and unbiased third party to the transaction. These smart contracts essentially run the entire ecosystem of Ethereum. Since these contracts are automated and enforced, transactions and applications that run on the Ethereum platform have become immensely appealing to all kinds of alternative applications. These decentralized applications have a wide variety of functionalities and purposes, and each use the Ethereum platform to function.
The most pivotal moment in the ETC vs ETH split has to do with an organization known as the Decentralized Autonomous Organization, the DAO. It was a decentralized form of venture capital or hedge fund and was designed to fund dApps built on the Ethereum ecosystem.
The DAO was set in a way that would give funders the power to decide which dApps should receive funding. The investors would therefore need to buy DAO Tokens using ETH as the currency to buy them. The DAO tokens integrated holders into the DAO system and provided a certain amount of voting power.
Funders who wanted to exit the DAO had access to an exit door called the “Split Function”. This “Split Function” would provide funders the Ether they had invested and also give them an option to create their own “Child DAO”, which essentially acted as a smaller version of the DAO. The only stipulation was that the funders had to hold their Ether for 28 days before they were free to spend them. This “Split Function” exposed a giant loophole in the DAO system. Despite the DAO raising around $150M through crowdfunding, on the 17th of June, 2016, some unknown attacker or attackers took around $50M due to the seriously flawd security aspects of the “Split Function”. The system could have been broken into by anyone with just a few basic skills.
ETH is a fork of ETC
After around 1/3 of the DAO’s initial funds had been stolen, the DAO and Ethereum communities went into disarray. They rapidly began scrambling for solutions to the problem. The majority decided that the best options were to create an Ethereum fork or to stop the blockchain entirely and create something new from scratch. This “something new” is what we now see as ETH. ETC is the original Ethereum which still uses the first blockchain.
The decision to fork naturally caused a lot of controversy, and although the majority voted to fork the blockchain, there were still around 10% of people who were loyal to the original blockchain. The forked ETH chain was able to retrieve the $50M that was hacked.
Ethereum vs Ethereum Classic
ETH functions on a completely new blockchain and the majority of miners, users and protocols from the original ETH use this new version.
ETC runs on the same protocol and performs a similar function but with some distinct differences in the community. Only around 10% of users from the original Ethereum remained committed and are specifically loyal to the concept of the immutable ledger. ETC primarily has value because of its speculatory nature, much like many of the other altcoins.
ETH acts more like a software company which wants to grow and improve, meaning there could possibly be more hard forks in the future. The leaders of the ETH community are far more public in nature than those in the ETC world. ETH has value due to speculation, but more so because of its utility, use cases and community support. The ETH Alliance consists of billion-dollar firms such as Accenture, JP Morgan, Microsoft, and UBS. This support, in turn, has added credit to ETH over ETC.
Ethereum vs Ethereum Classic Price
The ETC/ETH graph reflects Ethereum’s strength, however, in the near future there may be a considerable price rise due to ETC’s weakness and descending trend.
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The Issues of ETC vs ETH
In the ETC vs ETH debate, both sides make valid arguments, but each chain isn’t without their faults.
The primary issues facing ETC is its lack of backward compatibility with the ETH Hard Fork, and that now many big players of the Ethereum community have adopted ETH. Since ETC is not backward compatible with the Hard Fork, users of ETC will not be able to access any updates built on ETH, such as Ethereum’s move from Proof of Work to Proof of Stake.
The most significant issue facing ETH resides in the fact that the hard fork seal has been broken, causing many to suggest that there could be more hard forks in the future. Since the Ethereum community could essentially come together to make a substantial change in the value and future of the blockchain, something hailed for its ruthless mathematical objectivity. Some people have become rightfully speculative or simply conspiracy-driven, believing that leaders in the Ethereum community could manipulate a hard fork in the future. This risk adds some volatility to the long-term price.
ETC and ETH Mining
According to the latest crypto-oriented research startup Diar, the total ETH mining revenue across popular Proof ofWork (PoW) blockchains has exceeded $5.8Bn.
ETC mining requires a large amount of RAM,therefore special ASIC miners are required for ETC mining. The company Antminer released Antminer E3 with a performance similar to that of the 6 Radeon 580 farm. The platform uses hash algorithm Ethash, which was previously called Dagger Hashimoto.
Applications for mining ETC and ETH use the same mining algorithm and work with the same "hardware". The only difference is that ETC has a smaller Dag file size and can be mined on video cards with up to 3 GB of RAM.
Despite the lower price and popularity than the "brother" (Ethereum), ETC has certain advantages:
- The principle of code supremacy, the basis of ETC, guarantees the inviolability of the blockchain and ensures the decentralized operation of the network;
- The open code allows enthusiasts to develop ETC and create their own applications on its platform;
- Its limited supply stimulates the growth of coin value and reduces dependency on miners;
- It is supported by the authorities of the crypto community: Gadwin Wood, Charles Hoskinson;
- It has good feedback in terms of modernization on the basis of a consolidated decisions of the community and three teams;
- The possibility of investing in coins and in the investment fund ‘Ethereum Classic Investment Trust’;
- The blocks high closing speed provides a high network performance compared to BTC and ETH;
- Possibility of mining ETC on less powerful video cards weaker than required for ETH mining.
The vast majority of crypto supporters have chosen to favor ETH. The power of it lies in its community since it is a platform which allows others to build projects and DApps that could potentially revolutionize any industry. Ethereum Classic however, is stained with the unfortunate history of the DAO. The core idea behind the DAO could have made a substantial impact on the future of technology, but the core flaws in its security gave birth to a stronger platform.