Crypto investors on the hunt for coins to invest in might have noticed two cryptocurrencies that have similar names: Ethereum and Ethereum classic. Today, we will be looking back at their shared past and the differences between these tokens.
Ethereum is a next-generation smart contract and decentralised application platform that was launched in 2015. Let’s decode that sentence a little. Smart contracts are programs stored in the blockchain that are self-executing when certain conditions are met. Decentralised applications, more commonly known as dapps nowadays, are developed for various purposes like financial services and gaming that are run on the blockchain.
The history behind ETH and ETC
To understand the relationship between both these cryptocurrencies, we must go back to 2016. Ethereum had just launched a year prior and had just started gaining some momentum among the crypto community. A Decentralised Autonomous Organisation project called ‘The DAO’ was formed as an investor-focused venture fund on the Ethereum blockchain. The project had a crowdfunding round through a month-long token sale. Over this period, the project had raised 14% of the ETH supply at that time from over 11,000 investors, valuing the fund north of $150 Million.
During this timeline, several well-known computer scientists had gone through the project’s code and flagged out multiple security issues with it. While these issues were getting approval by the members of the project for a fix, the project got exploited on this vulnerability, and the hacker was able to siphon off a substantial percentage of the projects holdings. The account the hacker transferred to had a 28 day stay period based on some smart contract rules, meaning that the ETH was not cashed out.
With this high-level hack on the Ethereum blockchain, there was much debate on what the step forward would be. Allowing the blockchain to continue would result in many individuals losing a large amount of money. Even in the blockchain front, this hack somewhat tarnished Ethereum’s reputation and having a substantial supply on the hacker’s hands would not board well for Ethereum in the long run.
After much deliberation, it was then decided that Ethereum would undergo a hard fork to undo the hack and return the funds to the affected individuals. This caused much uproar among the Ethereum community that felt that this action was a step back in terms of the ethos of code being law.
The Ethereum blockchain was hard forked and resulted in 2 different blockchains. The blockchain with the hack in its history that continued was Ethereum classic, and the one with the hack undone was Ethereum. So, in simple terms, Ethereum Classic is the OG blockchain while Ethereum has undergone the change.
How do they differ?
Both the blockchains have similar roots and history until the hard fork, but clearly, Ethereum has come out on top as one of the most popular cryptocurrencies. Following are some differences between both of them.
– Team and updates: Most of Ethereum’s core team from before the hard fork continue to work at Ethereum, including Vitalik Buterin, the co-founder. A large number of updates have been brought out to Ethereum since the fork to make it more efficient, but Ethereum classic does not get any of those upgrades. Additionally, Ethereum is moving towards Proof of stake next year, while Ethereum classic would stay with the Proof of Work consensus.
– Dapps and Activity: Ethereum is pretty much the most active and popular blockchain among users and developers across the board — not just in comparison with Ethereum classic. Ethereum has taken centre stage in terms of infrastructure projects, Decentralised Finance (DeFi), Non-Fungible Tokens (NFT’s), gaming and in most sectors. Furthermore, Ethereum classic is in no competition with Ethereum when it comes to the Total Value Locked (TVL), which currently stands at a staggering $134 Billion at the time of writing this article.
– Market Dominance: Ethereum ranks 2nd among all the cryptocurrencies with a market cap of $500 billion, while Ethereum Classic ranks 32nd with an MCap of only $6 billion.
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