Ethereum Classic (ETC) Explained — AAX Academy
Can you guess which is the original blockchain: Ethereum (ETH) or Ethereum Classic (ETC)?
Judging from the name, ‘classic’ must be the right answer and indeed it is! ETC is the original Ethereum blockchain that has preserved the original code after a major debate in the cryptocurrency’s community.
Bear with us as we explore the essentials about Ethereum Classic in this bite-sized AAX Academy guide!
The History of Ethereum Classic (ETC)
Ethereum Classic’s history started with an unfortunate event.
In May 2016, the Decentralized Autonomous Organization (DAO) held a token sale with the goal of setting up a blockchain-based venture capital to fund future decentralized applications (DApps) within the Ethereum ecosystem.
Basically, the DAO was a complex smart contract — computer code executed automatically between multiple parties when its conditions are met — that functioned in a decentralized way.
Despite its ambitious goals and a successful token sale, the DAO’s code included a major vulnerability that allowed attackers to steal ETH from the decentralized organization.
Attackers exploited this vulnerability in June 2016, which led to the infamous DAO hack where malicious parties stole roughly $50 million worth of ETH.
It goes without saying that the DAO hack had shocked the Ethereum community, driving down the ETH price from $20 to $13.
In the aftermath of the DAO hack, the Ethereum community had to choose from three options:
- Do nothing and try to live with the consequences of the attack,
- Initiate a soft fork to reclaim the funds, or
- Deploy a hard fork to recover the lost ETH
Both soft and hard forks are major network upgrades. However, while a soft fork allows non-updated and updated users to interact with each other, a hard fork is not backwards compatible with previous versions.
As developers realized that deploying a soft fork would compromise the network to Distributed Denial of Service (DDoS) attacks, the Ethereum community decided to initiate a hard fork to recover the funds it had lost during the DAO hack.
While this solution had the support of the majority, a small group in the Ethereum community opposed it, arguing that “code is law” and blockchain networks are supposed to be immutable.
Since the two sides failed to agree in a common solution, this had led to a split in the Ethereum blockchain.
While those who sought to reclaim the lost ETH went with a hard fork creating the Ethereum (ETH) blockchain we know today, the other group stayed with the original Ethereum Classic (ETC) chain.
What Problems Does Ethereum Classic Solve?
Ethereum Classic (ETC) is a blockchain platform where developers can deploy smart contracts and DApps.
While this functionality is identical to Ethereum’s (ETH), the ETC blockchain has two major differences.
First, the Ethereum Classic community is opposed to tampering with the distributed ledger, supporting the idea that blockchain networks are (and should be) immutable.
Secondly, while there’s no hard cap for the total ETH supply, Ethereum Classic uses a fixed monetary policy that allows a maximum of 230 million ETC to be created.
As a plus, Ethereum Classic initiated the Atlantis hard fork last year to (among other things) increase the blockchain’s interoperability with Ethereum and to add a higher level of privacy to transactions via zk-SNARKS.
How Is ETC Performing In Terms of Price?
Now let’s take a brief look at the ETC price.
After some ups and downs in the aftermath of the DAO hard fork, Ethereum Classic started to experience major moves in March 2017.
Between March 2 and June 18, the ETC price had grown from $1.37 to $22.42, representing a surge of over 1,500%.
Moving with the crypto bull market, after a short correctional period, Ethereum Classic’s value continued to surge in late October, increasing the cryptocurrency’s price from $10.57 to as high as $45.25 on December 21.
However, as a result of the sudden and long-lasting bear market, the coin’s price started to fall throughout 2018, trading at $5.23 by the end of the year.
While ETC experienced minor losses in 2019 (-17%), the coin was doing well in early 2020, increasing its value from January 1’s $4.55 to $11.82 by February 15.
The COVID-19 pandemic caused a crash on the general market, which negatively influenced the ETC price (and most cryptocurrencies).
After reaching its 2018 lows at $3.77 on March 13, the ETC price has been since on a moderate uptrend, trading at $7.03 at the time of writing this article.
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Originally published at https://academy.aax.com on July 28, 2020.
