Into the Ether: ETH Vs ETC
The story between Ethereum (ETH) and Ethereum Classic (ETC) has always been a fascinating one, and since both cryptocurrencies share a common name it is only natural to compare them against each other. However, most of the comparison articles out there usually explain their differences in terms of how both cryptos were born, what are their technical differences, and how well they have performed. Therefore, this article seeks to compare both ETH and ETC through a different approach using several tools available on the Pro Subscription of the IntoTheBlock’s platform.
But, as much as I’d like to jump into the topic straight away, there are a couple of things that need to be mentioned. Like I stated earlier, I won’t spend a lot of time defining each project and their main differences, instead, I’ll answer some of the most common questions for those that are not too familiarized with the topic.
How did this start? And, what does The DAO has to do with it?
DAO stands for Decentralized Autonomous Organization, so as the name states The DAO was a sort of venture capital fund for crypto projects and independent investors, where these would be granted voting rights on which projects to fund with ETH that it had crowdfunded on, what it was at the time, the largest crowdfunding event in the history of cryptocurrencies (about USD $150m in ETH).
How come both projects have the same name?
It all dates back to June 2016, when an anonymous attacker(s) found a glitch on The DAOs’ smart contract code that allowed it/them to funnel roughly 1/3 of the funds on The DAOs’ deposit address out to a different address with a locking period of 28 days. During this time, most of the Ethereum community joined efforts and reached a consensus on making the transaction invalid by hard-forking the network (modifying the chain of blocks from a specific block number in an immutable way) to retrieve all stolen funds and return them to their original owners. This “new” blockchain would not change its name and it’s what we know today as Ethereum.
It’s worth mentioning that this was an important event as The DAO had about 15% of the existing ether, so any outcome would certainly have an impact on the Ethereum project. As this was an unprecedented event, a smaller part of the Ethereum community did not agree on the measures taken by their peers and therefore decided to continue supporting the “old” blockchain, which they renamed Ethereum Classic.
Got it?… Now, let’s get down to business
Now that we are past the whole ETH-ETC dichotomy, let’s dig into what differences both chains tell us when we look deep into-the-block.
Looking straight away we notice differences that are obvious to the average crypto investor, but not quite so for the newcomer. For example, ETH has a market cap and price 26 times higher than ETC, but that has to do more with how funds from the “old” chain were moved to the “new” one. Other significant differences include how concentrated both currencies are, the number of large transactions taken place and how correlated they are to BTC.
What if we look deeper?
1. The In/Out of the Money (IOM) indicator allows us to have a holistic view of how well investors are doing by holding a specific crypto asset. In a nutshell, it averages all on-chain positions, compares them to the current price, and through a Machine Learning (ML) algorithm, it organizes the data into the 10 most significant groups in terms of both addresses and volume of tokens. Those addresses above current price are those “In the Money”, where those that have a dollar average balance below current price are said to be “Out of the Money”.
For ETH, roughly 44% of addresses that have a positive balance are In the Money, against 36.5% of ETC.
2. We call Large Transactions to those with a dollar value greater than $100k and they demonstrate how much heavy activity is taking place in the network. This, in turn, gets manifested in price trends accordingly. It’s obvious to think that Ethereum will surely show substantial activity by exchanges, OTC desks, hedge funds, and other players, but will that be the case for Ethereum Classic?
Large transactions are less frequent in ETC, some days like on Feb 25th there where none. Numbers for ETC range between 0–150, but for ETH Large Trxs range from 150–1000 in a single day, so you draw your own conclusions.
3. Another important topic is to understand if these networks are either growing or decreasing. We are able to get this measure by taking into account three important numbers: Numbers of new addresses, active addresses, and addresses going to a zero balance. The result is a measure of Net Network Growth, which we have also turned into a momentum-based signal on our Quick View Dashboard or as you can see below.
4. Crypto has been long famous for experiencing high levels of volatility in small windows of time and it can be explained through different theses. Concentration of large holders is one of those, as they are likely to have a substantial impact on price movement if they are actively trading. This is a direct measure of exposure, so that’s why we have dedicated an analysis with high focus on the area.
At IntoTheBlock, we consider “Whales” to be those addresses/holder(s) that concentrate more than 1% of the circulating supply of an asset. The only issue for some tokens is that, much like BTC, you would have to concentrate roughly 182,406 Bitcoins ($1.6bn) in a single address to fall into this group. Therefore, we segmented ownership into another group called “Investors” that concentrate between 0.1–0.99 % of the circulating supply, and this changes the picture drastically.
ETH: There are 5 whales with total holdings of 9.33% and 150 Investors with 30.81% of tokens, for a total of 40.14%. The rest are considered to be retail investors like you and me, which sum about 59.86% of the ownership.
ETC: 15 Whales with a concentration of 39.82% and 140 Investors with 32.83% of the tokens for a total of 72.65% in hands of big players. Retail, on the other hand, concentrates only about 27.35% of the asset so exposure to these players is considerably higher.
5. Analyzing price movement through social network activity is not an easy task, hence we have created a set of indicators that tackle different approaches to this problem. For some of the most popular insights in this section, the intention has been to understand the semantics behind thousands of telegram groups and twitter posts that are specifically talking about an asset. For that purpose, we have trained neural networks that understand whether the sentiment of posts was either positive, neutral or negative.
In addition, Github metrics give us a snapshot of the amount of work and engagement of the development community behind an asset, just like you can see below:
What do most of our indicators say?
Personally, I don’t have any preference over one project or the other, but as many people think, been able to move with agility and evolving to tackle the hardest problems should not be underestimated. That’s why many investors have decided to support Ethereum over Ethereum Classic, and looking at the data consistently proves it.
Although price percentage increase over the last year favors ETC (76.96% increase from $4.34 to $7.68) over ETH (62.87% increase from $138.52 to $225.74) at the time of writing, most of the indicators on IntoTheBlock such as IOM, Large Trxs, and Concentration, make me lean towards Ethereum.
Making an investment decision in a highly volatile environment must be a well-understood action. Consequently, the more valuable data we have at our hands the better our investment decisions will be.
So, have you made up your mind?… I did.
I encourage our readers to stop by www.intotheblock.com and register for our free trial, as we’re constantly adding more features to the platform and welcome as much feedback as possible.
