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What is Ethereum Classic? Introduction To ETC

Before there was Ethereum... the "original" chain, with all that entails.

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What is Ethereum Classic? In fact, WHY is Ethereum Classic, might be a better question! Their stories are intertwined, as their shared name suggests. For the first 1.92 million blocks, the two have the exact same transaction history.

But not long before block 1920000, a bad thing happened to Ethereum. The DAO, a decentralized organization established to promote d’apps and development in Ethereum, suffered a hack due to a vulnerability in its smart contract. Over 6.2 million Ether were lost to the attackers. In today’s figures, that would amount to more than $2 billion.

The DAO Hack

Needless to say, the community was shocked by these events. Over 10% of the Ethereum that existed had been invested into the DAO, it having funded in record time. Its members represented some of the most renowned minds in the Ethereum community. A decision was made to hardfork with changes to the blockchain that effectively returned the funds to the DAO and repaired the flaw in its smart contract.

This decision was not universally agreed upon. A lot of people made detailed arguments in favor of it while enough people also argued against it. Here are some of the reasons it was felt that to hard fork at the behest of the DAO was the wrong thing to do:

  1. The flaw which enriched the hacker was not a flaw in Ethereum, but a flaw in the DAO’s own code. Therefore it’s not much different than a government handing out money to corporations who get robbed — it probably doesn’t help corporations learn from their mistakes and it’s not the government’s job anyway.
  2. A hard fork to solve a one-off problem that isn’t a side effect of the blockchain itself lessens the public’s faith in the blockchain’s “immutability.” If a blockchain is not truly immutable then it will fundamentally lose value against one that is.

Birth of Ethereum Classic

Nevertheless, the community felt overwhelmingly that the precedent should be set that hackers would not be rewarded in the long run. Thus, at block 1,920,000, Ethereum mining nodes hard forked to a new version of the blockchain which did not honor the DAO hacker’s theft. Nodes that continued to mine on the original chain quickly fell into the minority. This is how Ethereum Classic was born.

When a blockchain forks, all the data up until the fork is still valid. Therefore Ethereum users who had 1 Eth before the hard fork now also had it on the new chain. The question of whether the new chain would “survive” — receive enough mining support to be secure from attack — and whether exchanges would allow for the trading of the “new” token remained to be answered.

Why The Term “Ethereum Classic”

Ask any exchange and the reasonable response you’ll get is that Ethereum is older than Ethereum Classic. In strict terms of the symbol, this is true. But Ethereum Classic does not call itself such for no reason — in fact, Ethereum Classic retains the original, immutable record of the Ethereum blockchain, while Ethereum itself is a modified history.

However, it seems the often argued reasons from earlier in this article were not sufficient to sway the majority of the money nor the hash power toward the original Ethereum chain. For all intents and purposes, the main difference between the two technologies is that in one, Ethereum Classic, the DAO hacker kept his winnings. Also, on Ethereum Classic the majority of the decentralized applications that are attracting people to Ethereum in the first place are not functional.

ETC’s Place in the Universe

And so, instead of steering the Ethereum community toward a more cypherpunk understanding of immutability, the miners who chose to continue mining the legacy chain actually created a wide open space — something with a bit more risk and potential for reward than testnet.

Ethereum Classic, like Ethereum, as a base token has little meaning without decentralized applications operating on top of the blockchain which require it to power their transactions. This is fundamentally where such tokens derive their real worth. Like Ethereum, projects have run initial coin offerings to raise ETC in order to fund development of Ethereum Classic decentralized applications.

It’s still very early in blockchain history as a whole. The actual technological demands of global finance are still not even understood by blockchains. This is to say, while today Ethereum might appear sufficient, there will come a day when it’s not surprising that there are so many different available blockchains, because there will be so many more and obvious use cases. At that point, it might be unsurprising to see even more hard forks for the sake of development alone.

With only a few tokens on the chain as of yet, it remains to be seen at what level of congestion in the Ethereum network other platforms truly become attractive enough for companies to take the risk. As for Ethereum Classic, it has its loyal developers and adherents, and its chain continues to put out new blocks. It provides a grassroots alternative to mainstream Ethereum development and a lower risk (as well as financial barrier to entry) area to attempt blockchain projects.

ETC Summary

  • Ethereum Classic would not exist had there not been a major hack in Ethereum which caused the majority of the community to decide to, essentially, agree on a less-than-true blockchain.
  • Ethereum Classic has essentially the same technical functionality as Ethereum.
  • Ethereum Classic, despite its lower value than Ethereum, is a top 25 cryptocurrency at time of writing.
  • ETC’s most likely future is as an alternative to Ethereum when the network is overly congested.

 

(Editor’s note: Someone on Flickr is very passionate about Ethereum Classic – they built a library of rather fun images, in case you are a fan!)

 

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