Ethereum has made a name for itself in the cryptocurrency world. But when searching about Ethereum, one may come across something called “Ethereum Classic.” To differentiate the two, let’s dive into a short history lesson.
The DAO and the Formation of Ethereum Classic
In the previous article, we learned that Ethereum started in 2015. It is a platform where developers can create their own decentralized applications (DAPPS). The DAO (decentralized autonomous organization) was created as a decentralized capital fund intended to fund the DAPPS that were to be created in the Ethereum community.
To have control over a company and its financial and economic direction, one would have to purchase shares. In the same way, those in the Ethereum community used their Ether to buy DAO tokens that not only raised funds for the projects but also allowed the buyers to have voting rights on which projects to fund. If you wanted out of The DAO, there was a split function where you could get back your Ether in exchange for your DAO tokens given that there was a 28 day grace period before you could use your retrieved Ether.
In 2016, hackers found a loophole in The DAO’s system and took $50 million worth of Ether from its funds. Thanks to the smart contract’s grace period, the Ethereum team had 28 days to fix this before the hackers could spend all the Ether. In these 28 days, the Ethereum team performed a hard fork on the blockchain that resulted in the creation of another blockchain separate of that from the original Ethereum one.
Founder Vitalik Buterin continued on with Ethereum on the new blockchain while the “anti-hard fork” people in the Ethereum community remained on the old one and named it Ethereum Classic (ETC).
Why Continue on ETC?
If ETH is running on the new, updated blockchain that was created post-hack and ETC on the old blockchain pre-hack, why are people staying on ETC?
The Anti-Hard Fork folk have argued that the hard fork that created ETH was an action that did not stay true to the vision of the blockchain as an immutable object. They believed that if the Ethereum community did a hard fork once, they can do it again.
Is ETC in for the Long Haul?
The problem with staying in the old blockchain was that it did not have access to the continuous updates done on the new one. The Ethereum founders Vitalik Buterin and Gavin Wood also moved on to the new blockchain ETH meaning ETC does not have the backing of their lead developers.
Despite this, ETC does seem to have grown well since its inception. It has even been dubbed as the best performing cryptocurrency as its price rose from its February 6 low of $13.95. As of this writing, ETC is now at $33.09.
ETC Price Chart from Ethereumprice.org
The Callisto Fork
ETC’s recent surge in price can be attributed to its upcoming fork—the Callisto Fork. Now, this fork won’t be like the previous hard fork that separated it from ETH. It’s basically a blockchain that runs on Ethereum Classic that implements a cold-staking protocol.
You can read more about Callisto in their whitepaper here.
What about ETH?
Of course, those who continued on with the new blockchain refute the anti-fork folk’s arguments stating that:
- A hard fork was a necessary move to save the $50 million from being taken from the community members.
- Multiple hard forks in the future is unlikely because Ethereum runs as a democratic community and decisions like hard forks would require the vote of the majority.
After the whole hard fork incident, Ethereum has really made a comeback. It dropped significantly from $21 to $13 after the DAO hack but has continued on to gain back the people’s trust and is, as of this writing, now at $806.71! Clearly showing a higher growth than ETC.
Where do you stand on this issue? Are you for ETH or ETC? Or do you think that both are good investments? Comment below!
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