Ethereum Classic (ETC)
The Original Ethereum Blockchain
For many investors and digital currency enthusiasts, the story surrounding Ethereum Classic (ETC) is fairly confusing.
It is a story that reads like a well-written mystery novel, complete with team disarray, an unnamed villain, and over $50 million in stolen funds.
That said, even though Ethereum is the dominant currency in the news, Ethereum Classic is the original technology developed by Vitalik Buterin and Gavin Wood, raising the question: which one is the better long-term investment?
To answer that question, we're going to go back and look at the event that caused the Ethereum chain to split.
The story begins with a DApp (decentralized application) called the Decentralized Autonomous Organization, or DAO.
If you've read our Ethereum resource page, you likely know that the Ethereum network uses something called “smart contracts.” Smart contracts are parameters in the code that dictate action. This action can take place without interference from a third party.
The Decentralized Autonomous Organization was a smart contract unlike any other. In fact, it was the smart contract that many thought would change Ethereum forever, creating the world’s first killer DApp. The DAO basically provided a decentralized venture capital fund. These funds could be used to power all future DApps built on the Ethereum network.
It was an exciting prospect. But it wasn't long before this glimmering utopia fell apart.
In June 2016, an unnamed individual exploited a gaping loophole in the DAO. Through this loophole, the hacker was able to take over one-third of the funds in the DAO. This sum, at the time, amounted to over $50 million in Ethereum.
This infiltration caused an uproar in the Ethereum community. The price of Ethereum dropped dramatically, and investors begged for their lost money to be found.
This left the Ethereum team in a tricky place.
They could either stand by and do nothing, or they could initiate a soft fork to restore funds to investors.
The people who argued the “do nothing” route believed doing something would go against Ethereum’s mission as a decentralized network, since doing something would be centralized interference.
In the end, it was decided that a soft fork would be initiated to reclaim funds. Those who didn't support the fork decided to continue to mine and maintain the original Ethereum chain, which was quickly christened Ethereum Classic.
Like Ethereum, Ethereum Classic is a decentralized platform with the ability to execute smart contracts. For the Ethereum Classic team, the code is law. Changing the blockchain goes against the mission that Ethereum originally set out on: decentralization and the end of corruption. This may appeal to many investors who believe blockchains should not be altered, regardless of circumstance.
That said, Ethereum Classic does have some flaws worth noting. One of the attractive parts of Ethereum to investors is the currency’s slow push toward proof of stake, a mining validation method that is less energy intensive and more democratic than proof of work.
Since Ethereum Classic is no longer compatible with the new Ethereum chain, Ethereum Classic will not be able to adopt proof of stake when it happens. There are also those who view Ethereum Classic as an attack on Ethereum since many anti-Ethereum people backed Ethereum Classic in the wake of DAO simply to cause discord.
If you're interested in learning more about Ethereum Classic, you can access its website here.
You can access the Ethereum Classic white paper here.
How to Buy Ethereum Classic
Ethereum Classic is on a wide range of exchanges, including Poloniex, Bitfinex, and Huobi.
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