Home Ethereum Ethereum (ETH) vs Ethereum Classic (ETC): What Are the Differences? Ethereum (ETH) vs Ethereum Classic (ETC): What Are the Differences? October 4, 2018 John Ethereum 0
Ethereum vs Ethereum Classic : The difference between these same-name cryptocurrencies is both philosophical and technical. After a $55 million cryptocurrency hack, the Ethereum network split into two cryptocurrencies with separate blockchains, market caps, and ideologies. Here’s how the Ethereum vs Ethereum Classic rivalry came into being, and why these currencies are far from the same. A History of Ethereum
To understand the Ethereum vs Ethereum Classic dichotomy, you have to look back to 2016 when there was only Ethereum.
In 2013, Vitalik Buterin, Joseph Lubin, and Gavin Wood introduced the world to a new type of cryptocurrency.
Using blockchain , the distributed ledger technology underlying Bitcoin (BTC), Ethereum was built for peer-to-peer agreements and decentralized applications.
More specifically, Bitcoin functions as money or investment, whereas Ethereum is a platform for smart contracts and DApps. A smart contract is a code with preset conditions which, once satisfied, automatically enforces the terms of an agreement.
A DApp is a decentralized, open-source application that uses cryptocurrency tokens. You can use DApps as a payment platform, cloud storage, communication, and much more.
In other to create smart contracts and DApps, Ethereum has its own Turing complete programming language. This means that it can theoretically solve any problem when given the proper resources.
In other words, the Ethereum network hypothetically has the power to fulfill any smart contract’s terms.
In the summer of 2014, Ethereum launched its ICO , initially pricing 2000 ETH at 1 BTC. This ICO made $18,300,000, an unprecedented figure at the time. Led by Buterin, the team behind Ethereum created Ethereum’s genesis block in 2015.
Though Bitcoin and Ethereum both use Proof-of-Work to verify transactions, they are structurally and ideologically distinct. For instance, there can only ever be 21 million bitcoin.
By comparison, the Ethereum network permits the mining of 18 million Ethereum per year, forever. Ether, the ‘Fuel’ Powering the Ethereum Blockchain
Ethereum (also known as ETH or ether) was never supposed to be a digital currency like Bitcoin. Instead, ether is a cryptocurrency that someone receives once they’ve fulfilled the terms of an agreement. Ethereum transactions are generally automatic since they’re fulfilled by smart contracts rather than people. Additionally, ether can represent something other than currency. This is especially true in the case of DApps.
In other terms, ether powers the virtual Ethereum network whereas Bitcoin functions more similarly to fiat, or government-backed currency, in the way that people exchange it. ETH is also less liquid than Bitcoin, meaning that it’s harder and less common to convert ether to cash. The DAO Hack
Why do we have Ethereum vs Ethereum Classic? It all goes back to a historic event in crypto history known as The DAO hack, which occurred on June 17, 2016. Over a few hours, an anonymous hacker stole 3.6 million ETH, which was worth $55 million. The DAO: a Decentralized Venture Capital Fund
In 2016, a development team that went by Slock.It introduced The DAO to the Ethereum blockchain. The DAO, or decentralized autonomous organization, was a venture capital that used smart contracts to allow investors to fund DApps without going through a centralized organization.
Here’s how The DAO worked: Investors would exchange ETH for DAO tokens . Using these tokens, they voted on which DApps The DAO fund should back. If a DApp received 20% of the votes, the smart contract underlying The DAO would automatically release the funds to the app.
In its 2016 ICO, The DAO token raised $150 million in Ethereum, making it one of the most successful ICOs of all time.
At the time of The DAO hack, 14% of all ether existed within The DAO network. But keep in mind that The DAO and Ethereum are not one and the same. The DAO is an application built on the Ethereum blockchain, not the blockchain itself. The Problem with The DAO
Say an investor wanted to convert their DAO tokens back into Ethereum.
They would ask the smart contract to exchange their DAO tokens for ETH. After issuing the ETH, the smart contract would update the ledger. This meant that converting crypto in The DAO network was a two-step process.
To withdraw funds, the hacker kept requesting conversions from the smart contract. And by adding a recursive function—an algorithm that refers back to itself—they were able to continually withdraw funds before the smart contract could add the transaction to the blockchain. Over a few hours, the hacker stole $55 million, which was 30% of total DAO funds.
The network put these funds into an account with a 28-day holding period. Though the hacker wasn’t able to collect the stolen $55 million, The DAO was essentially shut down.
Cryptocurrency exchanges Poloniex and Kraken delisted DAO tokens in September and December 2016, respectively. Ethereum Hard Fork Data courtesy of CoinMarketCap (10/01/2018). Price in USD.
Within 48 hours of The DAO hack, Ethereum’s market cap fell by over $768 million USD—45.
9% in two days. As seen in the graph above, Ethereum’s coin market cap continued to dwindle in the following weeks.
About 90% of the Ethereum community supported a hard fork. This is a change in a blockchain’s protocol so major that it requires the creation of an entirely new blockchain.
The goal was to create a new Ethereum blockchain that would allow people to collect stolen funds from an account into which the network would allocate them.
However, not everyone agreed with the Ethereum hard fork. 10% of the Ethereum community believed that this contradicted the core notion that blockchain should be immutable.
On July 20, 2016, the Ethereum vs Ethereum Classic divide was born. Ethereum (ETH) is the cryptocurrency used by the new, forked blockchain. As its name indicates, Ethereum Classic (ETC) is the older, smaller part of the community that rejected the Ethereum hard fork.
At the time of the Ethereum hard fork, anyone who owned Ethereum received the same funds in ETC as they had in ETH.
This became a problem for even the most secure cryptocurrency exchanges . Even if they had nothing to do with ETC, exchanges were technically responsible for giving customers access to ETC after the Ethereum hard fork.
Ethereum vs Ethereum Classic
Here’s how to distinguish between Ethereum vs Ethereum Classic:
1.
Ethereum price is higher. Today, ETH and ETC cost $ 229.
70 and $11.21, respectively.
Their market caps are $ 23.50 billion and $1.
2 billion.
2. Ethereum accounted for 90% of the Ethereum community at the time of the Ethereum hard fork. This means that Ethereum Classic was only 10% of Ethereum investors.
3.
Large corporations use the Ethereum blockchain.
The Enterprise Ethereum Alliance assists companies when it comes to applying Ethereum’s blockchain technology. Mastercard, BP, Microsoft, and JPMorgan Chase have experimented with Ethereum-based applications.
4. Ethereum functions more like software, whereas Ethereum Classic resembles a cryptocurrency for trade . ETH is largely used to pay transaction fees and, more broadly, keep the Ethereum network up and running. And because so many large companies exist on the Ethereum blockchain, Ethereum’s value is tied to the value of those companies using the blockchain.
By comparison, Ethereum Classic has value based entirely on supply and demand—like other money, cryptocurrency or otherwise.
5. Ethereum vs Ethereum Classic: They have different hash rates. A hash rate is a speed at which a network can complete a transaction.
It depends on computational power. The higher a network’s hash rate, the faster it can create new blocks.
According to BitInfoCharts , Ethereum’s current hash rate is 263.7Th/s (trillion hashes per second).
Ethereum Classic is currently 15.9Th/s. This means that miners are using a lot less computational power to mine Ethereum Classic than Ethereum. In general, the higher the hash rate, the more profitable, and therefore more competitive, the mining.
By comparison, Bitcoin’s current hash rate is 55.1E/s (quintillion hashes per second).
6. Ethereum Classic developers largely remain behind the scenes .
The faces of ETH—Vitalik Buterin, Joseph Lubin and Gavin Wood—are public, whereas ETC leaders are largely pseudonymous. Ethereum and Ethereum Classic Similarities
With Bitcoin vs Bitcoin Cash , the Bitcoin blockchain hard-forked the blockchain so that Bitcoin blocks could be much bigger and Proof-of-Work algorithms could be simpler. The objective was to make Bitcoin transactions faster.
By comparison, the blockchains of Ethereum vs Ethereum Classic are not all that distinct. Similarities between these two blockchains include:
1.
Ethereum and Ethereum Classic are open source . Anyone, anywhere can download Ethereum as a software, edit it and redistribute it as they see fit.
2. Creating a block takes the same amount of time . It takes around 15 seconds to create an Ethereum block on either blockchain.
By comparison, it takes 10 minutes to create a Bitcoin block.
3.
Transaction fees depend on the same factors . All Ethereum fees depend on the computational difficulty of the transaction, the amount of bandwidth it uses and the amount of storage it needs. This is all calculated in gas, a unit the exists only in the Ethereum system.
The advantage of gas is that it allows the network to calculate fees without taking the fluctuating price of ETC or ETH into account. In order to convert gas to Ethereum, you have to set your ‘gas price’, meaning the amount you’re willing to pay for a transaction.
4. They use the same consensus mechanism .
Ethereum and Ethereum Classic use a form of Proof-of-Work called Ethash.
5. Both cryptocurrencies are smart-contract, rather than currency, focused . This is because they’ve both still in line with the original Ethereum Whitepaper . Ethereum Continues to Evolve
The Ethereum vs Ethereum Classic rivalry began with the Ethereum hard fork in 2016. Following a $55 million hack on The DAO, an Ethereum network-based application, the Ethereum community reached a crossroads. 90% wanted to hard fork the cryptocurrency to return lost funds; the remaining 10% thought this contradicted the immutability of the blockchain.
As a result, we have Ethereum vs Ethereum Classic today. The former represents the new, higher value cryptocurrency while the second is the “classic” version of Ethereum that existed pre-DAO hack.
Today, ETH has a higher hash rate, price and market cap than ETC. This is because most of the Ethereum mining community switched to ETH.
Additionally, major corporations are building applications on the Ethereum blockchain, which increases the value of ETH. However, these currencies have similarly structured blockchains.
Today, they have the same block completion time, open source technology, Proof-of-Work and transaction fee structure.
But one big distinction between the two remains: the Ethereum blockchain has forked several times since 2016 and could fork again soon. For instance, Ethereum is rumored to upgrade its code with “Constantium” in fall 2018.
In other words, the contrast between Ethereum vs Ethereum Classic could soon become starker. But as smart contracts become legally binding , both Ethereum blockchains could benefit. .