Ethereum vs Ethereum Classic – Everything You Need to Know

Ethereum vs Ethereum Classic – Everything You Need to Know
Sudhir Khatwani

Ethereum vs Ethereum Classic

Do you know which space right now is the most dynamic space?

Any guesses!!

Yeah, you are correct, it's crypto.

A big round of applause for whoever guessed it right.

Some of you who might be reading my write-up for the first time and may think I am crazy but believe me crypto is crazier.

Here, 1-week long absence can be considered as an absence of 1 month and 1-month absence can be considered an absence of a whole year!! What to speak if you take an off for 2-4 years is humorously denoted in the below tweet.

4 years? that's like an ice age in crypto

— CrypticalMass (@CrypticalMass) October 20, 2017

So people who are visiting the cryptoland for the first time welcome and stay safe from scams and for the people who are visiting after a break they have a lot to catch up.

Catch up because in last 2 years alone so many upgrades, forks, controversies etc have happened in the cryptoland that one can simply get overwhelmed or can be carried away by misinformation.

One such event happened in May 2016 when Ethereum (aka ETH) forked into Ethereum classic (aka ETC). Since then many newbies have been carried away by so much FUD and misinformation in the cryptoland around these two projects.

That's why I think for awareness purposes I should shed some light on these two projects so that atleast all the CoinSutra readers can take a wise decision after knowing the actual facts.

To understand the difference between Ethereum and Ethereum Classic we need to first look at these series of events such as:

Ethereum's Birth
Formation DAO & DAO Attack
The DAO Hard Fork
Ethereum Classic Was Born

Ethereum's Birth

Ethereum is the brainchild of Vitalik Buterin, a Russian programmer. Vitalik was an early adopter of Bitcoin/blockchain technology and is also the founder of Bitcoin Magazine.

He created Ethereum in late 2013 to do things which Bitcoin couldn't do and formally announced it at The North American Bitcoin Conference in Miami, the USA in January 2014.

Ethereum is decentralized smart contract's platform which aspires to be the world's only supercomputer. It is fueled by its native cryptocurrency Ether (ETH) and is used to build and execute smart contracts and Distributed Autonomous Applications (DApps), without censorship, downtime, or any third party requirements.

Read our exclusive Ethereum beginner's guide for more details.

Formation DAO & DAO Attack

The DAO and The DAO Attack

Two years after the Ethereum project launch, the Ethereum community thought of launching the DAO.

In short, the Decentralized Autonomous Organization (aka the DAO) was built to act as a decentralized venture capital fund for decentralized crypto projects. The idea was to make a stateless decentralized organization with no board of directors or employees but instead would use independent investors as its key actors.

In May 2016, the DAO went for a crowd token sale to fund its development. With $150million in the pocket, this stood out to be the second largest crowd sale ever held in history, at that point in time.

Shortly after that, a flaw in the DAO's code was exploited by attackers and more than $50 million was drained out of the DAO's funds.

This lead to an upheaval in the crypto space, among DAO investors, and particularly among members of the Ethereum community. This upheaval was mainly because a lot of money of investors was drained out and some even presumed that Ethereum blockchain itself was hacked and the project had failed.

The DAO Hard Fork

This unfortunate event brought the DAO investors and the Ethereum community to a loss. DAO was one of the earliest and biggest applications being built on Ethereum's platform, and it resulted in a mess.

And mind you, $50 million is not a small amount.

When this incident happened, Ethereum was in its infancy stage. Ethereum's prices dropped as soon as the news was out.

But even though the attackers exploited the DAO code, not Ethereum's, Ethereum still had to pay for its reputation and loss of market cap because of its relationship to the DAO.

Just to clarify through an example: Consider the Ethereum platform as the internet, and the DAO as your website. If your website gets hacked, that doesn't mean that the internet isn't faulty; rather, it means that there's a flaw in your host or your website code or something. But if your website was one of the first ever created on the internet, it might make the internet look like an unsafe place.

This shattered people's confidence in cryptocurrencies as a whole.

So the majority of Ethereum community decided that they would "hard fork" Ethereum to restore the investor's financial loss and its ruined reputation.

A hard fork is a kind of split or divergence where the community decides they will no longer follow the same protocols on the same blockchain. Basically, a new version of the original blockchain evolves from that spot.

So a hard fork was implemented on the Ethereum blockchain at Block 192000 to refund the loss of the DAO investors. The hard fork made the hacked transaction invalid, and a new version of the blockchain was formed.

Hence as result of this hard fork, ETC (Ethereum Classic) was born.

Ethereum Classic Was Born

When this all drama of fork was going on the majority of Ethereum's community was in agreement but like as always, you have someone with whom you have differences so did the group of minority community members had.

The minority of users were against the hard fork and hold the notion that 'Code Is Law' and since then continued on the old blockchain to call themselves -"Ethereum Classic".

Ethereum Classic (ETC) is also a decentralized programmable blockchain like Ethereum. And like ETH, ETC is traded on exchanges and offers the same functionality of decentralized apps and smart contracts as Ethereum (ETH). It also has the same smart contracts language called Solidity.

ETC is basically the same as ETH but on the old blockchain.

After the DAO attack, the original Ethereum community got divided into two troops:

Troop I – Those who wanted to reverse the DAO attack and refund investors.
Troop II – Those who wanted to stick to the notion of "Code is Law".

Community members who did not support the hard fork idea continued to mine on the old version of the blockchain without upgrading its version.

Since then, both communities have diverged based solely on the versions of the blockchain they are using and with time some more differences have emerged between the two projects that we will discuss in the next section.

Conclusion: Ethereum Vs Ethereum Classic

But now as some considerable amount of time has passed the hard fork both the projects are moving ahead with a different economic policy.

Ethereum still has an uncapped total supply with a fixed yearly supply where Ethereum Classic has changed that.

The new monetary policy sets a limit for the total ETC issuance. The block reward will be reduced by 20% at block number 5,000,000, and another 20% every 5,000,000 blocks thereafter. And the anticipated total supply is expected to be approximately 210 million ETC, not to exceed 230 million ETC.

And this in itself is a huge difference between the two projects which can have a long-term impact on their respective futures.

Also, when ETH is planning to move to, proof of stake but there is no such plan of ETC to change its proof of work to proof of stake.

Lastly, in terms of ICO launching and DApp building also ETH seems to be way ahead then ETC and enjoys much more confidence of investors too.

So that's all from my side in the article of Ethereum and Ethereum classic. Hope you liked this article and you will now make wise and informed decisions.

Share that decision with us in the comments section below!!

For further reading:

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