Ethereum VS Ethereum Classic
One of the most popular coins in the crypto world is Ethereum. Not for the first year, it is tailing along with Bitcoin and holds the second position of profitability. There is a story behind, at the end of which two separate crypto camps have appeared, Ethereum and Ethereum Classic. Which community to join? Let’s have a trip to the origins…
Ethereum VS Ethereum Classic… Two Ways of One DAO
The U-turn in the second world cryptocurrency and platform – Ethereum – took place back in 2016. A division on Ethereum and Ethereum Classic led to the significant separation of two blockchains, two communities, two worlds. The systems are adept to function separately but an ideological conflict remains.
Ethereum and Ethereum Classic are blockchain-based platforms that are used to develop decentralized online services. These platforms may affect transactions with assets of any type without traditional juridical procedures.
When comparing the two, ETH or ETC, it’s worth turning to history.
From the history book of Ethereum
Chapter 1. The next generation of Bitcoin
Let’s get back to 2013, the beginning point of Ethereum. As a startup, Ethereum became a base for blockchain implementation in third-part projects, aside from a payment system.
Everything started with white paper. The main originator Vitalic Buterin, the Canadian developer with Russian roots, pursued the aim to perfect Bitcoin and create the ideal platform without drawbacks of current currencies.
The scheme met a positive response and was developed by means of crowdfunding. More than 30 000 BTC (over 18 000$) were contributed only in 2014. But the project of Ethereum covered itself with glory amid not only private investors but banks and other financial organizations. This record sum became a key milestone in a new platform creation. Ethereum came into existence.
Chapter 2. The path of DAO
Ethereum became a global break which broadened the possibility for the creation of new apps and blockchain-based startups. The essential side of the platform was proved by its advantages:
- Ethereum operates automatically without human involvement.
- A launched code couldn’t be subjected to edit or modification.
- A database was seen to every user allowing to check it till cooperation.
- Smart contracts created trust protocols – both sides may be sure in obligations fulfillments.
On the basis of Ethereum technologies and smart-contracts system DAO (or decentralized autonomous organization) was originated.
Inherently being a hedge fund the ecosystem financed decentralized applications (DAPPs). It was flexible, transparent and simply built. Anyone wishing to join the DAO community got tokens in exchange for ether. Tokens were indicators of participation and gave the right to vote. Such a system ran like a clockwork:
- To get financing for a new app devs needed to get approval of investors.
- A project was brought up for a vote of token holders, more than 20% of votes were decisive.
- With that investors’ approval, developers gained financing from their investments in the system.
Thousands interested and 150 000 000$ investments… Such a credit of trust and unbelievable popularity of the platform could not but turned the idea in the largest crowdsource project in the history. But one question remained: what if a DAO token holder didn’t want to expend money on one or another project? The system offered a way out via split function. An investor got his ethers back and had a chance to form his own Child DAO based on close-knit community with other token holders and start to elect projects. There was only one restriction: funds was not available within 28 days.
Such a scheme seemed to be perfect leaving out of account one loophole in the assets exchange system. The result did not be long coming. An unassailable fortress of DAO received an assault.
Chapter 3. The hacker attack
In 2016 using this backdoor someone transferred the third part of the whole DAO funds on a Child ecosystem. This theft was estimated at about $50 billion and made this artifice one of the biggest cyberattack in the crypto world.
A split function represented an easy algorithm consisted of only 2 steps:
- An investor gave his ethers in return for tokens.
- The system committed the transaction in a blockchain.
The recursion formula implemented by hackers set the reverse motion. Tokens accumulated until a transaction was registered. Money loss was estimated to be the third part of DAO resources as well as betrayal of participants’ confidence to the whole Ethereum system.
Chapter 4. The raise of Ethereum
Despite the breach arose not in Ethereum itself but in DAO, one of its smart contracts, a considerable part of Eth participants lost faith in the Ethereum platform. The ether price plummeted from 20$ to 13$, and community members decided to take actions.
There were 3 ways out of the catastrophe:
- Go with the flow of the situation. A mantra “a code is a law” denied interfering in the Ethereum entity. Some participants adhered a position to take its normal course.
- Softfork. A little group of Eth followers took the line of least resistance. All the changes took place on the basis of forks, so-called deviation from the rules and requirements in a block. In the course of soft changes or soft fork, cardinal transformations didn’t take place. Both blocks, old and new ones, cooperated with each other improving algorithms. Such a decision would lock down the blocks stolen by a hacker and prevent leakage of funds. Nevertheless, a soft fork code had a defect that made the whole system vulnerable to new cyber-attacks.
- Hardfork. The biggest part of Ethereum investors chose hardfork – dramatic changes which led to independent developing of the blocks without an option of interrelation. It allowed refunding money to owners. From that moment an origin chain of transactions divided into two. The community fractured on separate “camps” – Ethereum Classic and a new one – Ethereum.
This radical solution faced diversified disapprovals from the members, as conflict the ideology of Ethereum. Since the battle – Ethereum vs Ethereum Classic – laid the foundation to debates around what camp to join with.
Ethereum Classic VS Ethereum
10% of crypto idealists have remained true to a classic model while others have switched over to a new Eth blockchain. Buterin and Wood among them.
Despite such progress towards a new ideology, the common features remain:
- A blockchain platform. Ethereum and Ethereum Classic are based on the same chain of blocks, smart contracts, and opened as well as closed source code.
- A virtual machine. Both ecosystems function due to a virtual machine – a computing node.
- A cryptocurrency. The name of virtual money – ether – is changed but not the main functions: an exchange between members, trade, payment for tokens creation.
- Terminology. Representatives of Eth as well as ETC use similar terms (for example, “gas” is an inner chargeable unit).
However, subtle resemblances don’t necessarily signify a full similarity. Both systems have elected different methods to unlock their potentials.
Both directions of Ethereum have the following dissimilarities which express in a social as well as in a technical area.
| Ethereum Classic | Ethereum | |
|---|---|---|
| Blockchain alterability | Amendments in records and contracts are prohibited. | Changes are accepted according to majority voting. |
| Development | The owners of a developing strategy are 3 teams of developers acting at the behest of the community. | Decisions about developing methods are made by the Fund counting an opinion of the community. |
| Compatibility | A special emphasis is paid to secure contracts but not to the number of developers. | In terms of ETC vs ETH, Ethereum orients on eWASM, the safety of contracts is receded to the background. |
| Transaction rate | 14 sec in the current, new updates suppose a speed-up in 4 sec | 25 sec in average |
| A block volume | A lot of free slots that is partially explained with a lower popularity in the line of ETH vs ETC | A limit is 500 000 transactions a day |
| Monetary policy | A sustainable growth of emission volume with approximate inflation to 3% a year | Inflation rate is around 3% till 2025, then – deflationary |
| Investment | Ethereum Classic Investment Trust – an investment fund allowing its members to acquire ether independently of basic assets | There is no possibility of securities trading |
| Intercommunication | Via Slack | Via Reddit |
| Sociality | The community members prefer to appear in public more rarely | The open community |
It is hard to say what system, Ethereum or Ethereum Classic, is winning in this battle. They both have strengths and weaknesses. Few people are ready to go into technical details and search for the only answer, which one will generate more profit.
The biggest problem of a newly-minted Ethereum is that a lot of users hesitate in its further validity. If only unauthorized access has resulted in such a dramatic changes, many more hard forks may be produced and shatter the steadiness of the platform. Being a relative betrayal of the blockchain idea, Ethereum represents a democratic community that has managed with the hardest cryptocurrency catastrophe in history. In such a way, the danger of the further hard forks is arguably.
Ethereum is a unique platform with an army of leading developers. They work out projects which may be successfully applied in any field. Many experts foretell a bright future to the ether as currency: it will become the first cryptocurrency after BTC, the cost is up to 1000$.
The name Ethereum Classic will be always associated with an obscure past. Now it is governed by 4 developers and supported by miners with high computing power. The fact the community is continuing an original chain and developing shows the Ethereum Classic potential. Barely it will exit the market.
To sum up, the main difference between ETH and ETC lies in its lists of pros and cons:
Ethereum Classic
[+] loyalty to ideology
[+] support of a few big members
[-] no access to Ethereum upgrades
[-] vulnerability to frauds
[-] support of a small number of users
[-] fighting mood forward Ethereum
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Ethereum
[+] successful development and constant renovation
[+] support of the “titans” and the group of the largest corporations (Enterprise Ethereum Alliance)
[+] merit for a refund after hacker attack and the reveal of a fraud
[+] a higher level of hash
[+] cohesion of members
[-] contradiction to ideology
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Nonetheless, the future of Ethereum seems to be more colorful. It has the ability to restore reserves as well as unite and counter risks. That is the main power of the community. Along with the other advantages, the choice in favor of Ethereum is obvious for the majority.
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