The history of ETC cryptocurrency until the summer of 2016 is equal to the development path of the project, which today is known to the cryptocurrency community as Ethereum. The emergence of the “classic” version is due to the dramatic situation faced by the startup team one year after the cryptocurrency’s release.
What happened is closely related to an initiative called The DAO. The latter was an investment fund aimed at financing promising projects. The organization was seen as a center for the accumulation of investor funds.
On June 17, 2016, a group of hackers discovered a vulnerability that helped them gain access to The DAO’s funds (about $50 million). Technically, the incident could have been solved, by conducting a hardfork (since the hackers could not gain full access to the investment until 28 days later). However, at this point, an ethical dilemma arose for members of the cryptocurrency community.
The fact is that during the creation of Ethereum, the developers and users interested in the development of the project were guided by the principle “the code is the law”. What is law cannot be changed. A hard fork means making adjustments. Accordingly, in terms of the original idea of the project, such changes are impossible.
However, if the hard fork was rejected, Ethereum could lose The DAO funds, which were accessed by attackers. Due to the discovered circumstances, the participants of the crypto-community were faced with the question of choosing the further development path of the project. The latter contained two options:
- Leave the code unchanged, guided by the principles. In this case, the funds would have finally fallen into the hands of attackers. As a way to fix the security problems, the developers were suggested to make minor corrections to the code.
- Perform a hard fork and continue to exist on a new, updated, better version of Ethereum. The bug that led to the theft of funds by attackers would have been fixed. The DAO’s assets would have been returned.
Gavin Wood, one of the Ethereum developers, on the attack on The DAO:
Representatives of the project were unable to reach a unanimous decision. Some users insisted on protecting the code from changes, while others leaned toward improving quality through the crime of principles.
As a result of the controversy, the Ethereum cryptocurrency community split into two camps at the end of July 2016:
- Users who did not want to change the code continued to work with the cryptocurrency in its original form. The name of the project was changed from Ethereum to Ethereum Classic (the classic version of the asset).
The second birthday of the cryptocurrency is July 20, 2016. It was on this day that the project community published a declaration of independence. The document states the intention of users to continue working on the classic version of Ethereum, which from now on should be recognized as a separate project.
- Members of the crypto community, who did not agree to put up with the imperfections of the code, supported the hard fork. The latter resulted in the emergence of the Ethereum cryptocurrency. The asset became “mainstream” because the majority of the project’s users voted for it.
It turns out that Ethereum Classic is the true cryptocurrency launched by Vitalik Buterin and his team in 2015, and the project known today as Ethereum is only a fork of the “classic” version of the asset.
The ETH ticker has been assigned to Ethereum. ETC cryptocurrency continued under a new ticker.
At the time of the project split, Ethereum Classic needed support from miners and major exchanges. Cryptocurrency mining was needed to stabilize the price, while listing on trading platforms was needed to maintain demand and status.
Poloniex, a digital asset exchange, played an important role in the future fate of the “classic” version of the asset. Thanks to Poloniex specialists, ETC cryptocurrency was listed on a major trading platform in the shortest possible time.
At the end of 2018, the project experienced a crisis due to the refusal of the current development team (ETCDEV) from further work on the cryptocurrency. The reason was funding problems.
Despite the difficulties and the refusal of the developer funding from the members of the cryptocommunity, the project continued to exist at the expense of programmers working on a voluntary basis.
Ethereum Classic vs Ethereum
Ethereum Classic today is significantly inferior to Ethereum in popularity and demand on the market. The situation can be explained as follows:
- Most developers, led by Ethereum founder Vitalik Buterin, supported the new version of the cryptocurrency. Ethereum Classic went “free-floating” with an incomplete team.
- The code adjustments made the cryptocurrency fork, now known as Ethereum, a more efficient version of the asset. In the course of eliminating weaknesses in the technical component, experts formed a platform for further changes to the project for the better. As a result, the fork outperformed the original in many ways.
The Ethereum community has eventually outgrown the community of its progenitor. At the time of writing the review, Ethereum Classic is inferior to its little brother in many aspects: from the level of capitalization to the number of partners. The differences between the cryptocurrencies can also be seen in the behavior of their exchange rates.
Critique of ETC cryptocurrency
“Classic” version of the cryptocurrency often faces criticism from members of the cryptocurrency community. The main arguments against the asset include the following:
Exaggerated value. According to many members of the cryptocommunity, trying to defend the code as a law, in the context of the weak technical performance of the cryptocurrency and the presence of security flaws, is not appropriate.
Ethereum Classic has no value as a separate project. Technically, ETC cryptocurrency is the same ETH, only in its worst form.
The “classic” version of the cryptocurrency is underdeveloped. With the main developers switching to Ethereum, work on improving the first version of the asset has seriously slowed down.
It is important to note that Ethereum Classic, due to the similarity of the code with Ethereum, can copy almost all the technical solutions of the latter’s team. It turns out that Classic is able to “parasitize” on its own fork by adopting the developments of the new project. In this case, the ETC cryptocurrency team may consider ETH as a test bed: in case of a successful implementation of a technical solution, it may be borrowed.
A new wave of criticism fell on representatives of Ethereum Classic in early 2019, amid a 51% attack, to which the cryptocurrency was exposed.
Initially, the project team denied what had happened, but later experts were forced to admit the fact. The attack was attributed to the negative impact of testing new miners. The episode undermining the security system in the cryptocurrency network has been confirmed by many popular companies, including Coinbase.
At the moment, programmers of the project are considering the possibility of abandoning the word “Ethereum” in the name. According to ETC cryptocurrency Labs developer Stefan Lozh, this decision will allow the asset to “leave many of the top coins far behind.”
Ethereum Classic ecosystem
As a result of being forced to branch into two cryptocurrencies, the first version of Ethereum has its own, different ecosystem from the fork. At the time of writing, according to the official website of the “classic” cryptocurrency, the structure of the project looks as follows
|Major projects||Support of the project development by extending its functionality||An update of the Ethereum virtual machine – SputnikVM. Represents a virtual machine capable of running on low-power devices. This category also includes: sidechain system; Emerald platform; Multi-Geth / Classic-Geth patches.|
|Decentralized applications powered by ETC||Enabling the use of ETC as a financial and development asset||The examples of the decentralized applications (dapps), working on the basis of a cryptocurrency, are the following: Coingame; Metronome; Stampery.|
As of the end of January 2020, ETC cryptocurrency has become a financial tool for 8 decentralized apps, some of which are under development.
|Additional elements||Keeping the cryptocurrency network up and running and serving its needs||This category includes a blockchain reviewer, API control systems and nodes.|