Ethereum Classic: What is it, and how it differs from the new and altered version of Ethereum?

Some think that Ethereum and Ethereum Classic are one and the same, but they are not; though they came in one network, they are two separate blockchain technologies with distinct characteristics and histories.

With the advent of better and innovative technologies, people are becoming more aware of digital payment and digital currencies, including the different benefits these things provide like convenience, ease of payment, security, etc. In connection with this, the cryptocurrency that experienced a “boom” in popularity and trade is put in the limelight.

When people talk about cryptocurrency, the first thing they would probably recall would be Bitcoin. And that is unsurprising since Bitcoin is currently one of the most popular, most prominent, and widely-used cryptocurrencies. However, it is not the only cryptocurrency with this distinction, as there is also Ethereum.

Ethereum is one of the most popular cryptocurrencies available in the market, only second to Bitcoin. Many traders know this cryptocurrency. However, many beginners use this name interchangeably with the name of another cryptocurrency, Ethereum Classic.

Most seasoned traders will not miss the differences between the two, but the same cannot be said for beginners. They tend to think that the two are the same, and while that holds some truth, that is not the only thing on it since the two have a lot of differences despite coming from the same Ethereum Network.

That may sound not very clear so, if you are still interested in the topic, continue reading below and discover how the two differ from each other.

 What is Ethereum Classic?

Ethereum Classic is an open-source and decentralized blockchain-based distributed computing and cryptocurrency platform that runs smart contracts.  Ethereum Classic came to existence as a result of a hacking incident in 2016 that stole US$50 million from the crowdsale that was supposed to fund the DAO project.  As a result of the hacking, the original Ethereum blockchain split into two, with Ethereum (ETH) being the new and altered version that has the theft reversed. At the same time, Ethereum Classic (ETC) would continue being the original and carry its unaltered history.

 Smart contracts explained

Smart contracts are programs that independently execute terms and are running on digital software. Being autonomous digital applications, these contracts can run and carry out their function as programmed without the need for human interference. Known examples of this technology are automated teller machines (ATMs) and the Bitcoin system.

 History of Ethereum

Ethereum was the brainchild of a programmer named Vitalik Buterin. In late 2013, he described it in a white paper with the goal of developing decentralized applications. After that, it was developed by a team that will soon become acknowledged as co-founders. The formal development of the technology and software commenced in 2014 through a Swiss Company named Ethereum Switzerland GmbH (EthSuisse). After months of development, the technology was successfully launched on July 30, 2015.

Soon after the initial launch, Ethereum will experience several milestones and upgrades that affect its underlying functionality and incentive structure. However, the good times would come to a sudden halt because of hacking activity. In 2016, a set of smart contracts called DAO was developed by the platform. It garnered a record-breaking US$150 million in a crowdsale to fund it. Everything seemed to go well until an unknown hacker managed to steal US$50 million. The hacking of funds ensued a debate within the crypto-community of whether Ethereum should perform a “hard fork” or not. The issue ultimately ended when the network split into two separate and distinct blockchains, Ethereum and Ethereum Classic. The former would have the theft reversed, while the latter would continue the original chain.

Understanding the unaltered Ethereum

Like the altered Ethereum and other blockchains, Ethereum Classic also runs smart contracts which offer decentralized governance.  Since the contracts are smart, they are considered self-executing and therefore do not need the human inputs of a third party such as that of a lawyer. These contracts do not also need external monitoring nor censoring from centralized authorities or institutions for the same reasons that the codes execute the terms and conditions of the agreement.

Smart contracts are autonomous and carry their function based on their program. Their program is like if-then statements so, there would be an appropriate response if the opposite party fulfilled or neglected the parameters or conditions set in the contract.

An example of this smart contract is a contract about a real estate transaction. In that contract, there would be definite parameters and conditions that the parties involve should satisfy so that they would not incur any penalty. For example, an upfront deposit that should be paid on a particular date, the contract would proceed with the process if the funds were received, but if the opposite happened, the contract would be voided.

The contracts such as real estate transactions are written in codes and are kept in a distributed ledger or blockchain network. The distributed ledger contains and decentrally maintains the transaction and contracts that occur in the platform.

Structure of Ethereum Classic

Since Ethereum Classic contains the unaltered history of Ethereum, it could be considered a clone or the original itself. The protocol between the original and the classic is the same. On another note, both the classic and the altered versions perform smart contracts that allow decentralized applications in their blockchains. In essence, they serve the same functions from a functional perspective. Ethereum and Ethereum Classic are identical until block 1,920,000 (this is where the DAO hacking occurred), and after this block, their characteristics are no more the same. As a result, the two had different development; as such, the protocol upgrade in the former (including Ethereum 2.0) is not reflected in the latter.

The goal of Ethereum Classic

Though Ethereum Classic carries the unaltered history of the original Ethereum network, it does not mean that it is obsolete. Ever since the split happened, Ethereum Classic has undergone further development and improvement to reach its goal of becoming a global payment network that uses smart contracts that do not require a central authority nor external interference from any third party. In addition, same with the other cryptocurrencies, Ethereum Classic strives to become a digital store of value so that the currency will retain its value even if it was saved or exchanged.

How does Ethereum Classic (ETC) differ from Ethereum (ETH)?

Ethereum and Ethereum Classic came from one network, and they are the same up to a certain degree. However, due to a hacking incident, the original Ethereum split and created two separate blockchains, each with distinct characteristics. So how do the two differ?

Key Differences

·       Ethereum and Ethereum Classic represent the pre and post era of the Ethereum split

·       The original Ethereum network evolved after another 2016 DAO hacking incident. This development resulted in the altered Ethereum; however, original supporters went with the old blockchain technology of the classic.

·       Ethereum (ETH) was created in 2013, but it is now more advanced due to the 2016 incident, so despite carrying the original name, it could be considered a new version of it.  On the other hand, Ethereum Classic was born in 2016. And though it was born later than Ethereum, it is actually the old version as it is the one that carried the older blockchain technology. 

·       Ethereum evolved as a response to community members that wanted to support those who lost their money. On the other hand, Ethereum Classic came into existence as a response to those who prefer the older version of Ethereum.

Comparative Table of Ethereum and Ethereum Classic