The sudden surge of new cryptocurrency investors in the past year has clearly led to a sudden influx of funds being poured into the asset class. While most people are initially attracted to the ecosystem purely because of Bitcoin’s rising popularity, they eventually notice the sheer number of alternative currencies, or altcoins, that currently populate the digital currency market.
Ethereum Classic: An Introduction
Given that Ethereum is the second largest cryptocurrency after bitcoin, it is often the natural progression for new investors. The existence of Ethereum Classic, however, presents common questions regarding its intention and purpose.
Before answering those questions, it is important to note that when Ethereum was first unveiled by its founder Vitalik Buterin, there was no Ethereum Classic. The ETC digital token was created in response to a major hack affecting thousands of Ethereum users over the summer of 2016.
The hack in question is universally considered one of the most defining moments in the history of the Ethereum platform, even though it was not a direct attack against the cryptocurrency itself. In April 2016, an Ethereum-based venture capital fund named the Decentralized Autonomous Organization (DAO) was created. The fund was effectively one of the earliest implementations of Ethereum’s smart contracts feature and went on to attract 150 million dollars worth of the currency from investors.
A couple months after the DAO was announced, however, many in the cryptocurrency community began pointing out a rather major flaw in its smart contract execution code. It didn’t take long after that for someone to exploit the DAO and siphon over 3.6 million ETH overnight. Given the extent of the theft, the Ethereum Foundation and a majority of the community favored performing a hard fork to reverse the effect of the hack. As a result, the unaltered chain began being called Ethereum Classic, a nod to its legacy nature, whereas the rolled-back version of the blockchain continued to be called Ethereum.
What is Ethereum Classic and How Does it Work?
Since Ethereum Classic was a result of a hard fork of the original currency, it is essentially a carbon copy of Ethereum in almost every technical and fundamental aspect. While both blockchains are identical prior to the 1920000th block, every transaction that came after is unique to each cryptocurrency and is non-transferable. Because of the overall similarities in their codebases though, it should be noted that Ethereum Classic is every bit as capable as its sibling.
Overall, a sizeable chunk of the cryptocurrency community still believes in continuing to support the original Ethereum blockchain, or the one currently used by Ethereum Classic. As to why some cryptocurrency enthusiasts are against joining a rectified version of the blockchain, is because they staunchly proclaim the rule, ‘code is law’. They insist that, as a matter of principle, external interference in the ownership of the cryptocurrency, even at the hands of its developers to correct a hack, should not be encouraged or allowed.
Ethereum Classic’s Statement
The Declaration of Independence released by the Ethereum Classic community also reflects this philosophy, “Code is law; there shall be no changes to the Ethereum Classic code that violate the properties of immutability, fungibility, or sanctity of the ledger; transactions or ledger history cannot for any reason be reversed or modified.”
Apart from the group of investors that decided to stick with the currency for ideological reasons, Ethereum Classic has also attracted itself a rather decent sized following thanks to development projects such as the Emerald Software Developer Kit, a toolkit that can be used to build decentralized application (dapps). Another selling point for the ETC platform has been its implementation of smart contracts, a feature that the currency’s developers are pushing in the Internet of Things (IoT) space.
Despite its popularity, however, some cryptocurrency exchanges tend to only have trading pairs for Ethereum, and not Ethereum Classic. Some popular platforms that follow this rule are Coinbase and Bitstamp. That said, there are still many exchanges where trading Ethereum Classic is possible, with OKEx, Binance and Bitfinex usually boasting the most trading volume in any given day. Nevertheless, ETC’s stark difference in the number of supported trading platforms as compared to Ethereum (ETH) is worth considering.
Another important consideration is that Ethereum and Ethereum Classic wallets are not interchangeable. While some popular software and hardware wallets do have support for both, the balances and other attributes for the two currencies are stored separately. Some popular supported wallets include Jaxx, Ledger and MyEtherWallet. However, a full list of ETC supported wallets can be found on the currency’s official website.
The Economics of Ethereum Classic
At the time of writing this article, Ethereum Classic’s price hovers around the $15 mark, with volatility often swinging that figure a few dollars in either direction. In terms of market cap, it consistently manages to make the list of top 20 cryptocurrencies with a total valuation of over $1.5 billion.
Just like most other cryptocurrencies in April 2018, current market conditions has veered Ethereum Classic rather far from the all-time high of $45 it achieved back in mid-January of this year. However, anyone familiar with the digital currency ecosystem probably already understands that steep declines in this market are almost considered normal.
Nevertheless, the future of Ethereum Classic seems bright with its development team and others in the community working hard to bring new features to the platform. Chief among these is the full release of the aforementioned Emerald Project. At its most basic level, Emerald aims to be an ETC wallet that can verify transactions in a trustless way, something no other competing wallet can do right now.
In April 2018, the Emerald wallet project, at least, is still in beta. While there are fully functional releases of the wallet available to be downloaded on Github, the developers have attached a rather ominous sounding disclaimer, “Please do not keep or transact more than you are willing to lose, and please be careful. Please use a hardware wallet such as Ledger Nano S together with Emerald Wallet. If something were to happen, we are sorry, but we are not responsible for any lost ETC.”
In the grand scheme of things, however, the Emerald Project will provide developers with a set of guidelines and framework to build decentralized applications on the Ethereum Classic platform. Like the wallet, the Emerald SDK is not quite ready for primetime but is expected to be unveiled in the latter half of 2018.
By this point, it should be pretty clear that Ethereum Classic is every bit as formidable as modern Ethereum. It can even be argued that the integrity of ETC far exceeds that of ETH because of the philosophy followed by its community. ETC’s example should perhaps serve as a testament to the fact that immutability is still sought after in the prolific digital currency market.