Although Bitcoin was the first cryptocurrency to be created, many other currencies emerged after that, each with its own uses and features. Take Light Coin, for example, which was created with a similar purpose to Bitcoin but with faster transactions and lower fees. On the other hand, we have the Ethereum network, which was designed and developed to create a platform for smart contracts and decentralized applications. But did you know that the Ethereum network first started out as Ethereum Classic?
The story of the separation of Ethereum from the Ethereum Classic in 2016 is one of the most important and interesting stories in the world of cryptocurrencies. This is because many users of this network believed that this separation would have a positive impact on the future of this currency, and another group opposed this.
In this article, we have contacted Mohammad Hosseini to answer various questions about Ethereum Classic. He is one of the young entrepreneurs who has established a holding company in the field of cryptocurrencies in Iran. Hosseini was born in July 1996 in Tehran and he became very interested in business at a very young age. This crypto expert has a master’s degree in mechanical engineering. His areas of activity include cryptocurrencies, forex, stock exchanges and other financial markets.
What is the Ethereum Classic?
The Ethereum network, created in 2014 by a young Russian named Vitalik Buterin and published a year later, offers endless applications for Blockchains that were not limited to financial transactions. Unlike Bitcoin, which is only suitable for transferring funds, Ethereum allowed users to create something called “Smart Contracts”. A smart contract is a piece of code on the Ethereum network that allows the two parties to agree on something to do so that there is no need for a third party to oversee the proper execution of the agreement. All agreement rules are coded from the outset, and the terms of the contract are enforced automatically and simultaneously.
For example, you can create a smart contract to deposit some money into your friend’s account every year at the same time as his / her birthday. This is just one of the many uses for smart contracts, and the work that can be done with them is almost endless.
There were also those who, seeing the high potential of smart contracts, thought of creating a project called DAO. The project, which stands for “Decentralized Autonomous Organization”, worked somewhat like venture capital funds, except that it was decentralized.
In order for this project to start, it needed a large amount of capital, which cryptocurrency operators had to provide. The capital was so large that $ 150 million was raised in 28 days. Ethereum network users were so excited about the project that in the end 14% of all Ethereums in the market were allocated to start the project.
However, at the same time, a great catastrophe occurred. After the DAO raised the money it needed, an individual or group infiltrated it and stole $ 50 million of its capital. This intrusion did not occur due to security issues with the Ethereum Blockchain; the theft was originally caused by a programming error in building the DAO. After the robbery, Ethereum investors were worried about falling Ethereum prices. The price of Ethereum quickly fell down to $13 from $ 20. But because of the DAO coding, the individual or group that infiltrated the project were not able to have access to the $ 50 million for 28 days. That is why the Ethereum user community had to decide on the future. They had two choices: to create a “Hard Fork” from the Ethereum Blockchain or to remain silent and do nothing. This is where the discussion of the separation of the Ethereum and the classical Ethereum comes into play, which we will discuss in the next section.
Please explain about separation of Ethereum Classic from Ethereum.
If you do not know what a hard fork is, in simple terms a hard fork occurs when changes are made to the original coding of a Blockchain that divides it into two separate Blockchains. In other words, the new Blockchain includes computers and nodes that have downloaded the new updates. Another point is that if these changes are small, a soft fork will happen, and if the changes are major, it is called a hard fork.
The reason many Ethereum users believed that the network needed a hard fork was that if it did not, hackers would be able to access and spend the entire amount after 28 days. They believed that by doing a hard fork, the stolen money of DAO investors could be returned to them.
Another group believed that by creating a hard fork from the main Blockchain, the principles of this technology, which always seeks to decentralize, would be turned away. Although they knew that many investors had lost their money, they believed that the survival of Ethereum in its current form was more important than this theft. They claimed that the theft was not due to the Ethereum blockade, and that the low security of the DAO project was the cause of the theft.
In addition, since no changes could be made to the Blockchain without a vote, the Ethereum user community was forced to choose one of these ways. In the end, the majority vote was that the amount of stolen capital was too great and could not be silenced. That’s why a hard fork was created from the Ethereum. After this decision, the new Blockchain that was created inherited the same name as the previous Ethereum Blockchain, and the original Blockchain was renamed the Ethereum Classic.
What are the differences between Ethereum Classic and Ethereum?
Now that we are familiar with the story of the separation of classical Ethereum and Ethereum, we must also talk about their differences. In fact, there is not much difference between the bits of these two Blockchains. Note that the reason for this separation was only to delete the $ 150 million sent to DAO, not to add new features. However, the path that the two Blockchains have taken over the years has made a small difference.
Ethereum Classic can do all the things Ethereum can do, but because many developers prefer Ethereum, as it is actually overshadowed by Ethereum. All the new innovations that we have seen in recent years, such as decentralized exchanges (DEX), decentralized applications (DApp), etc., have all been developed on the Ethereum, and no one wanted to create them on the classical Ethereum.
Additionally, perhaps another difference that can be considered for these two Blockchains is the abbreviation of their currencies. ETC is used to refer to the Ethereum Classic, while for Ethereum the word is ETH.
Which is better, investing in Ethereum Classic or Ethereum?
Choosing between two cryptocurrencies, Ethereum Classic and Ethereum, to invest in has always been difficult, but there is no doubt that Ethereum has been much more successful than Ethereum Classic. This is confirmed by the current price of these two currencies, which are very different from each other.
Ethereum is not only very popular with investors, but other cryptocurrencies also use the Ethereum Blockchain for their operations. That is why Ethereum has emerged as the world’s second largest cryptocurrency after Bitcoin.
The only reason that can convince you to invest in Ethereum Classic is that you are one of those people who were against creating a hard fork. If so, and you are firmly committed to your beliefs, you can skip the Ethereum and go for the Ethereum Classic. Otherwise, Ethereum’s advancements over classical Ethereum in recent years are undeniable.
Ethereum is one of the most successful currencies after Bitcoin, which has also seen significant price growth and will continue to do so. Many other currencies are based on the Ethereum Blockchain, which is why the ETH is always in high demand. In addition, Ethereum is the focal point of DeFi projects that have grown significantly in recent months.
Ethereum Classic, on the other hand, has lost market share and is at the bottom of the list of cryptocurrencies with the largest market share.
However, in this article we have tried to address the reasons for the separation of classical Ethereum from Ethereum and explain their differences. Undoubtedly, Ethereum has a much higher status than classical Ethereum, and there is no reason to choose Ethereum Classic over Ethereum for investment. So, it is better for you to go to the direction that the majority of users have gone to and that is nothing but Ethereum.
Summary: Ethereum Classic and Ethereum were created after a disagreement between the users of this network in the face of a major theft.