Ethereum Classic (ETC): What is Cryptocurrency and How It Works

Ethereum Classic, with ETC token, was born from a fork of Ethereum (ETH) and bases its blockchain on the principle of decentralization and the intrinsic immutability of its code. In the constantly expanding world of cryptocurrencies, ETC aims to become a payment network characterized by high scalability, based on Smart Contract and on the development of dApps (decentralized applications). But what are the differences between Ethereum Classic from Ethereum? In this article we will explain the main differences between the two cryptocurrencies and what are the advantages or risks associated with investing in ETCs.

What is Ethereum Classic

Ethereum classic (ETC) arises following a hard fork (or bifurcation) that divides the Ethereum blockchain following a hacker attack during the year 2016. On the one hand, the blockchain is kept with the original code and, on the other hand, other, it aims at a real reconstruction of the ecosystem, returning the lost funds to the investors.

History and Origins

Ethereum Classic was born in June 2016, after a hacker attack on the Ethereum platform managed to steal a total of 3.6 million ETH. Following this famous theft, which blocked the entire cryptocurrency community, Ethereum founder Vitalik Buterin and co-founder Gavin Wood promoted a real internal split.

It was the launch of The DAO (Decentralized Autonomous Organization) project that started the disastrous event, being implemented in the form of a smart contract within the Etereum blockchain. Despite an initial resounding success (the project in fact collected in a very short time about 150 million dollars, equal to 11.5 million ETH), its code soon revealed important deficits, which made the Smart Contract vulnerable to theft. Much of the Ethereum community ignored warnings about the vulnerability of the system, paving the way for the hacker attack.

This extremely serious situation was followed by weeks of heated discussions which, far from being able to find a common solution, led to the decision to make a bifurcation (commonly known as the hard fork). The community was divided between those who supported the split, who aimed to thwart further risks of attacks and theft, and those who supported the law of the code, according to whom DAO was not to be changed for any reason. The final decision, made by 89% of investors, was to return the funds and start from scratch. The Ethereum blockchain, therefore, was divided into two: the original chain took the name of Ethereum Classic, while the new block chain (under the protection and supervision of Buterin and Wood) kept the original name Ethereum.

What is DAO (Decentralized Autonomous Organization)

DAO was born as a complex Smart Contract with the aim of revolutionizing the Ethereum blockchain. Since its launch in the ecosystem it has attracted a huge amount of investment and about 12% of the entire Ethereum block chain had been tied to it. It essentially aimed to become a decentralized venture capital fund intended to finance all future dApps created in the ecosystem. The owners of DAOs, therefore, obtained the right to participate democratically in all decisions on proposals for the modification and creation of new dApps, that is, they could determine how to invest the funds.

When decisions were approved that some investors were unfavorable to, however, they had to be given the option to withdraw from the Smart Contract. For this reason, an exit door was created, called the Split Function, which allowed investors to recover the entire capital invested as long as they kept the latter intact, without spending it, for the 28 days following the termination of the contract. The Split Function, paradoxically, became a real flaw within the security of DAO and it was thanks to it that it was possible to violate the entire ecosystem and carry out the theft of the outgoing capital and temporarily left idle.


Difference between Ethereum and Ethereum Classic


Now that we have understood the dynamics that led to the split of the original blockchain into Ethereum and Ethereum Classic, let’s try to understand what the real differences are between the two cryptocurrencies. As we have seen, Ethereum Classic has kept the old code of the original Ethereum blockchain, while the current Ethereum ecosystem is based on a new block chain renewed and optimized against hacker attacks. The main point of conflict between the two cryptocurrencies, therefore, has foundations such an ethical basis.

The original Ethereum project was born with the aim of creating a cryptocurrency that would resist the whims of the financial network, the market and humans. The hard fork and the modification of the code, even if carried out in order to increase the security of the system, undermined the ethical foundations of the project, which is why they were rejected by a good slice of the community that still believed in the immutability of the project. For the rest, both blockchains are based on smart contracts and the development of dApps. They simply continue to act on partially different codes: Ethereum Classic keeps the original blockchain, while Ethereum operates on the optimized blockchain and open to new updates.

How Ethereum Classic Works: Technical Characteristics
The Ethereum Classic platform is based on Smart Contracts that allow developers to create and use dApps, issuing new blockchain-based cryptocurrencies. The ETC blockchain network operates via SputnikVM, a virtual machine optimized and made accessible to low-power devices, and includes a node called Mantis and the Emerald toolkit. The main programming language of the ecosystem is Solidity.

Advantages and Risks: Should I Buy ETCs?
One of the main advantages of Ethereum Classic is that it is an original project, very solid and still supported by a large number of major investors (who continue to buy both ETC and ETH). The ETC token, in fact, is still one of the cryptocurrencies with the highest market capitalization. On the other hand, the ecosystem is faithful to the philosophy of code immutability and does not have access to the latest updates and new features implemented by Ethereum (ETH). Furthermore, in the cryptocurrency community, it is not well seen and is considered, for the most part, an insult to the Ethereum ecosystem.

To understand whether buying Ethereum Classic is convenient or not, however, it might be useful to look at the cryptocurrency from another point of view: ETC continues to be considered a good alternative investment to be exploited in particular in periods of ETH decline, since unlike the latter token, it is less subject to market fluctuations. In its own way, therefore, it could prove to be the basis of a winning investment strategy.

Forecasts for the Future: Our Opinions

Leading analyst firms, such as MACD and Momentum, are currently showing optimism regarding the short-term trend of the ETC token. The trend of the cryptocurrency, in fact, continues to be positive. In the long term, however, some elements need to be considered before buying it on an exchange: the immutability of the blockchain code, on balance, excludes it from the optimizations offered by the advent of new technologies. This could in the future expose cryptocurrency, already subjected to ruthless competition, to the risk of not being able to keep pace with both new generation cryptocurrencies and older ones that are constantly trying to improve their code and strategies. through the development and implementation of new and interesting features.

Michael Hughes