Ethereum Classic (ETC) is a fork of Ethereum. Or perhaps Ethereum is a fork of Ethereum Classic… It depends on who you ask and can be a little confusing.
Either way, the original Ethereum blockchain is now split into two competing versions. One is sitting pretty as the second-largest cryptocurrency by market cap – namely Ethereum. Ethereum Classic has been having a rougher time of it and is currently 18th in the market cap rankings.
Let’s dive a little deeper into what Ethereum Classic is and how it came about.
The creation of Ethereum Classic
Soon after the birth of Ethereum, a new concept was invented. The Decentralised Autonomous Organisation (DAO) was a smashing idea in theory that generated a lot of hype. However, in reality, things did not go to plan.
The DAO was supposed to be used as a fundraising tool for various projects built on Ethereum and was crowdfunded itself in 2016. This was the largest crowdfunding campaign in history at the time.
However, disaster struck the project soon after its release. The open source code had a major bug in the system which a hacker exploited. This resulted in 3.6 million ETH being stolen, equivalent to $50 million at the time. The DAO contained 14% of all circulating Ethereum upon its creation.
The hack caused much debate within the Ethereum community about how to proceed. Should they continue on and learn from their mistakes? Or should they roll back the blockchain, returning the money to the investors whilst also harming the supposed immutability of the blockchain?
Eventually it was decided to roll back the blockchain. However, this decision wasn’t without controversy and did not achieve consensus. Therefore, when the roll back was initiated, several miners continued to mine the original chain, causing a split. This resulted in the creation of two Ethereums: Ethereum and Ethereum Classic.
Unlike the split between Bitcoin and Bitcoin Cash, the fork for Ethereum has been a lot more civil. They have now co-existed together for a few years without the vitriol and competitiveness we have seen from the Bitcoin split.
Backers of Ethereum Classic
There are currently three separate teams supporting ETC. The first and most commonly cited is Ethereum Classic Cooperative. This is a project run by investor and Greyscale CEO Barry Silbert. There have been comments that Ethereum Classic is now Barry Silbert’s cryptocurrency in much the same way Ethereum relies on Vitalik Buterin. However, Silbert claims to have taken a “very hands-off approach”.
The two other teams working on Ethereum Classic are Ethereum Classic Labs and IOHK Ethereum Classic. IOHK is a technology company founded by Cardano creator Charles Hoskinson, so its time is split between the two cryptocurrencies (although it is likely that much of its focus is now on Cardano).
Ethereum Classic Labs is partnered with Barry Silbert’s Digital Currency Group and helps fundraise start-ups and projects on the Ethereum Classic blockchain.
Attack on Ethereum Classic
Earlier in 2019, Coin Rivet reported that ETC was suffering from a 51% attack. Coinbase was the first to spot the attack, stating on its blog: “We detected 12 additional reorganisations that included double spends, totaling 219,500 ETC ($1.1 million).”
Whilst this could have been a disaster from both a PR and security perspective, the reaction was subdued. This was either due to a lack of interest from the market as a whole or a strong belief from the Ethereum Classic community that they would survive and return stronger.
Ethereum Classic began trading at just under $1 and soon rose to $2.70 in early 2016, before ending the year at $1.60. Like every other cryptocurrency during 2017, the price of Ethereum Classic rose with the rest of the market.
The coin peaked at $47.77 in December 2017, and in January 2018, Barry Silbert released his tweet below when the price was $28.13. Unfortunately for anyone that might have listened to Silbert’s advice, they will have seen ETC succumb to the grip of the bear market as the cryptocurrency now rests at $5.68.
At the same time, Ethereum continues to plug away at a much higher value. ETC never managed to attract the ICO platforms that allowed the Ethereum chain to pump so massively in price, and with the days of ICOs seemingly over, it appears to have missed the boat on this price boosting tactic.
If you're not watching Ethereum Classic ($ETC), you're doing it wrong
— Barry Silbert (@barrysilbert) February 12, 2018
Ethereum Classic has struggled to compete with Ethereum since their split. With continued progress being made on Ethereum as well as the rise of other competing blockchains such as Cardano or EOS, the future of ETC appears to be one of struggle.
Should another bull run occur soon though, ETC may cling on and survive a little longer, but it is unlikely to reach mainstream attention.