The history of Ethereum Classic until the summer of 2016 is identical to the development path of the project, which today is known to the cryptocurrency community as Ethereum. The emergence of the “classic” version is due to the dramatic situation faced by the startup team one year after the cryptocurrency’s release.
The incident is related to an initiative called DAO (Decentralized Autonomous Organization).
The latter was an investment fund, the purpose of which was to finance promising projects. The organization was seen as a tool for centralized collection of funds from investors.
The DAO organization
On June 17, 2016, a group of hackers discovered a vulnerability that helped them gain access to The DAO’s funds (about $50 million). Technically, the incident could have been solved by conducting a hardfork (the attackers could only access the investments after 28 days). However, at this point, members of the cryptocurrency community faced an ethical dilemma.
The fact is that during the creation of Ethereum, the developers and users interested in the development of the project were guided by the principle “the code is the law”. What is law cannot be changed. A hard fork involves making adjustments. Accordingly, in terms of the original idea of the project, such changes are impossible.
However, if the hard fork is rejected, Ethereum could lose DAO funds that have been accessed by attackers. Due to the circumstances, the participants of the crypto community were faced with the question of choosing the further development path of the project. The latter contained two options:
- Leave the code unchanged, guided by the principles of the organization. In this case, the funds would finally fall into the hands of attackers. As a way to fix the security problems, the developers were suggested to make minor corrections to the code.
- Perform a hard fork and continue to exist on a new, updated, better version of Ethereum.
The error that led to the theft of funds by attackers would have been fixed. DAO assets would have been returned.
Gavin Wood, one of the Ethereum developers, on the attack on DAO:
“Representatives of the project could not get a unanimous decision.Some insisted on protecting the code from changes, while others leaned toward improving the user experience despite the principles.”
As a result of the controversy, the Ethereum cryptocurrency community split into two camps in late July 2016:
- Users who did not want to change the code continued to work with the cryptocurrency in its original form. The name of the project was changed from Ethereum to Ethereum Classic (the classic activation version).
- Members of the crypto community, who did not agree to put up with the theft of funds, supported the hard fork. The latter resulted in the Ethereum cryptocurrency.
The second birthday of the cryptocurrency is July 20, 2016. It was on this day that the project community published a declaration of independence. The document states the intention to continue working on the classic version of Ethereum.
The asset became the “main” because the majority of users of the project voted for it.
It turns out that Ethereum Classic is the true cryptocurrency that Vitalik Buterin and his team launched in 2015, the project known today as Ethereum is only a fork of the “classic” version of the asset.
The ETH ticker has been assigned to Ethereum. The “classic” cryptocurrency ETC continued under a new ticker.
At the time of the project split, Ethereum Classic needed support from miners and major exchanges. Cryptocurrency mining is needed to stabilize the price, listing on trading platforms to maintain demand and status.
Poloniex, a digital asset exchange, played an important role in the future fate of the “classic” version. Thanks to the specialists of the latter, ETC cryptocurrency was listed on a major trading platform in the shortest possible time.
At the end of 2018, Ethereum Classic experienced a crisis due to the refusal of the current development team (ETCDEV) to continue working on the cryptocurrency. The reason was funding problems.
Ethereum Classic vs Ethereum
Ethereum Classic today is significantly inferior to Ethereum in its market demand. The position can be summarized as follows:
Most developers, led by Ethereum founder Vitalik Buterin, supported the new version of the cryptocurrency. Ethereum Classic went “free floating” with an incomplete team.
The code adjustments made the cryptocurrency fork, now known as Ethereum, a more efficient version of the asset. In the course of eliminating the weak technical component, experts created a platform for further changes to the project for the better. As a result, the fork outperformed the original in many ways.
The Ethereum community eventually outgrew the community of its progenitor. At the time of writing, Ethereum Classic is inferior to its little brother in many aspects: from the level of capitalization to the first partner. The differences between the cryptocurrencies can also be seen in the behavior of their exchange rates.
Criticism of Ethereum Classic
“Classic” version of the cryptocurrency often faces criticism from members of the cryptocurrency community. The main arguments against the coin include the following:
Exaggerated value. According to many members of the crypto community, trying to defend the code as the law, in the context of the weak technical performance of the cryptocurrency and the presence of security flaws, is not appropriate.
Ethereum Classic has no value as a separate project. Technically, the ETC cryptocurrency is the same ETH, only in its worst form.
The “classic” version of the cryptocurrency is underdeveloped. With the transition of the main developers to Ethereum, the work on improving the first version of activation has seriously slowed down.
It is important to note that Ethereum Classic, due to the similarity of the code with Ethereum, can copy almost all technical solutions of the latter team. It turns out that Classic has a way to “parasitize” on its own fork by adopting the development of the new project. With this team, ETC can consider ETH as a testnet: in case of a successful implementation of a technical solution, the latter can be borrowed.
A new wave of criticism hit Ethereum Classic in early 2019, amid a 51% attack on the cryptocurrency.
Initially, the project team denied what happened, but experts are forced to admit the fact. The attack was attributed to the negative impact of testing new miners. The episode of the security subversion in the cryptocurrency network was confirmed by many popular companies, including Coinbase.
Ethereum Classic ecosystem
As a result of the forced branching into cryptocurrencies, the first version of Ethereum had its own, distinct ecosystem from the fork. At the time of writing, according to the official website of the “classic” cryptocurrency, the structure of the project looks as follows:
The main projects to support the project, by expanding its functionality Upgrade Ethereum Virtual Machine – SputnikVM. Represents a virtual machine capable of running on low-power devices. The category also includes: sidechain system; Emerald platform; Multi-Get / Classic-Get patches.
The formation of conditions for the use of ETC in financial quality and tools for conducting development Examples of decentralized applications (dapps) working on the basis of cryptocurrency include the following: Coingame; Metronome; Torture.
As of the end of January 2020, ETC cryptocurrency has become a financial instrument for 8 decentralized apps, some of which are in development.
Additional elements Keeping the cryptocurrency network up and running and serving its consumers This category includes blockchain review, API control systems and nodes.