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Ethereum vs Ethereum Classic
If you’ve spent some time learning about cryptocurrencies, then you must’ve heard about the ‘Ethereum vs Ethereum Classic debate’ as well. The blockchain is divided in two because of this topic, and in this article, you’ll find out why.
Important Note: We are not financial advisors, and this article is for information only, not for financial advice. If you want to invest in a cryptocurrency, you should do ample research and choose on your accord.
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The Decentralized Autonomous Organization and its Formation
Ethereum and its ecosystem work according to smart contracts. Smart contracts are automated contracts that complete themselves when both of the parties have satisfied their conditions.
The Decentralized Autonomous Organization (or DAO) was a highly sophisticated and advanced smart contract. You can view it as a decentralized VC fund for future DAPPS of the Ethereum ecosystem. For example, if you want any stake in DAPPS awaiting funding, you’d have to purchase DAO Tokens by paying a certain quantity of Ether. DAO Tokens would show that you’re a part of the DAO ecosystem.
DAO attracted Ether worth $150 million within a month. So you can understand how popular it was. But even though with a lot of transparency, control, and flexibility, DAO had a problem: if a user had to exit DAO, they would use the ‘Split Function’ which would give them their DAO back. The user can also create a ‘Child DAO’ which would split off multiple token holders and accept proposals. After you split off, you must keep the Ether for 28 days. You can only spend them after you’ve spent that time. This little issue caused the evil attack
In June 2016, a hacker used the ‘Split Function’ and took away $50 million (around one-third) from DAO. You see, a split function did the following whenever a user issued its request:
- Give the user their Ether for their DAO tokens
- Register the deal in the ledger and update the balance
The hacker created a recursive function which did this:
- Give the user their requested Ether and take the DAO tokens
- Transfer more Ether for the same DAO tokens (instead of registering the transaction)
The process kept going on until the hacker had stolen $50 million from DAO. You should know, this attack doesn’t indicate Ethereum is terrible, it just exposed the faults in DAO, which runs on Ethereum.
After the attack took place, the hacker had to wait for 28 days before he/she could use the Ether. The community of Ethereum now had several options as their solutions, which were:
- Not doing anything
- Soft Fork
- Hard Fork
The first option might seem like the wrong choice now, but people argued that changing things would be against the philosophy of blockchain.
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Soft Fork and Hard Fork
What is Soft Fork?
A Soft Fork means the software is divided into two versions where the new one can run the old version. The drawback in this method is the old version can’t have the features present in the new one.
Doing a Soft Fork seemed like an excellent choice for many because it meant that Ethereum would have two versions, one before DAO and one after, and users can use one according to their requirements.
However, Soft Fork exposed it to the risk of DoS (Denial of Service) attacks, so they discarded it.
What is Hard Fork?
A Hard Fork means the software is divided into two versions, but the new one can’t run the old one. There’s no going back in this method, and if a user opts for the old version, they can’t access the community or features of the new one.
The Inception of Ethereum Classic
People decided to follow the Hard Fork method for ethereum. This method split ethereum in two chains, where the new became ‘Ethereum’ or ‘ETH’, and the old one became ‘Ethereum Classic’ or ‘ETC’.
They did the hard fork to refund all the lost money to the users. However, many people objected to this and chose to remain with the old version, Ethereum Classic. Knowing this ordeal is crucial because it marks the basis for their differences. Now that we have that out of the way, let’s take a look at the critical differences in Ethereum vs Ethereum Classic.
Ethereum vs Ethereum Classic: The Key Differences
Ethereum doesn’t adhere to the philosophy that blockchain is immutable. Supporters of this notion believe people shouldn’t change the blockchain according to their whims; otherwise, it would fall prey to human corruption.
The creators of Ethereum had built it with this idea in mind. Ethereum Classic is based on this principle, and the members of its community believe in that principle as well.
The supporters of the ETH argue that the Hard Fork was necessary to do justice. It devalued the tokens the hacker had stolen, and it refunded the people who had lost their Ether.
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Currently, ETH is 15 times more valuable than ETC. A prominent reason behind this is ETH has the backing of numerous big players of the crypto community, and it continually gets new updates.
ETC’s value might be low, but it recently attracted the support of several prominent people too.
The growth potential of ETC is questionable. Some people argue that ETC has no future and its community is mostly filled with scammers, others believe in it. Whether ETC will grow or not, we have no idea.
On the other hand, many experts claim that ETH can become the first cryptocurrency after Bitcoin to reach $10,000. That’s a significant achievement, and it shows how much potential ETH has. It is growing at a rapid pace as well and gets multiple updates regularly.
This is another area where the contrast between ETH, ETC is too visible. ETH has the backing of the Enterprise Ethereum Alliance (EEA), a group of more than 200 companies that has the goal of using blockchain for smart contracts in Fortune 500 companies.
EEA has some of the most prominent organizations as its members, including JP Morgan, ING, Microsoft, and Toyota. ETH gets multiple updates regularly, which allow it to stay up-to-date with the market and its requirements.
ETC, however, can’t access most of the updates of ETH. So, it is substantially behind in terms of features and qualities.
Ethereum vs Ethereum Classic: The Verdict
The debate about which one of these two is better might never reach an end. On the one hand, you have the principle of immutability and on the other hand, constant development. As you’ll learn more about blockchain and its philosophy, you’ll realize how complicated this entire issue is.
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