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How Is Ethereum Classic Different from Ethereum?

Although Ethereum Classic’s ETC has value as a speculative digital asset that investors can trade, Ethereum’s ETH is considered the more legitimate and widely traded. In early 2021, the Chicago Mercantile Exchange (CME) approved the trading of ether futures. Only Bitcoin and Ether have been approved for such transactions. The futures are derivative contracts on an underlying security with a fixed price and maturity date. Ether futures allow investors to trade ether for speculation but also to hedge an outstanding position in ETH or perhaps other cryptos.

We can determine how the investment community views ETC versus ETH by analyzing how much capital or investment dollars are being committed to the two currencies. When comparing the two market capitalizations of the two cryptos, ETH is the clear winner. The market cap of a cryptocurrency is calculated by multiplying the currency’s price—based on a fiat currency such as U.S. dollars—by the outstanding coins or tokens in circulation.

ETC has 133.9 million coins in circulation with a market capitalization of $6.1 billion while ETH has approximately 120 million in circulation and a market cap of more than $417 billion. ETC trades at $46.00, while ETH trades for more than $3,475 per coin as of April 2, 2022.

Although both networks offer smart contracts, the potential for the aforementioned security concerns surrounding ETC will likely push investors to invest in ETH and adopt Ethereum’s smart contracts versus those of Ethereum’s Classic.

Posted in Overview

History and Future of Ethereum Classic

The Ethereum blockchain was initially established as a single network where transactions were facilitated by ether, or ETH. The new cryptocurrency quickly became popular for initial coin offerings, as different groups used the platform to launch their own tokens.

The DAO, a decentralized venture fund where investors would vote on assets to invest in was one of the most successful ICOs. The hackers discovered a smart contract bug that allowed them to withdraw about a third of The DAO’s accumulated ether which quickly amassed to over 11 million ETH from 18,000 investments.

Given that the hack was so large, a lot of investors recommended rolling back the Ethereum blockchain to save those who were affected. However, others contended that this would set a dangerous precedent for future occurrences. A poll conducted shortly thereafter resulted in 97% of participants voting to return the lost funds through a hard fork.

The Ethereum blockchain split into two separate networks as a result. The newer network took on the name Ethereum and uses ETH or ether as its cryptocurrency. The older one is now known as Ethereum Classic and uses ETC.

Many experts believe that Ethereum Classic does not have the same promising future as Ethereum because Ethereum is seen as the more legitimate of the two networks. This is especially true in light of recent security concerns surrounding Ethereum Classic.

Investors have lost confidence in ETC over the years due to hacks into the system. Ethereum Classic may have challenges ahead until its code and software can be redeveloped to prevent future hacks. However, it remains to be seen how smart contracts will be developed within the Ethereum Classic project and whether they can be adopted for widespread use.

Posted in Overview

What Is Ethereum Classic (ETC)?

Ethereum Classic is a decentralized, open-source platform that runs smart contracts on a blockchain. It was formed in 2016 after a hack of The DAO, a smart contract running on the Ethereum blockchain. The original blockchain was split in two, with most users opting to reverse the hack and return the stolen funds.

The Ethereum community was split on how to proceed after The DAO failed. Some people believed that the investors should suffer the consequences of investing in a flawed project, while others thought it would be best to roll back the blockchain and create a bailout. In the end, the majority of the community decided on the latter course of action.

Ethereum is a blockchain platform that, like bitcoin, can be used to record transactions. However, Ethereum’s key advantage is its ability to run self-executing smart contracts.

Smart contracts on Ethereum Classic are enforced through decentralized governance, meaning that they can be carried out without involving a third party, such as a lawyer. Smart contracts work similarly to if-then statements–if the actions required in the contract have been fulfilled, then the corresponding contract parameters would be completed. However, if the contract parameters haven’t been met, there might be penalties like fees or voiding of the initial agreement depending on what terms were established at the beginning ofthe relationship.

An example of this would be if, in a real estate transaction, the contract said an upfront deposit was due on a certain date, but the funds were not received. The smart contracts are within a distributed ledger or blockchain network. A distributed ledger is tracker for transactions and contracts that’s kept and maintained without any central authority controlling it..

The terms of an agreement between a buyer and seller are written in code, which is self-executing and does not need external monitoring.

Even though they are both after the same market and offer smart contracts, Ethereum has become more popular because it is seen as more legitimate. Also, ETH is only second to BTC in value.

The biggest issue that Ethereum Classic currently faces is scalability. The network can handle 15 transactions per second which lags significantly behind other payment networks like Visa, who processes one thousand transactions per second. There have been many software upgrades for Ethereum Classic, but the scalability of its payments systems continue to be a challenge.

Not to mention, security is prone to stay an issue with smart contracts–especially because Ethereum Classic has already had a hack where millions of dollars were stolen. These concerns have the potentiality to stop smart contracts from being used in large financial and real estate deals.

The cryptocurrency market is still developing, so it’s unclear how regulations will change Ethereum Classic and other virtual currencies. For example, the Security and Exchange Commission does not consider Ethereum or Bitcoin securities because they’re decentralized networks.

Some cryptos may not be approved as securities, which means they could have challenges being included in various financial products that contain a basket of securities, stocks, and bonds. These products include exchange traded funds and mutual funds. In the future, Ethereum Classic’s regulatory landscape is uncertain. The same goes for other blockchain networks that aren’t as popular.