It is very important to know the difference between Ethereum and Ethereum Classic. These virtual currencies have had a strong impact in the cryptocurrency market and they are key participants in the crypto industry. But what’s the difference between Ethereum and Ethereum Classic (ETH vs ETC)?
In the next sections, we are going to analyze the main difference between Ethereum and Ethereum Classic that would let us understand why these two virtual currencies have a similar name but a different path. Moreover, we will also get into the details of their price and how these virtual currencies evolved in the crypto market.
What is Ethereum (ETH)?
Ethereum (ETH) is one of the largest cryptocurrencies in the market. Indeed, it is the second-largest after Bitcoin (BTC) with a market valuation of over $400 billion. This shows the large expansion that ETH has had over the last few years.
Ethereum works as a cryptocurrency and blockchain network that allows for the deployment of smart contracts, decentralized applications and tokens, among other things. Thus, it is currently allowing for the expansion of the whole cryptocurrency market.
Nowadays, lending protocols, swapping platforms, dApps and tokens are being released on the Ethereum network. Thus, Ethereum is playing a key role in expanding the decentralized finance (DeFi) market around the world and facilitating new solutions for companies.
The main characteristic of the Ethereum network is related to its smart contracts capability. Thanks to these smart contracts, it is possible to make and build a large number of executable commands using the Solidity programming language.
If a certain condition is fulfilled, then the smart contract gets executed. The most important thing about smart contracts is that they can get executed without the need of a third or centralized party that would personally decide whether the conditions have been made or not.
Every single time that a smart contract gets executed it is necessary to pay gas fees. This is a transaction fee that is paid to Ethereum miners when they process transactions. Over the last few years, we have seen many times how Ethereum fees have been growing during several periods in which congestion is very high.
In the future, Ethereum wants to launch a new update called ETH 2.0. The goal is to move from Proof-of-Work (PoW) to Proof-of-Stake (PoS). This is very important as the whole network would now rely on individuals holding the virtual currency rather than processing hashes with mining equipment.
What is Ethereum Classic (ETC)?
Ethereum Classic (ETC) is a very similar network to Ethereum (ETH) that lets users execute smart contracts and release dApps and other types of programs on top of it. Users that want to create their own dApps would be able to do so and launch them on the ETC network without relying on a third-party authority.
One of the main focuses of the Ethereum Classic community is related to decentralized governance. Centralization is definitely something that cryptocurrencies try to fight against, and they are doing a very big effort to deal with transparency, accountability and other types of issues present at centralized organizations.
By working on decentralized organizations and governance systems it is possible to eliminate points of failure that could cause large damages to the community. It is worth mentioning that Ethereum Classic works with the ETC virtual currency and it has a similar approach to decentralization as Ethereum (ETH).
One of the main issues that have affected Ethereum Classic in the last few years is low hash power compared to other blockchain networks. This has affected the ETC blockchain network as 51% attacks were possible due to the low hash rate. In the future, ETC would have to improve its infrastructure in order to avoid further similar attacks.
Another thing that ETC would have to deal with is related to scalability. This is something that the Ethereum network is already working on with the ETH 2.0 proposal. Thus, Ethereum Classic has some challenges that it will have to face in the coming years if it wants to become a reliable virtual currency and blockchain network in the crypto market.
What’s The Difference Between Ethereum and Ethereum Classic?
There are many differences between Ethereum and Ethereum Classic that are worth taking into consideration. We also need to understand how these networks were created, as they share some common history.
Ethereum was before working as a single blockchain. There was no distinction between Ethereum and Ethereum Classic. This is something new that took place after the DAO attack that this blockchain network experienced and that we will summarize in the next sections.
The attack resulted in the loss of $60 million. Due to this reason, there has been a discussion among the community on how to handle this situation. As there was no consensus, the Ethereum network split into two: Ethereum Classic (ETC) and Ethereum (ETH).
Although Ethereum (ETH) and Etheruem Classic (ETC) have many similarities, they also have some differences that are worth taking into consideration. After more than 5 years after the hack, the communities are now clearly distinguished. Most developers are now working on Ethereum rather than on the Ethereum Classic chain.
Furthermore, the ETH network has grown massively compared to ETC. This is due to the fact that there have been many advancements on the Ethereum chain compared to the Ethereum Classic network. This division between ETH and ETC continues until today. This has also pushed for two different working groups among developers that focused on different blockchain networks rather than focusing on the same one.
Now, focusing on the DAO hack, this was the most important event for the Ethereum ecosystem that changed the future of the ETH and ETC virtual currencies. This was a hack that affected a decentralized autonomous organization (DAO) after raising $150 million in ETH after selling the tokens through an Initial Coin Offering (ICO).
The main issue that affected the DAO was related to a vulnerability in the code that was found by hackers that decided to exploit it. The hack in 2016 resulted in $60 million worth of Ethereum tokens being stolen.
Because of this hack, the community proposed different answers on how to deal with it. One of the proposals was to create a soft fork that would avoid the attacker from moving the funds. However, the attacker knew that there was a possibility to claim these funds as he explained in a letter that the funds had been legally obtained following the rules that were written in the smart contracts.
Another solution was proposed that involved a hard fork. For cryptocurrency networks, a hard for is usually a difficult moment as there is a division among the community. A group of developers preferred to roll back the Ethereum history to before the DAO attack and reallocate the funds to a different smart contract. However, not everyone was in favour of this solution as it could harm the seriousness and reliability of the Ethereum project.
Finally, in July 2016, a hard fork was conducted and it created the new network of ETH (with the funds that were returned to another smart contract) and the Ethereum Classic network that preferred to move forward without any type of hard fork but also with the stolen funds. Nowadays, the Ethereum network is the most powerful and the network that attracted the largest number of developers and supporters.
ETH and ETC In the Cryptocurrency Market
Both ETH and ETC have many differences in terms of price action. Let’s not forget that these are two different virtual currencies nowadays and each of them followed a different price path after July 2016.
As we have already discussed in this post, Ethereum is the second-largest cryptocurrency after Bitcoin. It has a market valuation of over $400 billion and a price per coin of around $3,800 at the time of writing. Nonetheless, we also know that virtual currencies fluctuate on a daily basis, thus, the price of Ethereum can also fluctuate according to the day and the situation in which it is.
Let’s have a look at the price evolution of ETH during the last few years. When Ethereum was released, the virtual currency had a price below $1 for several weeks. This was a good possibility for investors to get access to ETH and start stacking the digital currency.
Ethereum experienced a period of relative stability throughout 2016 where it was traded between $5 and $15 with peaks to $20. In 2017, the situation changed. A bull market started that pushed the virtual currency to new highs many times in 2017.
The digital currency spiked to over $1,400 in January 2018 after Bitcoin reached an all-time high of $20,000 per coin. This bull market in the cryptocurrency market was very positive for altcoins that reached their highest valuation against Bitcoin in the last few years.
However, in 2018 a new bear market started for the entire cryptocurrency market. This has pushed Ethereum to new lows not registered in many years. The virtual currency was traded below $100 for several days, showing that there was no interest in Ethereum and that investors were not sure about the future of the digital currency.
Nonetheless, 2020 has also been a very good year for Ethereum after the coronavirus crisis in the market. We have seen ETH move from $120 to over $4,000 a year later. This shows how the market turned bullish and how investors were waiting for this virtual currency to continue moving higher.
If we have a look at what happened with Ethereum Classic (ETC), then we will realize that this virtual currency has exactly followed the contrary way to Ethereum. This virtual currency has moved from under $1 when it was released in mid-2016 and it hit an all-time high of $125 in 2021.
Although this has been a very profitable trade for many, it is not even close to what Ethereum was able to experience. Moreover, as we mentioned in the article, Ethereum Classic has been affected by different difficult moments (51% attacks) that Ethereum has never experienced.
Nonetheless, if we compare the price of ETC to the price of ETH and BTC, we see that ETC has been falling against both of them since it reached a peak in December 2017. Although it tried to move higher, it was not able to reach the levels it had during the months after the DAO attack.
This could be highly related to the fact that investors were focused on Ethereum rather than Ethereum Classic. The price is a great way to measure the confidence of investors in a specific cryptocurrency, and it seems there have been constant outflows from ETC to BTC and ETH.
While Ethereum seems ready to continue moving higher in the future, ETC could continue with its bear trend against BTC and ETH. This could change only if there is a decision from ETH developers to move to Ethereum Classic, which does not seem to be a logical move to make in the near future.
The Future of Ethereum and Ethereum Classic
What’s the future of Ethereum and Ethereum Classic? It is difficult to know, but we can start thinking about the main difference between Ethereum and Ethereum Classic. For example, the community on the Ethereum network is constantly working in order to release new solutions and to improve the general functionalities of the ETC blockchain.
Instead, the Ethereum Classic community is working so as to keep the project alive and avoid being attacked. This is something that is affecting the whole ecosystem as ETC developers seem that they would have better chances to build on top of the Ethereum blockchain.
Moreover, another difference between Ethereum and Ethereum Classic is related to the relationship within the community. The Ethereum Classic project has been many times affected by internal issues. Although Etheruem has also had some similar situations, the largest problems were seen on the Ethereum Classic network.
In terms of price, we could see ETH as the main network attracting a larger number of developers and improving its solutions with an upgrade to ETH 2.0 (PoS). Meanwhile, ETC could continue as a digital currency among the top 100 with a lower market capitalization and trying to avoid the problems that affected it in the past.