Ethereum Classic: Everything to Know
By Beluga Research August 13, 2023
- Ethereum Classic (ETC) is a decentralized cryptocurrency and blockchain platform that preserves the original principles of Ethereum
- It originated from a disagreement that split the Ethereum community over a hard fork to reverse the impact of a costly hack. ETC upholds the founding principle of immutability.
- Ethereum Classic emphasizes decentralization, immutability, and compatibility with the Ethereum ecosystem
- It has a fixed supply of tokens, a community-driven governance model, commitment to immutability and has maintained a proof-of-work consensus mechanism
Ethereum Classic (ETC) is a decentralized cryptocurrency and blockchain platform that preserves the original principles of Ethereum. Ethereum Classic operates on the same fundamental principles as Ethereum, aiming to enable the development of smart contracts and decentralized applications (dapps). It leverages blockchain technology to create a secure and transparent ecosystem where users can execute self-executing contracts and interact with various decentralized applications. ETC utilizes a proof-of-work (PoW) consensus algorithm, similar to Bitcoin, to validate transactions and secure the network.
A Brief History
In 2015, Ethereum was launched with the goal of revolutionizing the blockchain industry by introducing smart contracts. However, in 2016, a high-profile incident occurred when a decentralized autonomous organization (DAO) built on Ethereum suffered a significant hack, resulting in the loss of $50 million dollars' worth of Ether.
To rectify the situation, the Ethereum community proposed a hard fork to roll back the blockchain and restore the stolen funds. However, a portion of the community disagreed with this decision, arguing that the principle of immutability should be upheld, even in the face of such unfortunate events. This dissenting group continued to support the original blockchain, and thus, Ethereum Classic was born.
What is Ethereum Classic?
- Decentralization: Ethereum Classic places a strong emphasis on decentralization, aiming to create a platform where no single entity has excessive control or influence. By maintaining a decentralized network, Ethereum Classic ensures that power is distributed among its participants, fostering a more democratic and resilient ecosystem.
- Immutability: Immutability is a core principle of Ethereum Classic. Unlike Ethereum, which implemented a hard fork to reverse the effects of the DAO hack, Ethereum Classic maintains the belief that transactions on the blockchain should be irreversible. This commitment to immutability ensures that once a transaction is recorded on the Ethereum Classic blockchain, it remains there permanently.
- Compatibility: Despite the contentious hard fork, Ethereum Classic remains compatible with the Ethereum ecosystem. Smart contracts and dApps developed on Ethereum can be deployed on Ethereum Classic with minimal modifications. This compatibility allows developers to leverage the existing tools, libraries and knowledge from the Ethereum community to build applications on the Ethereum Classic blockchain.
- Monetary Policy: Ethereum Classic has a fixed supply of tokens, similar to Bitcoin. The total supply of ETC is capped at 210 million, ensuring scarcity and potentially increasing its value over time. This fixed supply is in contrast to Ethereum, which has transitioned to a proof-of-stake consensus algorithm and has no supply limit.
- Development and Community: The Ethereum Classic community consists of developers, enthusiasts and supporters who are dedicated to the principles of decentralization and immutability. The community actively contributes to the development of the platform by proposing and implementing improvements through the Ethereum Classic Improvement Proposals (ECIP) process. This collaborative approach ensures that Ethereum Classic continues to evolve and adapt to the changing needs of its users.
- Choose a Wallet: Start by selecting a wallet to store ETC. There are various types of wallets available, including desktop wallets, mobile wallets, web wallets and hardware wallets.
- Secure Your Wallet: Regardless of the wallet type chosen, make sure to follow best security practices. This includes setting strong passwords, enabling two-factor authentication (2FA), and keeping private keys or recovery phrases safe and offline.
- Acquire Ethereum Classic (ETC): ETC can be acquired through cryptocurrency exchanges that support ETC trading. Some well-known exchanges include Coinbase, Binance, Kraken and Bitfinex. Create an account on a reputable exchange, complete the necessary verification steps, and deposit funds to buy ETC.
- Transfer ETC to Your Wallet: After purchasing ETC on an exchange, it's advisable to transfer your funds to a wallet for enhanced security. Most wallets provide a unique ETC address to receive your funds. Use this address to initiate the transfer from the exchange.
- Stay Informed: Get familiar with Ethereum Classic's ecosystem, community and developments. Follow ETC news sources, official social media channels and online forums to stay up-to-date with the latest updates, upgrades and discussions.
- Explore dapps and Use Cases: Ethereum Classic, like Ethereum, supports decentralized applications (dapps) and smart contracts. Explore the various dapps and use cases built on the ETC platform to understand the potential applications of the technology.
- Participate in Staking (Optional): Ethereum Classic has also introduced staking as part of its network upgrades. You might have the opportunity to participate in staking ETC to support the network and earn rewards. Research the staking process and requirements before deciding to stake your ETC.
Ethereum Classic shares many similarities with its sibling network, Ethereum, but there are also some notable differences that set it apart. One of the key distinctions is Ethereum Classic's adherence to the principle of immutability. Unlike Ethereum, which implemented a hard fork to reverse the DAO hack, Ethereum Classic decided to maintain the original blockchain and its transaction history, emphasizing the importance of preserving the immutability of the ledger.
Another unique aspect of Ethereum Classic is its commitment to decentralized governance. The Ethereum Classic community strongly believes in maintaining a decentralized decision-making process, where all participants have a say in the platform's development and direction. This philosophy is reflected in the absence of a centralized leadership or foundation that exerts control over the network. Instead, decisions are made through community-driven discussions and consensus-building.
Furthermore, Ethereum Classic employs a proof-of-work (PoW) consensus mechanism, similar to Bitcoin, to secure its network. PoW requires miners to solve complex mathematical puzzles to validate transactions and add new blocks to the blockchain. This process ensures the integrity and security of the Ethereum Classic network.
- Decentralization: Ethereum Classic aims to maintain a high level of decentralization by resisting any form of censorship or interference. It upholds the principle of immutability, which means that once transactions are recorded on the blockchain, they cannot be altered or reversed. This approach ensures that the network remains resistant to external control and manipulation.
- Security: Ethereum Classic benefits from the robust security provided by its proof-of-work (PoW) consensus algorithm. By utilizing PoW, the network ensures that transactions are validated by miners who invest computational power to solve complex mathematical puzzles. This process adds an additional layer of security, making it difficult for malicious actors to tamper with the blockchain.
- Compatibility: Since Ethereum Classic shares a common origin with Ethereum, it is compatible with Ethereum's smart contracts and decentralized applications (dapps). Developers can leverage existing Ethereum tools, libraries, and frameworks to build applications on the Ethereum Classic platform. This compatibility provides a wider ecosystem of development resources and fosters innovation within the Ethereum Classic community.
- Community-driven Governance: Ethereum Classic embraces a community-driven governance model where decisions are made through consensus among participants. This inclusive approach allows stakeholders to have a voice in shaping the future of the platform. Community governance helps ensure that the network evolves in a way that aligns with the values and aspirations of its users.
- Scalability Challenges: Like many blockchain platforms, Ethereum Classic faces scalability challenges as the number of transactions and users increases. The current design of the Ethereum Classic network limits its transaction processing capacity, resulting in potential congestion and higher fees during periods of high demand. This issue is being addressed through ongoing research and development efforts, but it remains a limitation for now.
- Slower Development Pace: Compared to Ethereum, Ethereum Classic has a smaller development community and less frequent protocol upgrades. This slower development pace may result in delayed implementation of new features and improvements. However, it also contributes to a more cautious and conservative approach to changes, which some users consider a strength in terms of maintaining stability and security.
- Limited Adoption and Network Effects: Ethereum Classic has a smaller user base and less widespread adoption compared to its counterpart, Ethereum. This difference in adoption can impact the network effects that arise from a larger user community. It may result in reduced liquidity, fewer dapps, and a narrower range of services available within the Ethereum Classic ecosystem.
- Potential Security Risks: While Ethereum Classic benefits from the security of PoW consensus, it is not immune to certain vulnerabilities. One such vulnerability is the 51% attack, where an attacker gains control of the majority of the network's mining power. This control enables the attacker to manipulate transactions and potentially double-spend coins. However, the Ethereum Classic community actively monitors and mitigates these risks to maintain the integrity of the network.