A beginner's guide to Ethereum Classic, where unlike on Ethereum, code is law.
Ethereum Classic is a decentralised, open-source blockchain platform that emerged in 2016 as a result of a contentious hard fork of the Ethereum network.
ETC operates on the same principles as the other Ethereum (ETH), enabling developers to build and deploy decentralised applications (dApps) and smart contracts on the blockchain.
However, ETC remains true to the original ethos of decentralisation and immutability, with a focus on preserving the integrity of the blockchain and avoiding any form of censorship or interference.
In this guide to Ethereum Classic, we take a look at why the chain exists, how it works and make a comparison to Ethereum.
Let’s dive right in.
Introduction to Ethereum Classic
Ethereum Classic (ETC) emerged in 2016 as a result of a controversial hard fork of the Ethereum network.
This fork occurred after a major hack that resulted in the loss of millions of dollars worth of Ether.
The hack was made possible due to a flaw in the code of a smart contract known as The DAO (Decentralised Autonomous Organisation), which was built on top of the Ethereum blockchain.
In response to the hack, Vitalik Buterin, the creator of Ethereum, and other members of the Ethereum Foundation proposed a hard fork that would roll back the blockchain to a previous block.
Effectively undoing the hack and returning the stolen funds to their original owners.
This proposal was met with resistance from some members of the community, who believed that the blockchain should remain immutable and that the hack should be allowed to stand as a lesson for future developers.
These dissenting members of the community chose to continue using the original Ethereum blockchain, which later became known as Ethereum Classic.
They believed that the principle of "code is law" should be upheld at all costs and that the blockchain should remain an immutable record of all transactions.
Regardless of any vulnerabilities or mistakes in the code.
By sticking to this principle, Ethereum Classic has established itself as a platform that prioritises security, transparency and decentralisation above all else.
What is code is law in crypto?
In the world of cryptocurrency, the principle of "code is law" is often seen as a fundamental tenet.
It refers to the idea that the rules and regulations of a network are embedded within the code itself and should be strictly followed without any room for interpretation or modification.
This principle ensures that transactions on the network are transparent, fair and immutable, as they are governed by predefined algorithms rather than the discretion of a central authority.
Ethereum Classic is a prime example of a blockchain platform that adheres to the principle of "code is law."
After the contentious hard fork in 2016 that resulted in the creation of Ethereum (ETH), some members of the community stayed with the original chain, now known as Ethereum Classic.
These members believed that the immutability and integrity of the blockchain should not be compromised, even if it meant retaining a history of transactions that some found objectionable.
By adhering to the principle of "code is law," Ethereum Classic remains committed to the ideals of decentralisation and trustlessness.
While it may not be as widely adopted as Ethereum, its priority of code is law means it has a definitive niche.
How does Ethereum Classic work?
Ethereum Classic operates on a proof-of-work (PoW) consensus mechanism, similar to that of Bitcoin.
PoW is a process that requires miners to solve complex mathematical equations in order to add new blocks to the blockchain and earn rewards in the form of ETC.
This consensus mechanism is designed to ensure that the network is secure and that transactions are processed in a decentralised manner.
Under the PoW mechanism, miners compete to solve the equations and validate transactions and the network rewards the miner who solves the equation first.
This mechanism helps to prevent any single entity from gaining too much control over the network and ensures that transactions are verified by a decentralised network of nodes.
In addition to its PoW consensus mechanism, Ethereum Classic has several technical features that set it apart from other blockchain platforms.
One of these is the ability to execute smart contracts, which are self-executing contracts that run on the blockchain.
These contracts allow developers to build decentralised applications (dApps), enabling a wide range of use cases, from decentralised finance (DeFi) to supply chain management and beyond.
It's worth noting that Ethereum (ETH), the platform from which Ethereum Classic emerged, has now completed its shift from PoW to proof-of-stake (PoS) as its consensus mechanism.
This shift means that the two platforms are now significantly different in their technical aspects, as well as their community and developer ecosystems.
However, Ethereum Classic remains a popular choice for developers and users who value the principles of decentralisation and immutability above all else.
What is ETC crypto used for?
ETC is the native cryptocurrency of the Ethereum Classic blockchain.
It is used primarily as a means of payment for transaction fees on the network, as well as a store of value and a medium of exchange.
Like many other cryptocurrencies, ETC can be bought and sold on a variety of exchanges and trading platforms.
It can also be used to purchase goods and services from merchants who accept cryptocurrency payments.
But primarily, ETC is used to participate in governance and secure the network.
One of the main benefits of using ETC as a means of payment is its low transaction fees.
Compared to ETH, ETC offers significantly lower fees and faster transaction times.
This makes it an attractive option for individuals and businesses who want to avoid the high fees and lengthy processing times associated with Ethereum.
It's worth noting that there is also a significant amount of speculation surrounding ETC, as with many other cryptocurrencies.
This can lead to significant price fluctuations and volatility in the market.
Additionally, for new traders, it's important to note that confusion can arise between ETC and ETH, as they both have Ethereum in the name.
While they share some similarities, they are separate cryptocurrencies with different communities, development teams and use cases.
Ethereum Classic pros and cons
As with any blockchain platform, Ethereum Classic has its fair share of pros and cons.
Understanding these can help users and developers make informed decisions about whether ETC is the right platform for their needs.
In this section, we'll explore some of the key pros and cons of Ethereum Classic.
Pros of Ethereum Classic
- Immutability: One of the key benefits of Ethereum Classic is its commitment to immutability, which means that once a transaction is recorded on the blockchain, it cannot be altered or deleted. This makes the platform ideal for applications that require high levels of security and transparency, such as supply chain management, digital identity, and more.
- Decentralisation: Ethereum Classic is a decentralised platform, which means that it is not controlled by any single entity or organisation. This makes it more resistant to censorship, hacking, and other forms of manipulation.
- Compatibility with Ethereum: Ethereum Classic is compatible with the Ethereum blockchain, which means that it can be used to build and deploy smart contracts and decentralised applications. This makes it an attractive option for developers who are familiar with the Ethereum ecosystem.
- Wide range of use cases: Ethereum Classic can be used for a wide range of use cases, from decentralised finance (DeFi) and gaming to digital identity and supply chain management.
- Established community: Ethereum Classic has a well-established community of developers, users, and enthusiasts who are committed to advancing the platform and supporting its growth.
Cons of Ethereum Classic
- Limited scalability: Ethereum Classic's PoW consensus mechanism can lead to limited scalability, as the platform can only process a finite number of transactions per second. This can lead to slower transaction times and higher fees compared to other blockchain platforms.
- Security concerns: As with any blockchain platform, there are always security concerns to consider. While Ethereum Classic has a strong commitment to security, it is not immune to attacks or vulnerabilities related to 51% attacks.
- Lack of mainstream adoption: While Ethereum Classic has a dedicated community, it has yet to gain widespread adoption among mainstream users and businesses. This can limit its potential for growth and development.
- Limited developer resources: Compared to larger blockchain platforms like Ethereum, Ethereum Classic has limited developer resources and a smaller ecosystem of tools and resources.
- Competition from other blockchain platforms: Ethereum Classic faces competition from other blockchain platforms that offer similar features and benefits. This can make it more difficult for Ethereum Classic to gain traction and establish itself as a leading platform.
In offering a final verdict on whether the pros outweigh the cons, let's start by saying that Ethereum Classic has its strengths and weaknesses like any other blockchain platform.
Its commitment to immutability and decentralisation, as well as its compatibility with the Ethereum ecosystem, make it an attractive option for many.
However, limited scalability, security concerns and competition from other platforms may present challenges for its growth and adoption.
Ethereum (ETH) vs Ethereum Classic (ETC)
Ethereum Classic and Ethereum are two blockchain platforms that share a common origin but have diverged significantly since their creation.
While Ethereum has become the more popular and widely used platform, Ethereum Classic remains committed to the principles of decentralisation and immutability that underpinned the original Ethereum vision.
In this section, we'll compare the key attributes of Ethereum and Ethereum Classic to help users and developers understand the differences between the two platforms.
| Attribute | Ethereum (ETH) | Ethereum Classic (ETC) |
|---|---|---|
| Launch year | 2015 | 2016 |
| Consensus mechanism | Proof of Stake (PoS) | Proof of Work (PoW) |
| Total supply | Uncapped | Capped at 210 million |
| Monetary policy | Inflationary (at least for now) | Deflationary (fixed supply) |
| Block time | ~13 seconds | ~14 seconds |
| Transaction fees | Variable, market-driven | Fixed |
| Difficulty adjustment | Dynamic (every block) | Static (every 5,000 blocks) |
| Mining algorithm | Ethash | Ethash |
| Compatibility with Ethereum | Yes | Yes |
| Smart contract platform | Yes | Yes |
| Turing completeness | Yes | Yes |
| Atomic swaps | Yes | No |
| Decentralised autonomous organisations (DAOs) | Yes | No |
| Current price (as of writing) | ~$2,100 | ~$12 |
While Ethereum and Ethereum Classic share many similarities, they have significant differences in terms of their consensus mechanism, monetary policy and overall philosophy.
Ethereum has now completed its shift to PoS, meaning that the gulf between the two is as wide as ever.
Ethereum Classic remains committed to the principles of decentralisation and immutability.
Should I buy Ethereum Classic (ETC) crypto in 2023?
If you're considering investing in cryptocurrencies, Ethereum Classic (ETC) may not be the first coin that comes to mind.
However, don't let its lower market cap and relatively lower price fool you. Ethereum Classic may actually be an excellent investment in 2023 and beyond.
One of the key factors that sets Ethereum Classic apart from other cryptocurrencies is its commitment to the principle of "code is law".
Unlike Ethereum, which underwent a hard fork to address the DAO hack in 2016, Ethereum Classic remained true to its original code and resisted the fork.
This principle may be attractive to investors who value the immutability of blockchain and prefer a cryptocurrency that adheres to its original code.
Furthermore, with Ethereum completing its shift to PoS, Ethereum Classic's PoW consensus mechanism is becoming more of a point of differentiation.
This is particularly relevant for miners who are looking for a cryptocurrency that still supports PoW.
As Ethereum Classic is relatively easier to mine than Bitcoin, it may offer attractive returns for miners and, in turn, investors.
Of course, as with any investment, there are risks involved. Ethereum Classic has faced challenges in the past, including a 51% attack in 2020 that led to a temporary suspension of trading.
It's also worth noting that ETC has lower liquidity than some other major cryptocurrencies, which can make it more volatile.
Ultimately, whether or not to invest in Ethereum Classic in 2023 will depend on your individual circumstances and risk tolerance.
However, if you're looking for a cryptocurrency that adheres to the principle of "code is law" and has a strong community of supporters, Ethereum Classic may be worth considering as part of a diversified portfolio.
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