What Is Ethereum Classic - A Virtual Currency or Is There More To It?
Ethereum Classic is a permissionless, decentralised, secure, and censorship-resistant blockchain, which is the continuation of the original Ethereum stack launched in 2015. After the DAO controversy, the Ethereum project split into two - Ethereum and Ethereum Classic over ideological differences and how to resolve them. The underlying objective and infrastructure of Ethereum Classic are the same - to provide a public platform to run smart contracts and decentralised apps or dApps. ETC donates Ethereum Classic token.
Ethereum Classic runs on an unaltered version of the original Ethereum blockchain. Its philosophy is to put the code above everything else, and if there are any exploits or compromises, they shouldn't be removed through hard forks which damage the integrity of the code. The team behind ETC believes in maintaining absolute immutability that doesn't welcome human interference at any cost.
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Why Was Ethereum Classic Invented?
The original Ethereum blockchain launched a complex smart contract called Decentralised Autonomous Organisation (DAO), a digital venture capital created to fund dApps. Anyway, whoever wanted to have a say in terms of what dApps should be financed through the Ethereum platform was required to purchase DAO Tokens using Ether. Having DAO tokens meant you were now a part of the DAO smart contract.
For any dApp to get the required funds, it needed 20% votes from DAO token owners. The versatility and transparency of this smart contract allowed Ethereum to sell $150 million worth of DAO tokens within weeks. Once you bought into the DAO system, getting out was a bit tricky and had a loophole. Using Split Function, you would be able to get back your Ether, but you weren't allowed to withdraw it for 28 days. In June 2016, a hacker used the loophole to steal one third i.e., around $50 million worth of Ether from people trying to get out of DAO.
To fix this issue, the majority of the Ethereum community, along with its founders, agreed on creating a hard fork. It would roll back the blockchain to before the hack took place, allowing them to recover the $50 million that was stuck in the system and give them back to the people. And this is where the ideological split happened. Some people in the Ethereum Foundation didn't see eye to eye with this approach and viewed it as a central authority subverting the integrity of the code and the ethos of decentralisation. They decided to continue to use the original blockchain instead of the updated one. This is why it's called Ethereum Classic.
How Does Ethereum Classic Work and What Technology is Behind It?
Ethereum Classic is quite similar to Ethereum. It relies on a blockchain that isn't only designed to replace payments but creates smart contracts and apps which users can own, transfer ownership of, and interact with. Allowing Turing Complete programming language means developers can write apps that are automated and can be supervised through conditional outcomes.
Like all the other blockchains, Ethereum Classic maintains a complete record of transaction history in a shared database. Moreover, it also has the record of the most current state of all the smart contracts powered by the blockchain and users' balances, which can be transferred digitally to another user's wallet. All of the activity is powered by ERC-20 tokens, which can be mined through the Proof of Work process. Due to the split, Ethereum Classic will not receive the ETH 2.0 update.
Is Ethereum Classic Real Money?
It should be kept in mind that Ethereum Classic isn't primarily a payment mode but a decentralised blockchain that enables the creation of programmable applications and contracts. Compared to the top cryptocurrencies, it has a weak penetration in the consumer market. It's only accepted by a handful of brands, including Playhub Casino, I49 Seed Bank, Bitcoin Investment Spheroid Universe, MrChrissy VPN, and Guarada Wallet. It’s far from being a viable currency.
The primary difference between a digital currency like Bitcoin and ETC is that Bitcoin is designed to be a conventional currency alternative. On the other hand, ETC is a token that mainly exists to power the Ethereum Classic blockchain, including smart contracts, dApps, transactions, and decentralised autonomous organisations (DAOs). That’s why in the ERC-20 token ecosystem, ETC is considerably more popular.
Fees & Expenses of Ethereum Classic
Compared to ETH, Ethereum Classic's average transaction fee is pretty nominal. However, its price has also remained under $8 during the last few months. At the time of writing, the average transaction fee of ETC is $0.0014, which was around the same mark the previous year except for a few temporary spikes. In January 2019, during the cryptocurrency boom, ETC experienced its highest average transaction fee around the $6 mark. Note that average transaction charges are determined in US dollars when a miner processes and verifies a transaction. The fee is dependent on multiple factors, including the demand for Proof of Work.
Moreover, the commissions and fees charged by several cryptocurrency platforms, including exchanges, differ significantly in terms of percentage and structure. Usual purchasing and selling using wire transfer will set you back around 0.5% to 2%. Quick buying through debit cards can be quite expensive as it can cost you anywhere between 3% and 10%. You might also have to pay for withdrawals and deposits. Remember that these are just general estimates, and fees may vary significantly depending on the crypto platform you’re using, geographical location, amount of ETC, and more.
What Are the Benefits of Ethereum Classic?
Ethereum Classic has all the advantages of a blockchain, but it offers a few specific to its technology. These benefits include:
Immutability - All transactions, once written and recorded in the blockchain, can't be altered, removed, or changed. This was the principle that forced the split between ETC and ETH. This doesn’t only maintain a high level of decentralisation but enforces greater security and code integrity.
Decentralised - Ethereum Classic relies on Proof of Work consensus procedure, which means there's no need for an intermediary or a central authority. Transactions can take place without them, and smart contracts are self-executable.
Quick & Affordable Transactions – Due to an automated process of verification that doesn't require a third-party involvement, your transactions are processed and verified quickly in no time. That's not the only upside, as it makes your transactions highly economical as well.
High Reliability - Ethereum Classic blockchain has been handling a wide variety of applications, smart contracts, and transactions for the last five years without any interference from the third parties, downtimes, frauds, and censorships. This speaks to its reliability.
Programmable – The key benefit offered by Ethereum Classic blockchain is that it's programmable, allowing developers to write decentralised apps or dApps and create smart contracts. These apps can include financial services, games, smart contracts, and more.
Can Ethereum Classic Be Used Anonymously?
The anonymity feature of cryptocurrencies is overstated. Although indeed, the decentralised blockchain doesn't have any personal data stored, if you're using Ethereum Classic or any other cryptocurrency, you'll have to go through trading and exchange services which require you to provide personal information. Some of the most reliable crypto exchanges have to comply with Anti Money Laundering (AML) and Know Your Customer (KYC) regulations, so they have no choice but to collect personal data. Increasing regulations for cryptocurrencies has also diminished anonymity.
You would maintain a certain level of anonymity if you only use the blockchain. Even then, there's a digital footprint and meta information that can lead anyone back to you if they try hard enough. So, if you're looking for absolute anonymity with ETC, unfortunately, it's not there. Maybe a few exchanges would allow you to buy and sell digital currencies, but they pose a significant risk, and sometimes they're just scams.
How Safe is Ethereum Classic?
Quite safe. Every transaction that occurs on the Ethereum Classic blockchain is made extremely secure by cryptographical encryption. Due to the way that Ethereum blockchain has been structured, it has a high number of nodes to verify transactions at a rapid pace. The majority of the cyber-attacks on Ethereum Classic generally target poorly programmed dApps or smart contracts, instead of the blockchain. However, it won't have the updated security of ETH 2.0, which is moving to a Proof of Stake consensus mechanism.
What Teams Are Working On Ethereum Classic Development
To keep the ETC blockchain alive and updated, five official teams are actively pursuing their goals. These teams include the following:
Ethereum Classic Consortium
It's an association formed by organisations, businesses, and individuals belonging to different crypto communities to promote ETC's fundamental values, which include resistance against censorship, absolute immutability, and decentralisation.
This team's main objective is to lead ETC protocol development and ensure the creation of a mature ecosystem achieved through accelerated adoption of ETC by consumers and commercial entities, enhanced collaboration between stakeholders, and mature transparency and governance.
This is the lead development team of the ETC project, which has been tasked with maintaining the Core-Geth client, EVM-LLVM backend project, and infrastructure tooling and specs. The team also ensures protocol research and timely updates.
This is the financial wing of the ETC project with the primary objective of acquiring required funding for Ethereum Classic and forging long term relationships with institutions and organisations to deal with the challenges.
It is a blockchain venture studio that is working on Web3 and creating decentralised systems. They have collaborated with ETC to launch decentralised applications, solutions, and products.
Other teams are currently contributing to the Ethereum Classic project, including Ethereum Foundation, Parity Technologies, ETC Consortium, ETCDEV, ETC Cooperative, Grayscale, Commonwealth, POA Network, Chainsafe, Core Paper, Second State, and PegaSys.
Which Financial Institutions Are Invested in Ethereum Classic?
Since ETC isn't a payment alternative, many financial institutions have backed the Ethereum Foundation, which supports ETH and ETC. A few years ago, EEA or Enterprise Ethereum Alliance was established that featured big names like JP Morgan, Credit Suisse, MasterCard, ING, and more. However, Ethereum Classic is the less popular split of the blockchain gets overshadowed by the attention and backing that its more famous sibling ETH receives.
Ethereum Classic Mining
Ethereum Classic mining is pretty identical to Ethereum. It involves using computational power to determine the correct solution. Technically speaking, miners run distinct metadata of each block via a hash function that yields random strings of alphabetical and numerical characters of fixed lengths. If a miner finds a hash that complies with the target, they receive ETC token while each node on the network verifies the transaction, and the blockchain gets updated.
Ethereum Classic Wallets
To keep your ETC tokens safe and secure, you can use a wide range of hardware and software wallets. Some of the secure wallets recommended by Ethereum Classic website include:
Squarelink, MyCrypto, MyEtherWallet, Portis
Saturn Wallet, Opera, Nifty Wallet, Brave, MetaMask
Ledger, Trezor, HTC Exodus, Bitski, CootBitX, Ellipal, SafePal, Parity Signer, Singatory Client
Software Wallets (Desktop/Mobile)
ABRA, Alpha Wallet, AToken, Atomic Wallet, BTCPOP, Button Wallet, Citowise, Cobo, Coinbase Wallet, Coinomi, Cryptonator, Edge, Emerald Wallet, Ethos, eToro Wallet, Evercoin, Exodus, Guarda, HubrisOne, Huobi Wallet, Infinito Wallet, Jaxx Liberty, Midas Protocol, Ownbit, Trust Wallet, Zelcore Wallet, ZenGo
Is Ethereum Classic Worth the Investment?
If you look at the price chart of ETC token, you will notice that it has been relatively stable compared to other popular cryptocurrencies. However, don't let that stability lure you into a false sense of satisfaction as all digital currencies are highly volatile. Prices can plummet or surge at any moment without giving you enough time to make a decision.
This phenomenon, which is particularly unique to cryptocurrencies, makes it challenging to recommend investment with a high level of certainty. The best way is to invest an amount that doesn't affect you financially and diversify your finances to manage your risks. It's likely that Ethereum Classic might be undervalued for what it is and may have a high growth potential in the coming months, but no investment comes with a hundred percent guaranteed success.
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How is Ethereum Classic different from Ethereum?
In terms of functionality, they don't have any differences. Ethereum Classic is the original blockchain that didn't go through the hard fork update that fixed the hack that was a result of a DAO hack.
What wallets should I use to store Ethereum Classic?
Ledger Nano and Trezor are the most secure hardware wallets while you can also rely on software wallets like Atomic Wallet, Abra, Exodus, and Evercoin. Web wallets include MyEtherWallet and MyCrypto.
How can I mine Ethereum Classic?
ETC can be mined with powerful computers that solve challenging cryptographical problems using the Proof of Work protocol. Once a block has been mined, all the miners start to work on the next block.
What are dApps?
It's an abbreviation for decentralised applications written by developers using the Ethereum Classic's programmable blockchain. These apps include smart contracts like DAO, financial service applications, games, and more.
Is Ethereum Classic a good investment?
The volatility associated with cryptocurrency prices makes them a high risk and high reward investment. It’s recommended that you only invest what you can afford to lose.
How much is the Ethereum Classic transaction fee?
Compared to popular cryptocurrencies like Bitcoin, it is nominal. At the time of writing, the average transaction fee is only $0.0014.
What is a smart contract?
It’s a contract that’s been programmed to run on its own and execute particular commands according to the given conditions.
Is Ethereum Classic decentralised?
ETC is one of the most highly decentralised cryptocurrency platforms. People behind it didn't agree with the majority of Ethereum backers, including founders, to revert the hack caused by DAO loophole. They believed such actions defeat the purpose of the written code.