In the summer of 2016, the Ethereum cryptocurrency community, led by its creator, Vitalik Buterin, went through a hardfork to eliminate the consequences of hacking the DAO smart contract. But not everyone supported this idea, and a small part of users continued to use the original blockchain, calling their project Ethereum Classic.
No one could have thought that Ethereum Classic would survive as an independent project, and today it is proclaimed to be the real killer of Buterin’s Ethereum.
History of creation
Before the summer of 2016, there was only one Ethereum, the idea for which was proposed by Vitalik Buterin in 2013. Then he searched for like-minded people, formed a team, and held a cryptocurrency ICO to launch the Ethereum network on July 30th, 2015.
But in June 2016, a critical error was made in the smart contract code managing the DAO investments, leaving it to an unknown hacker who took the advantage of this vulnerability. They managed to withdraw $60M in cryptocurrency from the DAO account. But as a result of the developers' countermeasures, these funds were frozen without the possibility of returning them to the owners.
To solve this problem, on July 20, 2016, the Ethereum network was rolled back to the moment before the hack had occurred. All this was backed by Buterin and the majority of the community. Those who did not support the hardfork continued to use the original blockchain and called their project Ethereum Classic.
Developing Ethereum Classic
The Ethereum and Ethereum Classic platforms are twin brothers. Both offer access to smart contracts, decentralized applications and ICO. But if Ethereum confidently holds the second place after Bitcoin for capitalization, then Ethereum Classic is still outside the top 10 cryptocurrencies.
The difference in capitalization is explained by the fact that Ethereum has several times more users and there is a well-known leader in the person of Vitalik Buterin. But Ethereum Classic is gradually reducing this gap by attracting new users and developers. Its development team is looking for ways to escape the shadow of Ethereum. For example, the Callisto project was launched as a means to solve the scalability issue for Ethereum Classic. Basically, it’s a blockchain of its own with a cryptocurrency.
But the main decision of the Ethereum Classic team was a refusal to switch to Proof-of-Stake mining.
“No” to POS
In May 2018, there was a technical hardfork in the Ethereum Classic network, resulting in the removal of the difficulty bomb. The bomb is a technical mining restriction in the blockchain set from the moment of its creation. It should stimulate the transition from Proof-of-Work to the Proof-of-Stake algorithm.
Why is this important, you may ask? Firstly, the transition to Proof-of-Stake, which is now actively engaged by Buterin, can cause serious bugs in the Ethereum network. The probability of repeating the DAO scenario is very likely, not to say about the frozen $150 M as a result of an error in the Parity crypto wallet. By the way, these funds are still inaccessible to this day. Maybe the developers didn’t try hard enough — that money is not theirs after all.
Secondly, Ethereum has a large army of miners, who obviously will not like the reduction of the award from 3 to 0.6 ETH per block. At the moment, both cryptocurrencies are identical in terms of the mining algorithm, so miners would be ready to change their specs for Ethereum Classic mining at any time.
Ethereum Classic has the following advantages:
- The community has their own vision, which may soon be extensively promoted by the common Ethereum users.
- Decentralized network with good abilities for further scalability.
- Tradings are available on almost every popular cryptocurrency exchange. Recently, Ethereum Classic has been added to the leading cryptocurrency exchange — Coinbase, becoming the 5th currency along with Bitcoin, Litecoin, Bitcoin Cash and Ethereum.
And after Buterin changes Ethereum with moving to Proof-of-Stake and launching Sharding, Ethereum Classic will become the main contender for acquiring its predecessor’s market niche.