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What Is Ethereum Classic? ETC Explained in Plain English

Ethereum Classic (ETC) is an attempt to preserve the originality of Ethereum. With a market cap of just over $2,000,000,000 USD, Ethereum Classic has proven itself as a valued asset. But is this cryptocurrency meant to last? Could Ethereum Classic (ETC) continue to be effective or will this Ethereum hard fork become a relic from the past? In this article, we’ll answer these questions by explaining what Ethereum Classic is, how it works, and how it differs from Ethereum. It took us countless hours of research to write this article. Therefore, we can assure you that this guide will help you understand all there is to know about Ethereum Classic (ETC).

In This Guide:

What Is Ethereum Classic (ETC)?

Ethereum Classic (ETC) is a decentralized cryptocurrency that was created as a fork of the Ethereum blockchain. The fork occurred in 2016 after a group of Ethereum developers decided to not implement a change to the Ethereum code that would have reversed a hack that had taken place on the Ethereum network. 

A group of developers chose not to implement the change, and thus created Ethereum Classic. They believe that the “code is law” and that any changes to the code should be voted on by the community before being implemented. On the contrary, the hacking event resulted in 3.6 million worth of ETH being stolen. The opposing developers believed that if this wasn’t resolved, it could potentially damage Ethereum’s reputation. 

At its core, Ethereum Classic still functions in the same way as Ethereum. It allows for the development of decentralized applications (dApps) and smart contracts. However, there are a few key differences between the two cryptocurrencies. For one, Ethereum Classic has a much smaller market cap and is not as widely known or used as Ethereum. 

Additionally, the Ethereum Classic blockchain is not compatible with the new changes that were implemented on the Ethereum network, which means that any dApps or smart contracts built on Ethereum Classic will not be able to take advantage of the new features that have been added to Ethereum. 

Another key difference is that the Ethereum Classic team is not as well funded as the Ethereum Foundation. This has led to a slower development process for Ethereum Classic. Overall, Ethereum Classic is a much smaller and less popular cryptocurrency than Ethereum. Its roadmap is not as clearly defined and its team is not as well organized. However, proponents of blockchain integrity and immutability believe that Ethereum Classic is the true Ethereum blockchain.

How Does Ethereum Classic Work?

Ethereum Classic works through a Proof-of-Work (PoW) consensus algorithm. This means that miners are rewarded for validating transactions on the Ethereum Classic blockchain. Unlike Proof-of-Stake (PoS) consensus algorithms, which allow users to stake their coins to earn rewards, PoW requires miners to use their computational power to validate transactions. 

The process of validating transactions and adding them to the blockchain is called “mining.” To be able to mine on the Ethereum Classic network, miners need to download the Ethereum Classic mining software. This software connects their computers to the Ethereum Classic network and allows them to start validating transactions. 

Once a miner has validated a transaction, they need to solve a complex mathematical problem. The first miner to solve this problem can add the next block of transactions to the Ethereum Classic blockchain. When a block is added, the miner is rewarded with a certain number of Ethereum Classic coins. It should be noted that Ethereum Classic’s PoW consensus algorithm is not as energy-efficient as Ethereum’s new proposed PoS algorithm. This is because PoW requires a lot of computational power, which in turn uses a lot of energy. 

Ethereum has been planning to move to a PoS consensus algorithm for multiple years now and Ethereum Classic has no plans to change its PoW method. This aligns with the philosophy of many Ethereum Classic (ETC) holders of not changing the original code and allowing the community to decide on any changes via a voting process. Critics of PoS argue that those with the most cryptocurrencies to stake will have a bigger say than those that don’t. 

It’s believed by some advocates of ETC that the only way this blockchain could work is if it remains decentralized. Although energy intensive, the work that the miners conduct is what makes the cryptocurrency valuable. Staking consolidates power to those that are already wealthy and doesn’t require the same level of commitment. This is a key point of contention between the two blockchains. 

To summarize, Ethereum Classic works as an open-source, decentralized cryptocurrency that is not controlled by any central authority. The Ethereum Classic network is powered by a blockchain that contains a record of all the transactions that have ever been processed on the network. This blockchain is secured through a consensus algorithm called Proof-of-Work (PoW). 

Miners on the Ethereum Classic network are responsible for validating transactions and adding them to the blockchain. In return for their work, miners are rewarded with a certain number of Ethereum Classic coins. The process of validating transactions and adding them to the blockchain is called “mining.” 

The way smart contracts work on Ethereum Classic is similar to how they work on Ethereum. Smart contracts are programs that can be executed on the Ethereum Classic blockchain. These programs can be used to create decentralized applications (dApps). 

To write a smart contract on Ethereum Classic, a programmer needs to use a programming language called Solidity. Once the contract is written, it needs to be deployed on the Ethereum Classic network. After it has been deployed, the contract will be stored on the blockchain and can be executed by anyone. 

Ethereum Classic (ETC) Fun Facts

  • ETC has a circulating supply of 135,819,684.36 according to CoinMarketCap
  • Described as a combination of ETH and BTC
  • Total supply of 210,700,000 ETC available
  • Sound money for blockchain dApps 

(Data as of 7/15/2022)

The Story of Ethereum Classic (ETC)

The story of Ethereum Classic begins at the start of Ethereum itself. Technically, it was founded by Vitalik Buterin and the rest of the Ethereum team because the original ETH blockchain was forked to create ETC. However, the developers that now spearhead Ethereum Classic have since distanced themselves from the original team. A fork occurs when a cryptocurrency’s blockchain splits into two separate chains. This can happen for a variety of reasons. 

In the case of Ethereum and Ethereum Classic, the fork happened because the community couldn’t agree on how to handle a DAO hack. The DAO was a decentralized autonomous organization built on the Ethereum blockchain. It was intended to be a way to invest in Ethereum-based projects. The DAO was hacked in 2016 and millions worth of Ether was stolen. 

The Ethereum community decided to hard fork the Ethereum blockchain to make it so that the DAO hack never happened. This created a new blockchain, which is now called Ethereum. Those who didn’t want to hard fork the blockchain stayed on the original chain, which is now called Ethereum Classic. Ethereum went on to use the cryptocurrency ETH while Ethereum Classic uses the cryptocurrency ETC. 

ETC is unique in that it is one of the only major cryptocurrencies to still use a Proof of Work (PoW) consensus algorithm. This is the same algorithm that is used by Bitcoin. Ethereum is in the process of moving to a Proof of Stake (PoS) consensus algorithm, which is more energy efficient. This is an important part of the story of Ethereum Classic because it could be seen as one of the key reasons why ETC has been able to remain successful. 

The potential miner migration from Ethereum to Ethereum Classic is something to watch for. If Ethereum does complete its plans to move to a PoS consensus model, it would leave Ethereum miners without a way to earn rewards. This could lead to a mass migration of miners to Ethereum Classic to continue earning rewards. 

With the original creators of Ethereum moving on to other projects or continuing Ethereum’s journey with the new changes, it is yet to be seen what the future holds for Ethereum Classic. This cryptocurrency might see a resurgence if there is a renewed interest in blockchain integrity and immutability. However, as it stands now, Ethereum Classic is a much smaller and less popular cryptocurrency. 

The lack of funding is not a major issue however as it is run by volunteers and has Barry Silbert, (CEO of investment firm Grayscale) backing the blockchain. Only time will tell what the future holds for this classic cryptocurrency. Ethereum Classic’s story might end as a nostalgic relic from Ethereum’s history or it could make a comeback as a major player in the cryptocurrency space.