{"id":2806,"date":"2020-03-20T04:10:08","date_gmt":"2020-03-20T11:10:08","guid":{"rendered":"https:\/\/coincentral.com\/?p=2806"},"modified":"2020-03-30T14:05:43","modified_gmt":"2020-03-30T21:05:43","slug":"ethereum-classic-vs-ethereum","status":"publish","type":"post","link":"https:\/\/coincentral.com\/ethereum-classic-vs-ethereum\/","title":{"rendered":"Ethereum Classic vs Ethereum (ETC vs ETH): What’s the Difference?"},"content":{"rendered":"

Ethereum Classic vs Ethereum (ETC vs ETH)<\/h2>\n

A quick look at any cryptocurrency price list shows two different types of Ethereum, one being <\/span>Ethereum (ETH)<\/b> and the other being <\/span>Ethereum Classic (ETC)<\/b>.<\/span><\/p>\n

The two cryptocurrencies not only share the same name but also share an interesting story that is one of the most pivotal events in all cryptocurrency history. The battle between Ethereum and Ethereum Classic is one of ethics and ideologies.<\/span><\/p>\n

Before there were two different Ethereums, there was only one Ethereum. Since then, $50 million was stolen by an unknown hacker or hackers, and this resulted in two distinct camps of people in the cryptocurrency world being formed.<\/span><\/p>\n

Here\u2019s how Ethereum <\/a>– as we now know it – came to be, and how it compares to Ethereum Classic.<\/span><\/p>\n

An Introduction to Ethereum<\/span><\/h2>\n

In broad strokes, both Ethereum and Ethereum Classic are platforms on which various applications can be built.<\/span><\/p>\n

A <\/span>smart contract<\/b> is a contractual state that is stored in the <\/span>blockchain<\/b>, and it executes when certain conditions are met. They are controlled and enforced by the blockchain, which serves as an objective and unbiased third party to the transaction.\u00a0<\/span><\/p>\n

These smart contracts essentially run the entire ecosystem of Ethereum<\/span><\/i>. Since these contracts are automated and enforced, transactions and applications that run on the Ethereum platform have become very appealing to all sorts of different applications.<\/span><\/p>\n

These applications, referred to as DAPPs (decentralized apps) have a wide variety of functionalities and purposes, all using the Ethereum platform to function.<\/span><\/p>\n

To get an idea for the myriad of different DAPPs out there, take a look at the<\/span> State of the Dapps<\/span><\/a>.<\/span><\/p>\n

Enter the DAO<\/span><\/h2>\n

The most pivotal moment in the ETC vs ETH split has to do with an organization known as the Decentralized Autonomous Organization, or the DAO.<\/span><\/p>\n

The DAO was essentially a decentralized sort of venture capital or hedge fund that was going to fund decentralized applications (DAPPs) built on the Ethereum ecosystem.<\/span><\/p>\n

The way the DAO was set up would give funders the power to say which DAPPs get funding. The investors would have to buy <\/span>DAO Tokens<\/b> using Ether as the currency to buy them. The DAO tokens integrated holders into the DAO system and gave them a certain amount of voting power.<\/span><\/p>\n

The way DAPPs were to get approved had a pretty straightforward process. First, they would have to be white-listed by reputable figureheads in the Ethereum community who acted as curators. Next, the DAPPs would be voted on by those who held DAO tokens. Once the proposal got an approval of 20% in the vote, they would then get a share of the DAO funds required to get started.<\/span><\/p>\n

The flexible process and seemingly immense potential the DAO offered had gathered a frenzy of people jumping in to get in on the action. <\/span>Within the first month of the DAO\u2019s formation, it raised over $150 million of ether.<\/b><\/p>\n

Funders that wanted to exit out of the DAO had access to an exit door called the <\/span>\u201cSplit Function\u201d<\/b>. This \u201cSplit Function\u201d would give the funder the ether they had invested, and give them the option to create their own <\/span>\u201cChild DAO\u201d<\/b>, which essentially acted as a smaller version of the DAO. The only stipulation was that the funders had to hold their ether for 28 days before they could spend them. <\/span>This \u201cSplit Function\u201d exposed a giant loophole in the DAO system.<\/span><\/i><\/p>\n

At its peak, although the DAO raised around $150 million by crowdfunding, it had some serious security problems. The structure, particularly the \u201cSplit Function\u201d, behind the DAO itself wasn\u2019t particularly air-tight, and on June 17th, 2016, some unknown person or persons took around $50 million. Some people claim it was a hack, but to call it a hack would severely overestimate the technical prowess necessary to break into this poorly guarded platform.<\/span><\/p>\n

In other words, the system could have been broken into by anyone with a few basic skills.<\/span><\/p>\n

The DAO Hack – The ETC vs ETH Origin<\/span><\/h2>\n

To exit the DAO, all someone had to do was send a request and the splitting function would then refund the user their Ether in exchange for their DAO tokens, and update the ledger with the transaction and update the internal token balance.<\/span><\/p>\n

The hacker made a recursive function in the request, which essentially allowed them to repeat the request multiple times for the same DAO tokens before the transaction could be registered.<\/span><\/p>\n

To further emphasize how big of a loophole this was, keep in mind that the recursive function was able to run and run until a THIRD of the DAOs funds were siphoned out.<\/b><\/p>\n

At the time, the DAO had a massive percentage (around 14%) of the total amount of Ethereum in existence. With $50 million, about a third of the DAO\u2019s initial funds stolen, the DAO and Ethereum communities went into disarray. They rapidly started scrambling for solutions to this problem.<\/span><\/p>\n

The majority decision for a solution was that Ethereum needed to create a <\/span>fork<\/b>, or stop the blockchain entirely and create something new from scratch. This \u201csomething new\u201d is what we now see as Ethereum (ETH). Ethereum Classic (ETC) is, as the name would suggest, the first Ethereum still using the original blockchain.<\/span><\/p>\n

The decision to fork naturally caused a lot of division and controversy, and although a majority voted to fork the blockchain, there was still a small but significant percentage (roughly 10%) of people that were loyal to the original blockchain. The Ethereum chain that forked was able to get back the $50 million that was hacked.<\/span><\/p>\n

ETC vs ETH – The Differences<\/span><\/h2>\n

Ethereum (ETH) functions on a brand new blockchain, and the vast majority of miners, users, and protocol from the previous version of Ethereum use this new version.<\/span><\/p>\n

\"ethereum
Ethereum is actually a fork of Ethereum Classic.<\/figcaption><\/figure>\n

Ethereum Classic (ETC) runs on the same protocol doing a similar function, but it does have some distinct differences in its community. The 10% or so people from the original Ethereum are relatively in the shadows and are loyal to the concept of the immutable ledger. <\/span>ETC primarily has value because of the speculator market, much like many of the other alt-coins out there.<\/span><\/i><\/p>\n

Ethereum (ETH), on the other hand, is more like a software company that wants to grow and could possibly have more hard forks in the future. The leaders of the ETH community are far more public in nature than those in the ETC world. ETH primarily has value due to a mix of the speculator market, but more so due to its use of case scenarios and community support. The<\/span> Ethereum Alliance<\/span><\/a>, for example, consists of billion-dollar firms such as Accenture, JP Morgan, Microsoft, and UBS. This support, in turn, has added credit to ETH over ETC.<\/span><\/p>\n

It can be argued that both ETH and ETC have some distinct strengths and weaknesses, but the power largely rests with ETH as it has a market cap of roughly $15 billion, whereas ETC has one of around $1.5 billion.<\/span><\/p>\n

ETC vs ETH – The Ideological Split<\/span><\/h2>\n

By this point in our discussion, you should have a fairly in-depth understanding of the differences between Ethereum and Ethereum Classic.<\/span><\/p>\n

To explore further, we start to reveal some of the ideological differences between both communities. These ideological points are important to understand because ideologies attract communities, and the community support behind most cryptocurrencies is what ultimately determines their long-term value.<\/span><\/p>\n

\"ethereum\"
Although a fork, Ethereum is now the more popular chain.<\/figcaption><\/figure>\n

It\u2019s important to distinguish that<\/span> Ethereum had no blame in what happened with the DAO<\/span>, as the DAO ran completely independent of Ethereum. However, the $50 million hacks dismantled the public belief in Ethereum and the price dropped from $20 to $13.<\/span><\/p>\n

The decision to fork was ultimately based on the fact that the missing $50 million of Ether was still on the hacker\u2019s child DAO, and it couldn\u2019t be accessed for 28 days due to the DAO smart contract. The Ethereum community had one of three options:<\/span><\/p>\n

    \n
  1. <\/b> \u00a0\u00a0\u00a0<\/span>Inaction – Do Nothing:<\/b> The \u201ccode is law\u201d approach was an integral component to many of the immutable blockchain believers that supported Ethereum. These supporters were largely the group that stuck around for ETC. The majority of people weren\u2019t happy with $50 million disappearings, so they decided to take action and cast their votes elsewhere.<\/span><\/li>\n
  2. <\/b> \u00a0\u00a0\u00a0<\/span>Soft Fork: <\/b>A soft fork essentially gave holders the choice of whether to update or not. Whatever decision they chose, updated and non-updated holders could still interact. The concept behind the soft fork was to isolate and segregate all the blocks that contained the hacker\u2019s transactions with the goal of stopping them from moving their stolen ether. The Soft Fork posed a problem, as it would result in a<\/span> \u201cDenial of Service\u201d attack vector.<\/span><\/a> The DoS attack essentially was a manipulation of how miners are rewarded in the Ethereum ecosystem, and for this reason, the community chose to go with the Hard Fork.<\/span><\/li>\n
  3. \u00a0\u00a0\u00a0<\/span>Hard Fork: <\/b>The main distinction between soft and hard forks is that hard forks did not allow updated and non-updated holders to interact. If you didn\u2019t join the upgraded blockchain, you would not be able to interact with users of the new system.<\/span><\/li>\n<\/ol>\n

    The community chose the Hard Fork…<\/span><\/em><\/p>\n

    The way the hard fork worked is that the ETH we know today split off from the main blockchain at a particular point. This particular point was around block 1,920,000 – right before the DAO hack.<\/span><\/p>\n

    So, how did this solve the DAO attack issue?<\/b><\/p>\n

    The hard fork helped to refund everyone who had invested into the DAO, using what is referred to as a <\/span>refund smart contract<\/b>. For every 100 DAO, token holders were given 1 ETH.<\/span><\/p>\n

    Gavin Wood, the co-founder of Ethereum, called this moment <\/span>\u201cthe single most important moment in cryptocurrency history since the birth of Bitcoin.\u201d<\/em><\/p>\n

    By now, you should have some idea of how this event split up the Ethereum community.<\/span><\/p>\n

    Ethereum was first created as a stance against financial corruption. The immutable blockchain was meant to be free from the human tendency to corrupt. The DAO hack (which had nothing to do with the integrity of the Ethereum platform) split the Ethereum community because the decision to hard-fork – and essentially manipulate the blockchain – went against the original purpose of Ethereum in the first place.<\/span><\/p>\n

    Ideologists that were unshaken in their beliefs stuck with ETC, whereas others split off into Ethereum for the sake of the survival and flourishing of the community. There is a natural antagonism between the two groups for this reason. Additionally, many anti-Ethereum people jumped into the ETC camp to further cause disruption in the Ethereum community.<\/span><\/p>\n

    ETC vs ETH – The Issues<\/h2>\n

    In the ETC vs ETH debate, both sides make valid arguments, and each chain isn’t without their faults.<\/p>\n

    Ethereum Classic<\/h3>\n