Ethereum functions on “smart contracts”, which essentially run the entire Ethereum ecosystem, where it automates the decentralized applications (dApps) that work on the ETH platform. Before going ahead with the differences between ETH and ETC, let’s discuss the Decentralized Autonomous Organization (DAO), which is like venture capital or a hedge fund, which was going to fund the dApps on the ETH platform. In order to get the funding, the investors need to buy DAO tokens with Ether. The DAO tokens integrated into the system, which gave them a certain voting power. The approval process was pretty straightforward- first, they need to be whitelisted by the curators, after which the dApps would be voted by the DAO token holders. After the proposal gets 20% approval, then they would get a share of the DAO tokens to get that started.
Within the first month itself, DAO raised more than 150 USD worth of Ethereum and had some security problems. The investors who wanted to exit had to go through “split function” where they were supposed to create their own smaller version of DAO. This was a giant loophole, and some people claim it as a hack. With around a third of DAO’s initial funds hacked, the Ether community proposed for the need to create a fork, which gave birth to Ethereum Classic (ETC).
Ethereum is being used as a platform to launch other cryptocurrencies and enables the developers to deploy other decentralized applications. Ethereum aims to be censorship-resistant and with the help of a smart contract, it aims to execute a task without the intervention of a third party.
Ethreum Classic is a fork of Ethereum, which aims to use smart contracts to construct a blockchain that helps to build dApps, wherein the information is not stored on a single server but distributed to all nodes on the ETC blockchain. ETC came into existence when a hard fork undermined the notion of “immutable” blockchain and that “code is law”.
The $50 million DAO hack left the Etherum community with three options:
The DAO hack split the Ethereum community as the decision to hard fork went against the initial purpose of Ethereum. Many anti-Ethereum people jumped into the ETC camp to cause disruption in the Ethereum community further.
As Ethereum Classic is not the only hard fork of Ethereum, it can trigger volatility in the future. The 8th hard fork of Ethereum- Istanbul phase 1 is going to take place soon. The long-term plans with the pricing and hard fork remain the reason for worry for the Ethereum community. ETH leaves a victory for its community members inspite of the violations of immutability.
Ethereum Classic is not backward compatible, the users might not be able to visualize the updates being built on the network, such as Ethereum’s shift from Proof of Work (PoW) to Proof of Stake (PoS).
Ethereum is the second-largest cryptocurrency, currently trading at $170.14 with a market capitalization of $18,293,106,898 and a circulating supply of 107,520,079 ETH.
Ethereum Classic (ETC) on the other hand, is the 17th largest cryptocurrency, trading at $6.10 with a market capitalization of $689,693,624 USD and a circulating supply of 113,063,773 ETC.
We have discussed the critical points of difference between ETH and ETC above.
Ethereum is the parent, from which ETC formed as a fork. So, Ethereum no doubt turns out to be the most favorable in comparison.
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2020-04-30 12:01:41.258055 | 2 min