Crypto Currencies

Difference Between Ethereum And Ethereum Classic

If you look closely at the list of available cryptocurrencies, it is easy to see that Ethereum has two versions: just Ethereum (ETH) and Ethereum Classic (ETC). These two cryptocurrencies not only bear the same name, but also have an interesting history, which in part has become one of the most important events in the entire history of the crypto world. The battle between Ethereum and Ethereum Classic touches on the ethics and ideology of cryptocurrencies.

Before there were two different versions of Ethereum, there was only one Ethereum. But hackers managed to steal $ 50 million in coins, and the result was the emergence of two separate camps in the crypto world.

This is how Ethereum split off, leaving behind Ethereum Classic.

What is Ethereum?

In general terms, both Ethereum and Ethereum Classic are platforms on which to build a variety of applications.

A smart contract is a contractual scheme that is stored on the blockchain and executed when certain conditions are met. They are controlled and executed by the blockchain, and the blockchain in this relationship serves as an objective and unbiased third party in the execution of transactions.

Such Smart contracts govern the entire Ethereum ecosystem. Since contracts are automated, transactions and applications on the Ethereum platform become very attractive for building all sorts of systems and interdependencies.

These applications, known as “dApps” or decentralized applications, have a diverse set of functionality and purposes, and they all depend on the Ethereum platform.

A few words about DAO

The moment of the split between ETC and ETH is associated with an organization known as the Decentralized Autonomous Organization, aka DAO.

The DAO was essentially a decentralized venture capital or hedge fund that was going to fund decentralized applications (dApps) built on the Ethereum ecosystem

The DAO was created so that the founders of the foundation had the right to say which decentralized application will receive funding. Investors then had to buy DAO tokens using ETH as their currency. DAO tokens integrated holders into the DAO system and gave them the right to vote.

The way decentralized apps were approved was pretty straightforward. First, they had to be whitelisted by influential people in the Ethereum community acting as curators. Then, those who had DAO tokens had to vote for DAPP. Once a proposal received 20 percent of the vote, it received a share of the DAO funds needed to get started.

The flexible process and huge potential of the DAO has led to a huge number of people joining this trend. In the first month of the creation of the DAO, the fund raised more than $ 150 million in Ethereum.

At its peak, it had serious security problems. On June 17, 2016, an unknown person or group stole about $ 50 million.

Hacking the DAO – the birth of Ethereum

To exit the DAO, it was only necessary to send a request, and the split function would reimburse the user for his Ethereum on the exchange in exchange for DAO tokens, after which it would update the blockchain by entering a transaction into it, and update the internal balance of the token.

The hacker injected a recursive function into the request, which allowed him to essentially repeat the request multiple times for the same DAO tokens before the transaction was registered.

To understand how big the security hole was, the recursive function ran until a THIRD of the DAO was depleted.

At the time, the DAO had a huge share of the total Ethereum supply, in the order of 14 percent. $ 50 million, nearly a third of the original DAO funds, was stolen and the DAO and Ethereum communities grumbled. The solution to the problem had to be found quickly.

The majority decision was that Ethereum needed to fork or completely stop the blockchain and create something new from scratch. This “something new” is Ethereum (ETH). Ethereum Classic (ETC), as the name suggests, is the original Ethereum still using the original blockchain.

The decision to fork apparently caused a split and generated a lot of controversy, and although the majority voted to fork the blockchain, there remained a small but significant percentage of people (roughly 10 percent) who held on to the original blockchain. The Ethereum fork allowed the return of the $ 50 million that had been stolen.

Ethereum vs. Ethereum Classic

Ethereum (ETH) operates on a completely new blockchain and most miners use this new version.

Ethereum Classic (ETC) runs on the same protocol and performs a similar function, but has certain differences in the community. 10 percent of the people on the original Ethereum blockchain are relatively unknown and welcome the idea of a blockchain that cannot be rewritten. The price of ETC is largely dictated by the speculative market, like many other altcoins.

Ethereum (ETH), on the other hand, is more in line with the image of the “world computer”, a software company that wants to grow and possibly implement more hard forks in the future. The leaders of the ETH community are much more open-minded and appear in the public more than the leaders of the ETC community. ETH primarily has value due to the participation of the speculative market, but it also enjoys community support. The Ethereum Alliance, for example, includes many billion-dollar companies – Accenture, JP Morgan, Microsoft, and UBS. This support in turn brings ETH to the fore.

ETC vs ETH: an ideological split               

It is important to note that Ethereum is not to blame for what happened to the DAO, as the DAO is completely independent of Ethereum. However, the $ 50 million hack scared the community and the price of ETH dropped from $ 20 to $ 13.

The decision to fork was made in large part because the missing $ 50 million Ethereum still remained in the hacker subsidiary of the DAO.

The hard fork led to the separation of ETH from the main blockchain. This moment was enclosed in block 1,920,000 – exactly before the DAO hack.

The hard fork has helped return funds to everyone who has invested in the DAO using a so-called smart refund contract. For every 100 DAO, token holders received 1 ETH.

Ethereum was originally created as a tool against financial corruption. The unbreakable blockchain was supposed to rid mankind of its addiction to corruption. The DAO hack also split the Ethereum community because the decision to hardfork – and essentially manipulate the blockchain – went against Ethereum’s original purpose.

Ideologues who were unshakable in their beliefs stayed with ETC, while the rest spilled over to Ethereum for the survival and prosperity of the community. There is a natural confrontation between these two groups for this reason.

ETC and ETH: problems

Obviously, each of these blockchains has its own disadvantages and advantages.

The biggest problem with Ethereum Classic is that the coin is incompatible with the ETH hard fork, and many of the big players in the Ethereum community use ETH. Since ETC is not backward compatible with a hard fork, ETC users will not be able to enjoy updates that are built on top of ETH, such as Ethereum’s transition from Proof of Work to Proof of Stake.

As far as Ethereum is concerned, its big problem is that since the hardfork seal has been broken, many are convinced that the number of hardforks will continue to grow in the future. Since the Ethereum community was able to get together and make an important decision for the price and future of their blockchain, some came to believe in its rigid mathematical objectivity. Some people have been outspoken that community leaders can manipulate the price of ETH in the future. This risk adds volatility to long-term price prediction.


The strength of Ethereum lies in the community itself, as it is a platform that allows others to create projects that can change almost any industry. Ethereum Classic, on the other hand, is overshadowed by a bad story with the DAO. The very idea of DAO could make a significant contribution to the future of the technology, and key security flaws led to the birth of a stronger platform.

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