ETC vs. ETH: Similarities and Differences Between Systems
In 2015, due to a hard fork on block 1920001, a new network was separated from the Ethereum crypto network, which had been unified until that moment. No one expected that the ideological conflict would drag on for years. It’s not just the blockchain that has split up. The teams, approaches, views on the development directions, and the exchange rate of coins were divided. The seceded cryptosystem (in fact, the main one) began to develop its ecosystem rapidly. It was accompanied by rapid growth in the value of its cryptocurrency – ETH.
Let’s take a closer look at how Ethereum differs from Ethereum Classic.
The History of Network Separation
A common crypto network for Ethereum and Ethereum Classic was launched in July 2015. It’s a blockchain platform designed to develop DApps of varying complexity, functioning by implementing the mechanism of smart contracts.
Thanks to this, many applications were deployed based on the blockchain network. Still, the key to the separation story was the deployment in a decentralized venture capital fund system – Decentralized Autonomous Organization, which was abbreviated as DAO.
In less than a month, the DAO project raised 2.7 million ETH, which in dollar terms at that time amounted to about $ 250 million. The developers conceived it as an investment fund, the resources for which were tokens purchased for ETH. The goal of the project was to raise funds to finance the development of new applications. At first, the new venture was approved by the curators of the Ethereum network. The holders of DAO tokens arranged a vote, and if the new application project gained more than 20% of the votes, it was funded from the fund.
The whole procedure was transparent and fair. The fund appeared to be influential and promising, which attracted system participants to it. If a new app passed the 20 percent barrier, but a particular DAO token holder was against funding it, he could withdraw from the agreement using a split.
This procedure contained one loophole, which the hackers exploited in June 2016. The following sequence was implemented:
- hackers submitted an exit request by adding a recursive function;
- the system returned ETH to the user;
- but before the transaction was registered, the exchange was restarted with a new cycle. For the same tokens, the initiator of the transaction received ETH again and then again and again.
It continued until almost a third of the ETH from the DAO accounts went to the hackers, deposited for 28 days.
In response to the incident, three potential solutions were proposed:
- Leave everything as it is, as this is in line with the idea of the inviolability of the code, which is at the heart of the philosophy of the Ethereum network.
- A soft fork is a “soft” reversible programmatic change, after which users would decide for themselves whether to accept it or not. Since the goal of this update was to “freeze” the stolen funds, most of the participants were leaning towards this option. Until it was discovered that the changes made could lead to DDoS attacks.
- Carry out a hard fork – an irreversible update, after which the blockchain chains are separated, and each begins to live its own life, which, in the end, happened.
Initially, they talked about “rolling back” the system to the moment “before the start” of hacker transactions. It was planned to restart the blockchain recording and return the withdrawn funds to the owners using a smart contract. However, on this decision, the Ethereum community split. Some of the participants refused to make any changes to the code. This part of the community became the core of Ethereum Classic with the ETC coin. The hardfork supporters launched a new chain branch, which became the second most famous and possibly the first most important Ethereum cryptocurrency with the ETH token. Since then, the ideological confrontation between Ethereum vs. Ethereum Classic has not stopped.
It is believed that the basis of the confrontation, from the supporters of the ETC, is the ideological doctrine of the immutability of the code for the sake of human whims. And the opposition of the inviolability of the “law of the code” to the corruption components that a person brings into any system.
On the other hand, the followers of the “new” Ethereum also had a relatively ideological solid position. The desire to restore economic justice about the community members who suffered from the hacker attack and the desire to develop and search for new forms provoked it. As a result, most of the authorities, including the network developers, supported the hard fork and the “new” network, which began to actively squeeze Bitcoin in the struggle for the title of the most promising cryptocurrency.
Remaining Similarities Between Crypto Networks
Despite the ideological differences, both crypto networks have retained several similarities that continue to make them intimate:
- Like Ethereum, Ethereum Classic is a cryptographic blockchain platform that enables the development of DApps based on smart contracts provided with open and available source code.
- Both systems function through numerous, interconnected nodes that operate as a single machine and are called the Ethereum Virtual Machine, or EVM for short.
- In both cases, the networks have their cryptocurrency. So at this level, the difference between ETH, ETC within the network is also minimal.
- The terminology is the same in both systems.
Differences Between Systems
The formal similarity of some parameters of both systems does not mean functional similarity. A different approach to the initial capabilities determines the difference in technical parameters and the socio-economic realization of the platform’s potential. Therefore, to determine how the systems differ from each other, we will consider these factors separately.
Based on both networks, users can issue their tokens and manage their blockchain projects. However, ERC 20 tokens are so popular that about 30% of all blockchain startups choose the ERC 20 smart contract according to rough estimates of experts. The “parent” network is not so popular.
The transformation of the consensus mechanism is also proceeding in different ways. Suppose Ethereum considers it necessary to gradually abandon PoW – through a hybrid version of PoS + PoW – with a complete transition to the PoS consensus mechanism in the future. In that case, Ethereum Classic voices its intention to continue using PoW.
ETC is ahead of ETH. An essential technical parameter is the block generation speed: 25 seconds in Ethereum and 14 seconds in the classic version. But with the introduction of new protocol releases, this block creation period in Ethereum should also be reduced.
In terms of interaction with various government and business structures, Ethereum bypassed Ethereum Classic and all other cryptocurrencies, including Bitcoin.
Unlike many other coins, ETH has nearly freed itself from the notoriety of a cryptocurrency designed to carry out criminal activities. Today, its ecosystem, on which many other projects operate, is an entire empire. The total cost of the whole system is formed. Although there is no exact data on its volumes, the capitalization of the ETH token alone as of November 25, 2021, exceeds $ 510 billion. Ethereum Classic cannot boast of such a scale of capitalization and implementation in real economic projects.