The Ethereum network has grown over the past year into the undisputed leader in the decentralized finance sector, and it is on it that most popular altcoins are based. However, not everyone knows that it has older siblings in the form of Ethereum Classic. So what made ETH a gigantic success that ETC could not repeat?
- Ethereum is currently the undisputed leader in the decentralized finance (DeFi) market, and its current price is above 3,000. USD
- ETC is the older brother of the well-known ETH, but it is much less popular
- Cryptocurrencies, although apparently similar, are very different from each other. Here are the top 5 things that separate both assets!
Ethereum vs Ethereum classic a split story
The well-known Ethereum blockchain was launched in 2015 by its co-founders: Vitalik Buterin and Gavin Wood, along with Charles Hoskinson and Anthony Di Iorio. Less than a year after the platform was launched, The DAO launched a crowdfunding campaign aimed at creating a venture capital fund, thanks to which investors were to participate in voting on the future of the project.
Initially, the sale of tokens was supposed to last 28 days, but the success of the project surprised the organizers themselves, who collected as much as USD 150 million in just three weeks.
Soon after, the network received shocking information, according to which there was a loophole in the code of the DAO wallet, allowing the theft of 3.6 million Ether coins worth over USD 60 million at the then exchange rate.
Initially, the creators of Ethereum wanted to introduce a soft fork, but after many threats from alleged frauds, the Ethereum development team decided to hard fork, i.e. a protocol update that forces all network users to switch to the new software. This is how Ethereum Classic was created in 2016 due to the fraud and lack of community compliance as to the next steps.
Cryptocurrencies diverged by ideology
Following the hack, developers and users of the Ethereum platform were unable to reach a common position. On the one hand, many people have asked for the suspicious transactions to be reversed. On the other hand, many people took the position that the history of blockchain is sacred and should not be interfered with.
We believe in the original vision of Ethereum as a global, decentralized system that cannot be turned off or manually modified - we read on the Ethereum Classic website.
Divergent consensus mechanisms
Ethereum Classic, like Bitcoin, uses a proof-of-work model where miners validate transactions with complex math puzzles.
Alternatively, ETH is working on a proof-of-stake model where users validate transactions with their Ether they produce rewards for adding blocks to the chain.
Trading volume
The trading volume is the sum of all transactions that take place with a given currency. Overall, the higher the volume of trading, the greater the liquidity of the cryptocurrency. In addition, this indicator reflects the general interest in the asset and its popularity on exchanges in pairs with other cryptocurrencies as well as fiat currencies.
According to the analytical company Statista, ETH processes more than 1.1 million transactions every day, while ETC can boast a modest fraction of this value. With so many trades, Ethereum's price is highly volatile, encouraging brave investors looking for quick profits.
Market capitalization and maximum coin supply
The total number of coins in circulation multiplied by their price determines the market capitalization of cryptocurrencies. Hence, the total market value of ETH and ETC depends on the supply in circulation and not on its total value.
The maximum supply in the Ethereum Classic network is around 210 million tokens, and the market capitalization of the asset is currently just over $ 4.1 billion.
On the other hand, Ethereum does not have a maximum supply, however it does have an annual cap and at the moment the market capitalization of ETH is over $ 402 billion.
Overall, market capitalization can reflect strong signs of popularity or investor interest. However, it has some limitations such as the current maximum coin supply which does not necessarily reflect the future performance of the asset and therefore should not be used as the sole indicator of the health of a cryptocurrency.
Mining
According to Coin Bureau, compared to Ethereum, Ethereum Classic only needs half the computing power required to break even. Also, since ETC has the maximum supply, miners will mostly earn from transaction fees rather than mining new blocks.
Ethereum Classic is also easier to mine than Ethereum, and therefore could prove to be a better choice for GPU miners.
Different ideologies, similar technique
If you are considering investing in any of these, it's important to understand that the cryptocurrency market is very volatile. Never invest more than you can afford to lose!