For those of you who are just getting into the cryptocurrency sector for the first time, you must have heard the term Ethereum. Ethereum is a decentralized computing platform that can run computer programs called smart contacts, just like Bitcoin. One of its products is Ether (ETH).
But besides Ether, there is also a crypto product called Ethereum Classic. What is Ethereum Classic? Is it the same as Ethereum? So, how does ETC work?
What is Ethereum Classic?
Ethereum Classic is a fractional platform from Ethereum. One of its products is the Ethereum Classic coin which is commonly shortened to ETC. More specifically, ETC is an open-source distributed cryptocurrency product and has a blockchain base that runs smart contracts or smart contracts.
If we talk about what Ethereum Classic is and its split with ETH, then we must first know what DAO (Decentralized Autonomous Organization) is a decentralized type of organization and The DAO which is the official company name as well as an example of a DAO.
Smart contracts are created to run the company and usually there will be a fundraising stage using the ICO (Initial Coin Offering) or TGE (Token Generation Event) method. Users can send some funds by buying tokens belonging to the company and after the ICO ends, the DAO will start operating.
While the ICO was still running, some experts said that there were bugs in the programming code that could increase the risk of hacking the system. While the developer was fixing a programming bug, a hacker managed to steal funds in the form of Ether.
The incident had an impact on The DAO’s ICO results and the price of Ethereum plummeted. Unfortunately, all the funds raised from the ICO are stored in the same account.
The tragedy of the hack took a toll on the Ethereum ecosystem and sparked divisions within the platform. After some time, Ethereum finally agreed to carry out a hard fork or changes made to the original code of the blockchain with the aim of recovering the stolen funds.
This hard fork decision was not approved by some miners because it was considered a bail-out and there would be a Code is Law. As a result, the Ethereum community eventually split into two camps.
Miners who did not agree with the hard fork decision then took steps not to upgrade the software and chose to stick with the old Ethereum system. This old Ethereum system is what is now known as Ethereum Classic.
Difference between Ethereum Classic and Ethereum
Basically, most of the basic functions of ETC are still the same as ETH, even down to its flaws. A striking difference from what Ethereum Classic is is the absence of a majority of the original developers of early Ethereum versions on the ETC platform. The reason is, the two founders chose to leave ETC and develop a new blockchain.
Another difference is that Ethereum Classic does not match existing updates on the ETH blockchain. By definition, a hard fork is an incompatible update. When a new set of rules starts to be implemented, the new chain and its users will be completely cut off from the original chain.
Due to these changes, consequently all users and the original Ethereum Classic chain system will not be able to access any updates contained in the new chain (Ethereum).
Another difference from Ethereum Classic is in the price of the cryptocurrency. As of May 2021, the price of Ether has surpassed $4,000 while the Ethereum Classic coin is only valued at $122.
Although the price and market cap of ETH is far superior, some crypto investors with small capitals are actually attracted to what Ethereum Classic is and switch to ETC because it is almost 30 times cheaper.
Crypto market cap is calculated by multiplying the price of a currency (based on fiat currency) by the number of coins or tokens in circulation. What is Ethereum Classic has 129.5 million coins in circulation and a market cap of $5.1 billion. Meanwhile, the number of ETH tokens is around 117.3 million with a market cap of more than $375.
Based on the available data, the performance of Ethereum Classic can be said to be quite good. This is because the market capitalization value of ETC has skyrocketed to 398 trillion rupiah as of May 2021.
How ETC Works
After knowing what Ethereum Classic is and how it differs from ETH, you may be asking about how it works. Like Bitcoin, ETC uses a Proof-of-Work (PoW) consensus mechanism. Later, network security is handled by miners who have computing capabilities.
When a network is used, it is important to ensure that transactions occur in the order they were created. Then, the miner will make it happen by completing the difficult computations for the block to work. This process is one way to secure the network from irresponsible people.
An important feature of ETC is that it allows users to execute smart contracts that contain agreements written in a single line of code. Since the entire process is carried out independently, there is no need for a third party to handle transactions between the seller and the buyer. In addition, ETC has also adopted a fixed monetary policy.
That’s a complete explanation of what Ethereum Classic is. Although the name and system are almost the same as Ethereum, there is actually a big difference between the two. In addition, the way ETC works is the same as Bitcoin.