The thing we must appreciate about blockchain and cryptocurrency is the high competitiveness and community involvement. And debates such as Ethereum vs. Ethereum Classic illustrate how much power the users hold in the crypto community.
Many big companies are known for making decisions that disappoint their customers. Yet, for the lack of a better option, the customers still stick with them.
However, in the crypto space, when a portion of the community disapproves of a decision, they can just go forward and have a hard fork.
And that’s how the Ethereum Classic appeared. A group decided that Ethereum wasn’t going the right way, and they hard-forked into their own Ethereum. With Blackjack and…, you know how it goes.
The thing with Ethereum
Vitalik Buterin and his co-founders started Ethereum in 2014 to decentralize the internet through smart contracts and decentralized applications.
The concept quickly got traction, and the crypto community’s developers started getting increasingly involved with Ethereum.
It started by employing proof-of-work to achieve consensus, just like Bitcoin does. However, the discussion about the proof-of-stake Ethereum began in September 2014.
And nowadays, we have witnessed a significant historical event on September 15, 2022. This important historical event is called “The Merge,” which involves the Beacon Chain with the Ethereum mainnet. The major blockchain has changed its consensus algorithm to proof-of-stake. Ethereum is the biggest dApps platform, the leading platform for developing DeFi’s, and the second cryptocurrency by market cap. But as successful as it sounds, there are still controversies within the community that create division.
The DAO Incident
DAO is a term that has been around for quite a while, mainly because of the DAO attack that’s been the main root of the Ethereum Classic vs. Ethereum dichotomy.
And if this is your first time hearing about it – no, we did not start talking about martial arts.
DAO is short for Decentralized Autonomous Organization. A DAO aims to codify an organization’s rules and decision-making process to handle project governance without involving people. In a way, it started from the “code is law philosophy” that strives towards further decentralization.
The infamous DAO that almost broke Ethereum was a blockchain-based venture capital fund that allowed organizations to secure funding within the Ethereum ecosystem.
It was launched in April 2016 and came out with the idea that all participants could vote on where the capital obtained in the ICO would be invested.
So, 10,000 people anonymously invested $168 million into it, making it the largest crowdfunded project since then.
Like always, that much hype became a magnet for bad actors.
It didn’t take long, and some hackers found a loophole in DAO’s smart contract.
By taking advantage of the split function that allowed participants to form child DAOs to support different projects, the hackers stole 50 million dollars on July 17, 2016.
At that moment, Vitalik Buterin and the Ethereum platform took a significant credibility hit.
So, to counter this crisis, Buterin and the Ethereum team decided to amend the code of their blockchain, removing the funds from the hackers’ accounts and returning them to their owners.
The Ethereum vs. Ethereum Classic schism
The Hard Fork solved the DAO crisis. But the Ethereum team’s intervention to help out one particular developer was not received well by everybody.
Two of the core values of blockchain are decentralization and immutability. Yet the Ethereum team took the initiative to change a past event inside the blockchain.
At the moment of the hard fork, the Ethereum community was faced with choosing between recovering the funds or letting the hackers run away with the stolen ETH.
The majority chose to recover the funds, joined the hard fork, and continued the Ethereum Blockchain from the point before the funds were stolen.
There was, of course, a faction that believed that the blockchain should never be tempered and decided to continue the original blockchain of Ethereum as Ethereum Classic. For the Ethereum Classic adepts, the “code is law” philosophy was more important than recovering the stolen Ether.
The Problems with Ethereum Classic vs. the Problems with Ethereum
Today, both platforms and cryptocurrencies exist and are primarily similar in functionality. But they are anything but the same.
The difference in perspective, community support, and leadership since the hard fork made a clear difference in getting the platforms through different evolution paths, development, and problems.
In terms of market cap
Ethereum held the second position as the most popular cryptocurrency for a long time. It is the second-biggest cryptocurrency by market cap, with over $147.94 billion and a price of approximately $1,207.51 (As of November 9, 2022).
On the other side, Ethereum Classic has decreased in popularity as many more projects are coming into the market. As of November 9, 2022 – Ethereum Classic holds the #23 position by market cap with $2.81 billion and a price of $20.63.
These numbers show clearly that Ethereum has fared far better over time than Ethereum Classic.
Platform performance, consensus, and evolution
Until recently, we can say that Ethereum Classic and Ethereum are just as fast in terms of performance. Both employed the POW consensus protocol and were designed to use the consumer’s graphics processing units (GPU).
Until December 2020, 4 GB VRAM cards were just enough for mining on both blockchains. But as of December 16, they will only be used for mining Ethereum Classic. That happens because starting from epoch 382 of the Ethereum blockchain, the gradually increasing DAG file size will get too big for older GPUs. After that, Ethereum will only be mined with newer, more powerful GPUs and ASICs.
But today, we are facing the Beacon Chain merged into the Ethereum mainnet, which involved changing the consensus algorithm from Proof-of-Work (PoW) to Proof-of-Stake (PoS). The Beacon Chain introduced the consensus logic and block gossip protocol which now secures Ethereum. The upgrade is meant to make the blockchain platform more scalable, secure, and decentralized. At the time of this update, the Ethereum blockchain has become much greener and more performant than Ethereum Classic.
Also, Ethereum is preparing to implement sharding, a new process of dividing a common database into fragments to allow the Ethereum network to grow with the load, despite a significant increase in the size of the ledger. The sharding implementation will increase the scalability of the blockchain.
On the other hand, Ethereum Classic is going the other way.
Being accused of having an unsafe blockchain due to the several 51% attacks in recent years, Ethereum Classic vowed to make the network more resilient. Thus, on November 29, 2020, Ethereum Classic underwent a hard fork that introduced a new upgrade to increase miner participation and security. And in February 2022, Ethereum Classic underwent a new upgrade called “Mystique,” meant to bring improvements for the community, also known as a routine protocol upgrade.
This way, the older GPUs dropped by Ethereum will be welcomed on Ethereum Classic.
How that will work in profitability and blockchain efficiency is yet to be seen.
The Pros of Ethereum vs. the Pros of Ethereum Classic
The first thing to mention here is ideology. In terms of ideology, Ethereum Classic stuck to “code is law,” giving a place to those that took that idea to heart.
On the other hand, Ethereum showed the suitable flexibility to manage and go through a crisis and improve.
The dApps platform
Saying if one approach is morally superior to the other is quite complicated. Still, as far as the Ethereum community goes, Vitalik Buterin’s decision comes out as better as a whole.
Furthermore, the dApps developers found Ethereum to be the most suitable for their decentralized application to the degree that made this platform the primary host for DeFis.
When we speak about Ethereum, we need to think about proof-of-stake (POS) as a network securing. When discussing Ethereum Classic, the network security is focused on a proof-of-work consensus mechanism.
One of the first things to consider about mining is the difficulty. A more incredible difficulty translates into more network safety and resilience against 51% of attacks. However, after the Ethereum merger, in Ethereum Classic’s case, the mining difficulty on November 9, 2022, was 127.25 TH/s, which is a low hashrate, given that there has been no significant change to the mechanism, which can give confidence.
In Ethereum’s case, after the major and long-awaited network change to a proof-of-stake consensus mechanism, the way of operating the blockchain network is better and more efficient. However, after the Ethereum merger, investors can expect more errors than in the case of Ethereum Classic, given that the change to proof-of-stake has just been made.
- Ethereum is the biggest dApps platform, the leading platform for developing DeFis, and the second cryptocurrency by market cap.
- DAO is short for Decentralized Autonomous Organization and describes a wide range of cryptocurrency projects. It is not to be confused with “the DAO” that almost broke Ethereum.
- The DAO attack is the root of the Ethereum Classic vs. Ethereum dichotomy.
- The hard fork meant to solve the Ethereum DAO crisis led to the apparition of Ethereum Classic. Some of the Ethereum community believed that the blockchain should be decentralized and immutable, preferring to split from the main blockchain and let the hackers get away with their funds rather than break the philosophy.
- On September 15, 2022, a significant historical event called “The Merge” happened in the Ethereum network. The major blockchain has changed its consensus algorithm to proof-of-stake.
- The dApps developers prefer Ethereum’s platform for decentralized applications, and that was once again clearly shown with the DeFi ascendence.