The story behind Ethereum and Ethereum Classic. Do we need them both?
Ethereum vs Ethereum Classic: The beginning
Out of a need to create a blockchain network (unlike bitcoin) that will supplement code execution virtual machine for running other blockchain programmable applications, ethereum was created in 2014 by a Russian-Canadian developer Vitalik Buterin. The project was finally released in 2015 after it first initial coin offereing (ICO) in 2014 through which it raised funds.
Ethereum allows for the creation of smart contracts. Smart contracts are automated contracts stored on the blockchain and auto-executes when certain conditions are met. With smart contract, two people can enter an agreement without need for an intermediary.
Ethereum was the first platform to provide framework for decentralised apps (DAPPs) to be built in the blockchain. Thus, the project would easily excite anyone.
The DAO, known as the decentralised autonomous organisation was created on the Ethereum platform as a venture capital fund which was going to fund all DAPPS built on the Ethereum blockchain. Through the DAO, funders where able to decide which decentralised applications get funded. The DAO raised about $150 million. However, the DAO had security vulnerabilities which could allow ether to be stolen. These security flaws were exploited and resulted to the theft of $50 million by hackers. This attack led to to the value of ether quickly plummeting from $20 to $13.
Due to the manner in which the DAO was built, the hacker couldn’t have access to the money until after 28 days. So, a decision had to be made on the way forward by the Ethereum community.
The community had to decide among three options; inaction (do nothing), a soft fork and a hard fork. Do nothing mean that no changes no changes should be made on the blockchain as it is supposed to be immutable. Altering it will go against the philosophy of the Ethereum blockchain.
A soft fork means that slight changes would be made. There was a choice to update or not. However, users could still interact with one another regardless of whether they choose to update. For soft forks, an update in the software is backward compatible. Majority of the community opted for this option until they realised that it would lead to a “Denial of Service” attack. This would mean manipulation of how Ethereum miners are rewarded. So majority voted for the third option, a “hard fork.”
A hard fork implies a lack of interaction between updated users and non-updated users. There is no reversal once it is utilized. The two blockchains would become different entities.
Some members of the Ethereum community rejected the hard fork, citing “immutabilbity”, a principle that the blockchain cannot be changed. So they decided to keep making use of the unforked version. The new blockchain from the fork was known as Ethereum (ETH), while the unforked version became Ethereum Classic (ETC). You see now why we earlier mentioned that Ethereum Classic was the older version.
Both ETC and ETH have their pros and cons
For pros, ETC has the backing of a couple of big players as well as loyal to the principle of blockchain immutability. As bad marks, Ethereum Classic does not get access to all new updates on the Ethereum blockchain because it lacks backward compatibility. For instance ETH’s update from POW to POS. ETC was considered an insult and attack on the Ethereum community as it was perceived that it was done to cause a disruption in the Ethereum community. Also remember that the heavyweights all moved on to the new Ethereum blockchain including Vitalik Buterin.
Ethereum is known to be growing at a rapid pace as well as has a higher hash-rate than ETC. we already mentioned that the big guns moved to Ethereum, not neglecting the fact that it is constantly being updated with the latest changes. In addition, Ethereum is backed by a strong group of over 200 corporations known as Enterprise Ethereum Alliance (EEA). Some of the members of EEA include Microsoft, ING, JP Morgan etc.
One major con of the Ethereum blockchain is that it went against the philosophy of immutability.
Having understood the history as well as the pros and cons of both cryptocurrencies, it is safe to say that Ethereum is the better camp to stick with. Ethereum is more than a currency. People can build revolutionary projects on the Ethereum blockchain. With all the major developers on its side, the only way for Ethereum is up as people seemingly have more trust in it over Ethereum Classic. Remember that the value depends on people’s demand for it.