Introduction of Etherum
The global cryptocurrency market has raised thousands of millionaires’ crypto holdings. Since cryptocurrency started trading with Bitcoin (BTC), retail and institutional investors have been on the lookout for projects with exciting potential that they can include in their investment portfolio. One of the projects that is worth considering particularly in the present bear market is Ethereum Classic.
There are lots of differences and similarities between Ethereum Classic and the original Ethereum. Ethereum Classic is an offshoot of Ethereum. The token has proven beyond reasonable doubt that it can fetch a high return on investment when added to a portfolio that’s not performing too well.
If you are interested in Ethereum Classic and you want to know how it compares with the original Ethereum, then you are in the right place. If you also want to invest in Ethereum Classic and need a perfect understanding of how the token operates and what the future holds for it, this article is also for you.
We have created this article to dive you into the world of Ethereum Classic so that you know exactly what to look out for when you hold this token in your portfolio. Let’s get started!
What Is Ethereum Classic?
Ethereum Classic is a decentralized, blockchain-powered, open-source distributed token that uses smart contracts. It was developed as software by Vitalik Buterin and his team of experienced and knowledgeable blockchain experts.
Ethereum Classic came to be in 2016 after a widely reported hack when the Ethereum community members disagreed on whether or not to compensate those that the hack affected.
The disagreement led to the splitting of the Original Ethereum into two, with the original Ethereum continuing as a hard fork and the newly formed token (Ethereum Classic) remaining as the “immutable’ asset.
Originally, Ethereum Classic was developed to allow content creators, developers, and those desirous of creating Dapps and tokens on the new Ethereum blockchain protocol. It offers blockchain network decentralized governance and enables users to host dApps within the network.
Unlike the original Ethereum, Ethereum Classic has an active group of miners who are in charge of maintaining the network. Since inception, Ethereum Classic has also refused any form of change from the developers, and indeed, the larger cryptocurrency community. It has also refused to fork.
How does Ethereum Classic (ETC) work?
Now that you understand how Ethereum Classic (ETC) was created, it is very important that you understand how the token works so that you know how to engage with it. Like Bitcoin (BTC), ETC also uses the proof of work mechanism to validate transactions on the network.
Remember, anything that has to do with the security of a network is usually handled by miners. Miners make use of their computational power and time to produce blocks and process transactions.
Every transaction on the network needs to be validated on the order they’re received, and miners make this happen. They are able to achieve this by solving complex puzzles to produce blocks. The blocks help to secure the network from the activities of internet hackers and fraudulent actors.
One important feature that Ethereum Classic possesses and that’s vital to the operation of the network is that users can run smart contracts on the network.
The smart contracts are self-executing and usually contain agreements. Transactions on the Ethereum Classic network do not require the interference of a middleman, say a lawyer during the transaction between a buyer and seller, as the process is entirely self-executing.
Ethereum vs. Ethereum Classic
In terms of the benefits they offer to users and basic functionalities, these two cryptocurrencies are pretty similar. Most Ethereum features have been incorporated into Ethereum Classic. However, there are also important differences that you need to be aware of, as you look forward to including Ethereum Classic into your investment portfolio.
Importantly, during the upgrade of Ethereum in September 2022 to a proof of stake consensus, Ethereum Classic was incompatible with updates to the original Ethereum. Meanwhile, Ethereum Classic still continued to use the proof of work consensus mechanism.
Additionally, in the Ethereum Classic community, the asset remains immutable. This feature enables it to preserve the proof of work system and pre-merge, which means miners will need to validate transactions involving Ethereum Classic.
According to experts and professionals within the cryptocurrency industry, the proof of work (PoW) mechanism is more decentralized and secure than its rival proof of stake (PoS).
Miners Move to Ethereum Classic after the Merge
Days after the merge, crypto enthusiasts and miners who were bullish on the original Ethereum have since jumped ship to Ethereum Classic, paving way for the latter to continue to grow.
In fact, Ethereum Classic’s hash rate skyrocketed to around 280% moments after the merge. Experts believe that the growth of ETC suggests how miners prefer the proof of work consensus over the proof of stake algorithm.
Advantages of Ethereum vs. Ethereum Classic
After the transition from the proof of stake (PoS) mechanism to the proof of work (PoS) consensus through the merge, members of the Ethereum community have cited several advantages. First, the energy consumption has drastically reduced by over 99.95% from the previous mining model.
Secondly, in terms of scalability, Ethereum is better off than Ethereum Classic. Crypto analysts believe that due to the malleable code, Ethereum Classic will find it difficult to overcome the scalability issues.
Ethereum Classic Price
According to CoinMarketCap, Ethereum Classic is among the top 25 cryptocurrencies on the market with over 210 million tokens in market capitalization. On the other hand, Ethereum is the second largest token on the market with a market cap of $166 billion.
Should You Invest in Ethereum Classic?
Ethereum Classic is a token with great potential. The value is bound to increase so long as people continue to adopt and use the token. But for the scalability and power consumption issues, Ethereum Classic would have surpassed the popularity of the original Ethereum.
So, if you are looking for a crypto asset that can fetch you a decent return on investments, Ethereum Classic fits the bill. However, endeavor to do your own research before investing your hard-earned money.