Bittime - This article will discuss the differences between Ethereum Classic (ETC) and Ethereum (ETH). The two crypto assets, although both use the name Ethereum, turned out to have quite striking differences.
Ethereum has become one of the most important and widely used platforms. However, for those new to the crypto world, it may be confusing why there are two different versions of Ethereum: Ethereum (ETH) and Ethereum Classic (ETC).
These two networks emerged from the same basic code but have experienced significant differences in their development and support communities.
Ethereum, often referred to as the 'computer of the world', is designed to allow anyone to make immutable transactions on the public ledger and develop decentralized applications (dApps). However, the split that occurred in 2016 due to the DAO hack led to Ethereum splitting into two: ETH and ETC. Let's further explore the differences between these two networks.
Starting from the Ethereum DAO Hack
In 2016, The DAO (Decentralized Autonomous Organization) started a fundraising campaign to create an investor-driven venture capital firm. Investors can participate in block voting, which will help steer the future of the platform.
Less than a year after the launch of the Ethereum network, The DAO launched a token sale planned to last for 28 days. Within three weeks, The DAO managed to raise $150 million (around Rp2.25 trillion) in Ether from more than 11,000 investors.
However, vulnerabilities in The DAO's wallet smart contract code were exploited by malicious actors before they could be resolved. As a result, over $60 million of Ether disappeared from the pool, shocking the blockchain community as a whole.
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Hard Fork: The Birth of ETC and ETH
Initially, Ethereum developers wanted to implement a soft fork to reverse transactions that occurred before the hack. However, after many threats from attackers, the Ethereum development team opted for a hard fork.
Unlike soft forks that only cause divergence in the blockchain, hard forks create two different blockchains with radical protocol changes. This is what gave birth to Ethereum (ETH) and Ethereum Classic (ETC). Both platforms offer the same technology with a few key differences.
This split also reflects ideological differences between the two communities. This ideology is important to understand because ideology attracts community, and community support is what ultimately determines the long-term value of most cryptocurrencies.
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Striking Differences between ETH and ETC
Ethereum (ETH) is now the more popular chain despite coming from the same fork as Ethereum Classic (ETC). It is important to note that Ethereum is not at fault for what happened with the DAO because the DAO operates completely independent of Ethereum. However, the $50 million hack destroyed public trust in Ethereum, and the price dropped from $20 to $13.
The decision to fork was based on the fact that the missing Ether was still in the hacker's subsidiary DAO and was inaccessible for 28 days due to the DAO smart contract. The Ethereum community has three options:
1. Inaction: The "code is law" approach is an integral component for many proponents of the immutable blockchain that underpins Ethereum. This support group largely stayed with ETC. The majority of people were unhappy with the loss of $50 million, so they decided to take action and vote elsewhere.
Read also: Worldcoin Suspected of Privacy Breach, Hong Kong Privacy Commissioner Takes Strict Action
2. Soft Fork: A soft fork basically gives the holder the choice of whether to renew or not. Whatever decision they choose, updated and non-updated holders can still interact.
The concept behind a soft fork is to isolate and filter all blocks containing hackers' transactions with the aim of stopping them from moving stolen Ether. However, a soft fork poses a problem, as it can lead to a "Denial of Service" (DoS) attack vector. For this reason, the community chose the hard fork.
3. Hard Fork: The main difference between soft and hard fork is that hard fork does not allow updated and non-updated holders to interact. If it does not join the upgraded blockchain, users will not be able to interact with users of the new system.
Consensus Mechanism
In blockchain, the consensus mechanism is a fault-tolerant system. With a consensus mechanism, the blockchain reaches an agreement on the single state of the network across nodes.
Similar to Bitcoin, Ethereum Classic uses a proof-of-work model, where miners validate transactions through complex mathematical puzzles.
Instead, ETH is shifting to a proof-of-stake model, where users validate transactions using the Ether they own, generating rewards for adding blocks to the chain.
Conclusion
The difference between Ethereum (ETH) and Ethereum Classic (ETC) is more than just a technical one; This reflects deep ideological differences within their communities.
Ethereum has grown to become a more popular and widely used platform for various DeFi and NFT applications, while Ethereum Classic retains the original vision of an immutable blockchain. Understanding these differences is important for investors looking to jump into the crypto world and decide which one better suits their investment goals.
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How to Buy Crypto on Bittime
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Learn the Complete Guide on How to Buy Crypto on Bittime.
Monitor the price chart movements of Bitcoin (BTC), Ethereum (ETH), Solana (SOL) and other cryptos to find out today's crypto market trends in real-time on Bittime.
Also read:
10 Interesting Bitcoin Pizza Day Facts That Changed the Crypto Asset Landscape
Pendle Finance (PENDLE): Definition, How It Works, and Its Tokenomics
Ethereum History Story: How Ethereum Became Popular
DISCLAIMER: This article is informational in nature and does not constitute an offer or solicitation to sell and buy any crypto asset. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices may change significantly from time to time and Bittime is not responsible for fluctuations in crypto asset exchange rates.
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