Ethereum Classic or ETC quickly emerged as an unprecedented entry in world of cryptocurrencies and challenged ideas about how blockchains could be launched, altered and upgraded. Ethereum Classic (ETC) was created when some users of the Ethereum (ETH) blockchain elected not to upgrade to new code suggested by project developers.
Prior to Ethereum Classic’s 2016 launch, developers typically released new cryptocurrencies either by copying and modifying an available cryptocurrency software (usually Bitcoin) or writing a new software from scratch. Ethereum Classic was different.
Ethereum Classic was created when some users of the Ethereum (ETH) blockchain elected not to upgrade to new code suggested by project developers.
At issue was that the code would edit Ethereum’s transaction history, returning it to people who had lost funds when a popular the DAO was compromised.
Most of Ethereum users would upgrade their software (a development that helped ensure this new blockchain retained the Ethereum name).
However, a minority of users continued to keep the older Ethereum software with the record of the theft. Continuing to run this code, the users effectively created a new cryptocurrency.
This version of the Ethereum software now lives on as ETC.
The ETC fork happened over an ideological dispute among Ethereum users.
One of the core features of blockchains is their “immutability,” or the inability of any user to cange transactions after being added to the blockchain’s history.
ETC users saw the code proposed by Ethereum’s developers in the wake of The DAO as violating an essential guarantee of the software. Project developers wanted to view the code as a one-time fix for a beta software.
In June 2016, The DAO publicly found out a security flaw that could threaten the roughly $150 million in ethereum it had so far collected. Despite reassurances that funds were safe, they were eventually drained from its accounts.
The individual or group that drained the funds is unknown, and their motives are still negotiable among users.
This is because the attacker exploited a flaw in the code that would allow them to repeatedly recall their DAO tokens, allowing them to retrieve infinitely more than they originally invested. However, due to the specifics of the code, the developers had essentially enabled any user the ability to do such an action.
This eventually resulted in the removal of roughly one-third of The DAO’s collected funds and a heated community debate about how (or if) Ethereum’s developers should be responsible.
ETH and ETC were both based on the same code, but ETC has since changed its technology.
Perhaps the most important difference is the Ethereum Classic community has vowed to continue using proof-of-work mining (the system pioneered by Bitcoin) to secure its blockchain.
As of 2020, Ethereum uses proof-of-work, but the developers are pursuing a roadmap that will eventually find the software switching to a different model.
Ethereum Classic has adopted a fixed monetary policy. The total amount of ETC that can be created is capped at 230 million ETC, meaning scarcity factors into its value.
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