If you are into crypto trading, then you are probably aware that only a small percentage of all newly-launched decentralized projects manage to effectively sustain themselves and stay relevant throughout the years. The volatility of the market and the numerous external factors influencing the public could be ruthless towards even the brightest of ideas. One such failed concept led to the creation of the cryptocurrency we now know as ‘Ethereum Classic’.
And while it contains the word ‘Ethereum’ in its name, ETC works on its completely autonomous blockchain and is something far from what one might imagine to be a sustainable long-term investment. In this article, we will take a look at the differences between Ethereum and Ethereum Classic, review the recent spike in ETC price, and explain how the monetary worth of a cryptocurrency may not always represent its real value
How Ethereum Classic came to be
In May 2016, an open-source crowdfunding campaign began the launch of one of the first major cryptocurrency venture capital funds – ‘The DAO’ project. As at that time, the Ethereum network was quickly rallying up popularity among innovative tech minds (due to its ability to run smart contracts), a group of crypto enthusiasts decided to create a decentralized autonomous organization, which would allow users to pool their Ether and collectively govern in which companies to invest. The ICO (Initial Coin Offering for DAO) raised more than $150 million worth of ETH.
And while everybody envisioned this endeavor to be one of the most successful decentralized projects for its time, in June 2016 the blockchain was hacked and $50 million was stolen due to a fatal flaw in its codebase. In order to prevent further intrusion, developers had to perform a split and forced a hard fork to secure the network.
The Hard Fork
Blockchain forking is a mechanism, which can be used when the validity of an existing network is compromised. In the case of Ethereum, the community had to make a difficult choice. After developers forced the blockchain to split, a group of Ethereum supporters argued that the protocol should be amended, as to return the stolen crypto to their original holders. They started a new blockchain and essentially reversed the hack. Those who believed that this option was unsustainable, decided to stick with the original blockchain, which was renamed ‘Ethereum Classic’.
Differences between Ethereum and Ethereum Classic
While the two protocols were initially built on the same principles, after the split, the Ethereum network took off to become the single most popular platform for developing DeFi apps. ETH turned into one of the most expensive cryptocurrencies on the market, second only to Bitcoin.
On the other hand, Ethereum Classic hasn’t seen much development. With only a fragment of Ethereum’s daily volume, ETC is slowly starting to lose relevance, as its utility value declines over time.
And while the two cryptocurrencies vary greatly, in May 2021, they both recorded extremely high spikes in their price. In fact, Ethereum Classic has achieved bigger growth than Ethereum in terms of multiplying its monetary worth. The main reason for this is the recent meme coin/stock trend, where different groups of investors try to boost the price of unpopular cryptocurrencies to profit from speculation.
Sustainability, long-term opportunities, and spikes in price
And while Ethereum Classic may stay relevant for a while, there is very little chance that it will be a sustainable investment in the long term. Speculation could only temporarily boost the price of a cryptocurrency. After all, price is determined by value, and value is dependent on utility.
Ethereum on the other hand is constantly introducing new updates to its software and expanding the functionalities of its network. With the release of Eth 2.0, we can expect a lot of new financial corporations and institutions to integrate within the ecosystem and significantly boost its use-cases.
At present, there are a lot of cryptocurrency day traders that manage to follow the volatility of the market and take advantage of it. And while for some people that might seem like the better idea, others prefer to trust in the long-term sustainability of projects, in which they believe. It is likely that Ethereum will continue to expand its reach globally and scale its platform across various new industries.
The price of Ethereum Classic, on the other hand, is solely dependent on the fluctuation of the market and does not offer much besides its value as a coin. When looking for new investment options, you must always think about the risks that come along and decide if you are willing to take them. Sometimes, a well-thought long-term investment could prove many times more profitable than a temporary market exploit.
Nothing on this website should be perceived as financial, investment or trading advice. We urge you to do your own research prior to investing and we highly recommend that you consult a certified financial advisor.
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