Ethereum and Ethereum Classic are two smart contract platforms. They share many similarities and a few crucial differences. The two networks came into existence following a network-splitting hard fork in 2016.
After the split, Ethereum and Ethereum Classic have followed different development paths. However, they share a similar goal of serving as a decentralized platform for finance and other applications. This article will focus on the ETH vs ETC comparison.
Ethereum Classic Explained
Ethereum Classic is a proof-of-work blockchain that supports smart contracts. It was created when the network hard forked in 2016 following the infamous DAO hack. Whereas the Ethereum fork contained a change that returned the stolen $60 million to the victims, the Ethereum Classic fork did not.
As a PoW blockchain, Ethereum Classic incentivizes participants to run computer hardware to process transactions. New blocks containing transactions are added to the chain every 15 seconds. The network performs a maximum of 20 transactions per second.
To make a transaction on Ethereum Classic, a user must pay fees to the network in ETC. The network’s miners receive the fees for all transactions contained in the block they add to the chain. Transaction fees vary depending on network usage.
ETC In Numbers
ETC has a hard supply cap of 210,700,000. Like Bitcoin, the number of ETC issued with each new block decreases at regular intervals.
Since many of the original Ethereum community lost money in the DAO hack, ETC has been less popular than Ethereum. This is reflected in the asset’s market cap, which reached a maximum of $15 billion in 2021 โ a fraction of ETH’s. In price terms, ETC reached an all-time high of $176 in April 2021.
Ethereum Explained
Since splitting from Ethereum Classic, Ethereum has enjoyed more developer support. That included the network’s founder, Vitalik Buterin. Consequently, Ethereum features several innovations that Ethereum Classic does not.
Ethereum has changed its consensus mechanism from proof-of-work to proof-of-stake. Proof-of-work, despite being far more battle-tested, is often criticized for its electricity consumption. It takes huge amounts of power to run the mining hardware. The Ethereum community believes PoS is more efficient.
Proof-of-stake requires those validating transactions to lock 32 ETH. One validator is randomly selected to process each block. Processing blocks according to the network’s rules awards validators with newly issued ETH.
Both networks share the same starting code. That is why Ethereum’s block time and maximum transactions per second are the same as Ethereum Classic’s at 15 seconds and 20, respectively. ETH is also used for transaction fees, following EIP-1559. However, the validator processing a block does not receive the entire fee paid. This creates an interesting dynamic in terms of asset of issuance and monetary policy discussed below.
ETH In Numbers
Ethereum’s market performance has been much stronger than Ethereum Classic’s. ETH’s market cap reached a high of $570 billion in November 2021, coinciding with its all-time high price of $4,891.
Unlike Ethereum Classic, ETH does not have a maximum supply. New ETH is added to the supply with every block. However, the EIP-1559 mechanism burns part of every transaction fee. That permanently destroys units of ETH. This means that when many users are transacting, ETH’s monetary policy is deflationary โ the supply shrinks. Conversely, when few users transact, ETH’s monetary policy is inflationary, meaning the supply grows.
Striking Differences
The biggest differences between Ethereum and Ethereum Classic are:
- Consensus mechanism โ Ethereum uses proof-of-stake and Ethereum Classic uses proof-of-work.
- Issuance โ ETC has a hard cap and supply grows until this is reached. ETH has no hard cap, and supply grows and shrinks according to network usage.
- Developers โ Ethereum’s developer community is much larger. This means a more vibrant decentralized application ecosystem.
Conclusion
Ethereum and Ethereum Classic both aim to become decentralized platforms for smart contract-based applications. However, they have very different approaches. Ethereum has opted for energy efficiency and a dynamic native asset supply. ETC prides itself on decentralization, opting not to reverse the DAO hack transactions back in 2016.
The market values Ethereum’s approach more, as the networks’ relative market caps indicate. Even Ethereum’s recently launched scaling networks have attracted more interest. Users prefer to convert ETH to MATIC to participate in Ethereum’s more expansive ecosystem.
