What is Ethereum Classic (ETC)?

Ethereum Classic (ETC) is a blockchain-based distributed computing platform that offers smart contract functionality. It is an open-source, decentralized platform that runs smart contracts, which are applications that run exactly as programmed without downtime, censorship, or third-party interference.

Ethereum Classic was formed in response to the contentious hard fork of the Ethereum blockchain in 2016, which was a result of the hack of a third-party project called The DAO. The Ethereum Foundation created a new version of the Ethereum mainnet with an irregular state change that erased the DAO theft from the Ethereum blockchain history. Ethereum Classic maintains the original, unaltered history of the Ethereum network, and its native Ether token is a cryptocurrency traded on digital currency exchanges under the currency code ETC.

Ethereum Classic is often regarded as the "original" Ethereum crypto, as it preserves the old code of the Ethereum blockchain as it was until the DAO attack.

History of Ethereum Classic (ETC)

History

• July 2015 - Ethereum is launched, creating the original Ethereum blockchain. The first live release of Ethereum, known as Frontier, went live.
• May 2016 - The Decentralized Autonomous Organization (DAO) is launched on the Ethereum blockchain to act as a decentralized venture capital fund.
• June 2016 - A hacker exploits a vulnerability in the DAO code to siphon $70 million worth of Ether into a separate account. The Ethereum community debates how to respond to this attack.
• July 2016 - After much debate, the Ethereum community decides to hard fork the Ethereum blockchain to reverse the DAO hack transactions and return funds. However, a small minority rejects this change, arguing that blockchains should remain immutable.
• July 2016 - When Ethereum hard forks, the original unforked blockchain continues as Ethereum Classic (ETC) with the existing Ethereum ledger up until the DAO hack. The new forked blockchain was called Ethereum (ETH).
• January 2017 - The Ethereum Classic community announces a "Monetary Policy" to fix the supply at a hard cap of 210 million ETC. This is in contrast to Ethereum's uncapped supply.
• May 2018 - Coinbase lists Ethereum Classic on its exchange, significantly increasing its visibility and usage.
• November 2020 - Ethereum Classic implements the Thanos Upgrade to recalibrate the epoch length used in DAG calculations.

What is Ethereum Classic used for?

Ethereum Classic (ETC) is a decentralized platform that enables smart contracts and decentralized applications (DApps) to be built and run without any downtime, fraud, control, or interference from a third party.

Here are some common use cases and purposes of Ethereum Classic:

Smart Contracts

Ethereum Classic supports the creation and execution of smart contracts. These are self-executing contracts with the terms directly written into code. Smart contracts can be used for a variety of applications, such as decentralized finance (DeFi), supply chain management, token creation, and more.

Decentralized Applications (DApps)

Developers can build decentralized applications on the Ethereum Classic platform. These applications operate on a peer-to-peer network, without a central authority controlling them. DApps can range from financial services to games and social networks.

Token Creation

Ethereum Classic allows the creation of tokens on its blockchain. These tokens can represent various assets, and they are often used for initial coin offerings (ICOs) where new projects can raise funds by issuing their own tokens.

Decentralized Finance (DeFi)

Ethereum Classic, like its counterpart Ethereum, is used for various DeFi applications. DeFi refers to the use of blockchain-based technologies to recreate and improve upon traditional financial systems, such as lending, borrowing, and trading, without the need for traditional intermediaries.

Tokenomics

Ethereum Classic (ETC) has its own token, which is often simply referred to as "ETC." The token plays a crucial role in the Ethereum Classic network, and understanding its tokenomics involves looking at aspects such as distribution, supply issuance, and use cases.

Total Supply

The total maximum supply of Ethereum Classic is capped at approximately 210 million ETC.

Mining and Consensus

Unlike Ethereum (ETH), which is transitioning to a proof-of-stake consensus mechanism, Ethereum Classic currently relies on a proof-of-work (PoW) system for block validation. Ethereum Classic uses the Ethash proof-of-work algorithm for consensus. Miners compete to solve complex mathematical problems, and the first one to solve it gets the right to add a new block to the blockchain and is rewarded with ETC.The network is maintained by a decentralized group of miners.

Block Reward and Issuance

New ETC is created through the mining process as a block reward. Miners are rewarded with a certain amount of ETC for successfully adding a new block to the blockchain.

The block reward is subject to periodic reductions through a process known as the "Difficulty Bomb," which is intended to incentivize network upgrades. This bomb increases the difficulty of mining over time, making it less profitable.

Distribution

The initial distribution of ETC was a result of the hard fork that occurred in 2016. Holders of ETH at the time of the fork received an equivalent amount of ETC. Subsequent to the fork, new ETC enters circulation through the block reward system.

Use Cases

ETC is used as the native currency for transactions and computational services on the Ethereum Classic blockchain. It can be used to pay for transaction fees, deploy smart contracts, and participate in decentralized applications (DApps) built on the Ethereum Classic platform.

Highlights

Crowdfunding (2014)ETC has its origins in the original Ethereum blockchain. Ethereum conducted one of the earliest and most successful Initial Coin Offerings (ICOs) in 2014, raising over $18 million. This funding helped to support the development and launch of the platform.

The DAO Incident (2016)The Decentralized Autonomous Organization (DAO) was a complex smart contract on the Ethereum Classic blockchain that held a significant amount of funds. In June 2016, it suffered a major exploit, leading to a controversial hard fork to reverse the effects of the hack. This resulted in the split between Ethereum Classic (ETC) and Ethereum Classic Classic (ETC).

Implementing monetary policy (2017)ETC implemented its hard cap on token supply and a form of monetary policy. This provided scarcity and separated it from Ethereum's uncapped supply.

Weathering 51% attacks (2020)ETC was hit by a series of 51% attacks in 2020. The community introduced new security measures and modifications to deter future attacks.

Thanos Upgrade (2020)Ethereum Classic implements the Thanos Upgrade to recalibrate the epoch length used in DAG calculations.

Magneto Upgrade (2021)Ethereum Classic core developers implement ETH's Berlin network protocol upgrades to maintain operational parity with its sister chain.

Mystique Upgrade (2021)Ethereum Classic core developers implement ETH's Berlin network protocol upgrades to maintain operational parity with its sister chain.