Ethereum Classic Was Created by Crypto-Idealists | Blockchain Central

Hey everybody and welcome to another episode
of BLOCKCHAIN CENTRAL! Today, we’ll take a closer look at Ethereum
Classic. This cryptocurrency has many similarities
with the well-known Ethereum. Ethereum Classic came to life due to a hard
fork of the Ethereum blockchain and uses the original Ethereum blockchain. Similar to other blockchain solutions, the
Ethereum Classic network is decentralized and consists of many nodes, which communicate
with each other and verify transactions. Ethereum Classic is characterized by the usage
of smart contracts and DApps (Decentralized Applications). Smart contracts can be programmed with the
Ethereum language (Solidity) and self-execute when specified conditions are met. DApps are applications, which developers can
build on top of the Ethereum Classic blockchain and fulfill a specific task and purpose (e.g.
identity management or crowdfunding). All of these features are exactly the same
as in the Ethereum blockchain. For all of you, who are not familiar with
the concept of Ethereum and want to know more about it, please take a look at video on this
subject. But if Ethereum and Ethereum Classic are almost
the same, on a technical level, why are there two different cryptocurrencies? To answer this question, we have to go back
to 2016. At this point of time, only the original Ethereum
existed and it was already a popular cryptocurrency. During this time, the Ethereum network formed
the so-called DAO, which stands for Decentralized Autonomous Organization. The DAO was a complex smart contract, with
the aim to fund future DApps on the Ethereum blockchain. It can be best compared to a decentralized
venture capital fund. Investors could buy DAO tokens in exchange
for Ether and participate in the decision-making process of the DAO. Once a proposed project received the approval
by the DAO (at least 20% of votes), the project got the required funds to develop the DApp. This concept was very popular and within one
month the DAO collected over $150 million worth of Ether, which represented about 14%
of all issued Ethers. Unfortunately, the code of the smart contract
which controlled the DAO contained a loophole. The loophole exploited the “split function”,
which was initially intended to allow users to start a “child DAO”. That was possible once they disagreed with
the decisions of the DAO and wanted to support different projects. However, the loophole in this split function
allowed hackers to steal $50 million worth of Ether. According to the smart contract, the stolen
funds were locked for 28 days and could not be transferred anywhere else. The Ethereum community had to make a decision:
they could either accept the loss of the funds or agree to a hard fork and roll back the
system to the pre-hack state. If you want to learn more about the DAO Event,
you can check our video on this subject right here. The majority of the community voted for the
recovery of the funds and conducted a hard fork by separating the chain right before
the hack occurred and refunded the stolen money. The newly created blockchain continued as
Ethereum and was supported by its founder, Vitalik Buterin, and the Ethereum foundation. However, the remaining part of the community
refused to follow to the newly created blockchain and continued to support the original system. The blockchain which accepted the loss of
funds was called Ethereum Classic. But why would users prefer losing funds over
restoring them? The answer to this question is somewhat philosophical. The founding supporters of Ethereum Classic
believed that “code is law”; the code should always be immutable. Therefore, it was more important to follow
this underlying philosophy, than restoring the stolen Ethers to the rightful owners. As a result, accepting the loss of funds was
the only justifiable option. One of the biggest supporters of the “crypto-idealists”
and Ethereum Classic is Barry Silbert. Today, both cryptocurrencies exist independently
from each other. Ethereum has grown to the second largest cryptocurrency
and is used as a platform for many ICOs. Ethereum Classic is among the top 20 cryptocurrencies
in terms of market capitalization and has decided to change its monetary policy from
an unlimited token emission to a fixed-cap monetary policy at 210 million coins. The difference in market capitalization reflects
the popularity of both cryptocurrencies. Ethereum has a large number of supporters
and the support of over 150 corporate partners through with its Enterprise Ethereum Alliance
(EEA). The Ethereum Classic platform, however, has
fewer supporters. Ok, so what can you take away from this video? Well, first of all, you have learned that
the loophole in the DAO project in 2016 initiated a hard fork of Ethereum. Ethereum Classic represents the original blockchain
and is supported by the “crypto-idealists” and follows the “code is law” concept. Interestingly, the well-known Ethereum continued
on the forked blockchain and refunded the stolen funds of the DAO hack to the rightful
owners. Today, both blockchains coexist. The future will show how both rivals develop
and where they will find their place in the crypto space. That’s it for this episode of Blockchain
Central. Before you go, please not that this video
does neither represent financial, legal, or tax advice, nor is it supposed to be understood
or interpreted as solicitation to buy or sell any securities, coins or tokens. Thank you so much for watching. If you liked this video, make sure to hit
that like button and don’t forget to subscribe to Blockchain Central to never miss a beat! Happy investing!

2 thoughts on “Ethereum Classic Was Created by Crypto-Idealists | Blockchain Central”

  1. Yaaay, about time someone actually put it out that ETC is the original Ethereum chain and anything else is just a fork. And……… Code IS law. 😉

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