Ethereum Classic is one of two separate versions of Ethereum’s Blockchain, the other being Ethereum itself. The split occurred after The DAO, a decentralized autonomous organization based on Ethereum, got hacked in June 2016, and $50 million worth of its funds were stolen. Because The DAO was crowdfunded, this event has resulted in a large number of people losing their stakes. After several weeks of heated debate, the community has decided to conduct a “hard fork” of Ethereum’s Blockchain in order to “code” the stolen money back to its owners. In order to perform the hard fork, the majority of the users had to simultaneously take all the transaction records prior to the point of the hacking, and start anew from there, while discarding all transactions which have happened after that, including the hackers’. That doesn’t mean that anything has happened to the previous version of the Blockchain – on the contrary, the hardfork resulted in two versions existing simultaneously: Ethereum, which is the new one, and the old one, which was renamed Ethereum Classic.
The Hard Fork
A smart contract known as The DAO, the Decentralized Autonomous Organization was created on the Ethereum platform. The DAO was essentially a venture capital fund where investors would vote on how to allocate capital. The fund was so popular that it attracted roughly 14% of all Ether in existence at the time, raising 150 million dollars.
The advantage and disadvantage of a smart contract is the autonomous execution. In this case, the smart contract had a design flaw that allowed someone to steal over 3.6 million Ether from The DAO. Vitalik Buterin, creator of Ethereum, and the majority of the community wanted to perform a hard fork that would roll the blockchain back to block 1920000 to before the hack so that funds could be returned.
After the hard fork to return people’s funds, the original Ethereum blockchain remained and is now known as Ethereum Classic or ETC. The community that continued to mine and support the original blockchain believe there should be no outside influence on what was supposed to be an immutable blockchain. Ethereum Classic has since blazed its own trail in the cryptocurrency world. In the long run, the Ethereum Classic community hopes there is value in taking the principled approach that code is law.
Ethereum Classic Smart Contracts
Smart Contracts were invented by Nick Szabo in 1994. However, at the time there was no decentralized platform that could securely store the smart contracts. The blockchain provided the perfect platform. Smart contracts are built on top of the Ethereum Classic blockchain and automatically enforce the rules of an agreement. Smart contracts could one day eliminate countless intermediary services in banking, file storage, insurance, identity and reputation services, etc.
Ethereum Classic’s Turing-complete Sputnik Virtual Machine executes the smart contracts. A Turing complete machine can simulate a Turing Machine. The hypothetical machine by Alan Turing is the manipulation of a string of 1’s and 0’s to simulate any computer algorithm. It’s never been proven that a computer can actually do more than a Turing machine and thus the Sputnik Virtual Machine can run any computer program coded onto it. The idea of Ethereum Classic is to not simply decentralize currency, but make a decentralized world computer.
ETC nodes are incentivized to run the virtual machine financially. There are fees, paid in ETC for the nodes to process the transactions related to the contracts. The smart contracts are able to pay out to people in Ether classic.
Emerald Software Developer Kit
Development unique to Ethereum Classic produced the Emerald Software Developer Kit, a toolkit to build dapps. The SDK contains other components for developers such as UI, libraries, and build tools. As Ethereum Classic is a platform, the ultimate goal is for as many developers as possible to be building on top of the blockchain. ETC aims to focus on the internet of things, often referred to as IoT. In an interview, ETC developer Igor Artamonov said: “smart contracts on [the] blockchain are ideally suited for simple agreements between machines operating on [a] distributed network, a machine-to-machine protocol, and IoT is [the] most obvious application to this.”
Ethereum Classic Coin Supply and Sustainability
ETC diverges greatly from ETH when it comes to mining and coin supply. Ethereum has a built-in difficulty bomb that makes mining with proof of work harder over time. This will eventually force all miners to switch to proof of stake. ETC will pause this difficulty bomb and intends on sticking with proof of work.
On average there are 10-14 second block times with a reward of 5 ETC per block. As the block times are so short, transaction fees are relatively low, with an average fee of about 1 cent.
Ethereum Classic is inflationary through block rewards until the year 2025 at which point the coin supply will be capped at 210 million coins. Ethereum has no cap and plans to remain inflationary for the time being. ETC believes this monetary policy makes Classic a safer investment as the value of the coins will not decrease over time due to a neverending increase in supply.
Ethereum Classic Future Projects and Roadmap
The development team continues to work on the Emerald Desktop Wallet, the first ETC trustless wallet. In 2018 there is also the hope of the release of a mobile version of the ETC wallet.
As the popularity of Ethereum Classic grows, there will be the need for side chains to help scalability. There should be work on the prototype later in 2018. You can see their full 2018
Where can you buy Ethereum Classic
You can trade for ETC with BTC and ETH on Bittrex or Poloniex. You can also purchase ETC directly with USD on Bitfinex.
Where can you store Ethereum Classic
The Emerald Wallet is a still in development but you can download the latest version. For a mobile wallet, Jaxx supports ETC. However, for maximum security, you can use the Ledger Nano S hardware wallet.