Definition
Ethereum Classic (ETC) is a decentralized, open-source blockchain platform that features smart contract functionality, born from a split with Ethereum (ETH) following a disagreement over how to respond to a major hack in 2016. It shares functionality with Ethereum for developing decentralized applications and executing peer-to-peer contracts, while strongly adhering to principles of immutability and unforgiving code. Its future, like many cryptocurrencies, depends on market trends, technological advancements and regulatory environments in the crypto industry.
Phonetic
Ethereum Classic: /ɪˈθɪəriəm ˈklæsɪk/(ETC): /ˈiːˈtiːˈsiː/Definition: /ˌdefɪˈnɪʃən/History: /ˈhɪstəri/Future: /ˈfjuːtʃər/
Key Takeaways
Here are three main takeaways about Ethereum Classic:
- Definition: Ethereum Classic (ETC) is a decentralized platform that runs smart contracts, which are applications that run exactly as programmed without any possibility of downtime, censorship, fraud, or third-party interference. It is a continuation of the original Ethereum blockchain – the classic ‘unforked’ version; free from external interference and subjective tampering of transactions.
- History: Ethereum Classic came into existence when some members of the Ethereum community rejected a hard fork held in 2016. This hard fork was initiated in response to a hack where $50 million worth of Ether, Ethereum’s native token, was stolen from a venture capital fund called the DAO. Those who disagreed with the hard fork and decided to continue on the original chain coined it Ethereum Classic. Some of the key differences between Ethereum and Ethereum Classic include their communities, developments, and ideologies, with Ethereum Classic generally adhering more strictly to blockchain immutability and decentralization.
- Future: The future of Ethereum Classic, like all cryptocurrencies, is uncertain. However, it maintains an active development community and continues to follow its initial principles of transparency, immutability, and decentralization. Key future upgrades include improving network security, carrying out Ethereum’s discarded upgrades, and increasing integration with other blockchains. Regardless of how it evolves, Ethereum Classic will likely continue to be influenced by larger trends in the blockchain and cryptocurrency spaces, including regulatory changes, technological developments, and market demand.
Importance
Ethereum Classic (ETC) is a crucial term in business/finance as it represents one of the significant cryptocurrencies in the market. It originated from a hard fork that split the Ethereum blockchain in 2016 due to disagreements over an event known as the DAO hack. This makes its history particularly important as it shows how differences in philosophy within blockchain communities can lead to tangible splits in actual projects. Understanding Ethereum Classic is crucial for comprehending the breadth and depth of the cryptocurrency market. Its future price trends can profoundly influence investor strategy and allocation of assets. Considering the growing relevance of cryptocurrencies in financial markets and business activities, understanding terms like Ethereum Classic is essential.
Explanation
Ethereum Classic (ETC) is a decentralized, open-source blockchain-based platform known specifically for its smart contract functionality. ETC rests on the original Ethereum blockchain that persisted after a hard fork was necessitated by a significant hack in 2016, resulting in a split into two version – Ethereum (ETH) and Ethereum Classic (ETC). It is primarily used for building and executing smart contracts, which are self-executing contracts where the agreement terms are written into the lines of code. These smart contracts play a crucial role in creating decentralized applications (DApps).The primary purpose of Ethereum Classic is to allow developers to create their DApps on a robust and unfettered blockchain ecosystem. It upholds the principle that blockchain should remain immutable, thus promoting the idea that ‘code is law’. The ETC network has been utilized in various industries such as Internet of Things (IoT), financial services, and decentralised exchanges. It also serves as a digital currency, ETC, which can be bought, sold, or traded. In contemplating the future, Ethereum Classic aims to enhance its security measures and develop scalability solutions to accommodate more DApps, and drive forward the universal applicability of blockchain technology.
Examples
1. Grayscale Investments: Grayscale Investments, a digital currency asset manager, provides real-world examples of Ethereum Classic investment in action. The firm chose to invest a substantial portion of its holdings in Ethereum Classic. Recognizing ETC’s potential, the company valued the cryptocurrency’s adaptability and foreseeability. The firm also created the Grayscale Ethereum Classic Trust to allow investors to gain exposure to ETC without the challenges of buying, storing, and safekeeping digital currency. 2. Ethereum Classic’s Use in Decentralized Finance (DeFi): Ethereum Classic blockchain later started using for Decentralized Financial (DeFi) projects. An example of this is Wrapped ETC (WETC), an ERC-20 token equivalent to Ethereum Classic (ETC), which served as a bridge to access the DeFi ecosystem. The WETC token allows DeFi users to use ETC and participate in Ethereum-based DeFi projects, demonstrating an innovative application of Ethereum Classic in a real-world business scenario.3. Bitfly – Ethermine Mining Pool: Bitfly operates Ethermine, one of the largest Ethereum mining pools. They made headlines in 2020 when they chose to distribute $2.6 million in Ethereum Classic to its rightful owner when the money was sent to them in error. This decision demonstrated Bitfly’s commitment to Ethereum Classic’s key principles of transparency and legitimacy, showing how businesses using ETC handle unexpected ethical situations.
Frequently Asked Questions(FAQ)
What is Ethereum Classic (ETC)?
Ethereum Classic (ETC) is a decentralized cryptocurrency and open-source blockchain platform, emerging from a hard fork of Ethereum (ETH) in 2016. It preserves the original Ethereum blockchain and follows the principle that code is law.
Why was Ethereum Classic created?
The creation of Ethereum Classic came about as a response to a significant hack on the Decentralized Autonomous Organization (DAO) in June 2016, which ran on the original Ethereum platform.
What distinguishes Ethereum Classic from Ethereum?
The primary distinction is philosophical. Ethereum decided to change its code and hard-fork the blockchain to reverse the effects of the DAO hack. Ethereum Classic choose to preserve the original blockchain, maintaining the philosophy that the blockchain should remain immutable, no matter the circumstances.
How does Ethereum Classic work?
Ethereum Classic operates on a decentralized platform allowing developers to build and deploy smart contracts—self-executing contracts with the terms of the agreement being directly written into lines of code.
What is the future of Ethereum Classic?
While the future of any cryptocurrency is uncertain, Ethereum Classic continues to be developed and used by a dedicated community. It emphasizes upholding the principles of blockchain, decentralization, and immutability.
What is the relevance of Ethereum Classic in the finance and business sector?
Ethereum Classic, like other cryptocurrencies, represents a new form of asset class. Its blockchain can facilitate smart contracts, creating opportunities for automating and augmenting many areas of business and finance.
Is Ethereum Classic a good investment?
Investment decisions should always be made based on personal research and risk tolerance. While Ethereum Classic has a dedicated following and unique philosophy, like any cryptocurrency, its value can be extremely volatile.
How can I buy Ethereum Classic?
Ethereum Classic can be purchased on several major cryptocurrency exchanges, including Coinbase, Binance, and Kraken. You would need to set up an account, deposit funds, and then you can trade those funds for Ethereum Classic.
What is the total supply of Ethereum Classic?
Ethereum Classic has a capped maximum supply of around 210.7 million ETC. The actual circulating supply may vary as new blocks are mined.
How can I mine Ethereum Classic?
Ethereum Classic uses Proof-of-Work (PoW) consensus algorithm, meaning it can be mined similarly to Bitcoin and Ethereum. You’ll need a computer with a specialized hardware (an ASIC or a GPU), appropriate mining software, and a wallet to store your ETC.
Related Finance Terms
- Ethereum Classic Blockchain: An open-source, blockchain-based computing platform that features smart contract (scripting) functionality, running the original unaltered version of Ethereum.
- Smart Contracts: These are self-executing contracts with the terms of the agreement directly written into lines of code, implemented on Ethereum Classic among other blockchains.
- Decentralized Autonomous Organization (DAO) Attack: This refers to the 2016 hack that resulted in the split between Ethereum and Ethereum Classic, where $50 million in ether were stolen from The DAO.
- Proof of Work (PoW): This is the consensus algorithm used by Ethereum Classic. It requires significant work from miners for verifying transactions and adding new blocks to the blockchain.
- Ethereum Classic Vision: This refers to the predicted future developments and improvements in Ethereum Classic, including potential upgrades or plans for scalability and security.
