Ethereum Classic Guide: Born from the DAO Hack
Will the original Ethereum please stand up? Classic Ethereum (ETC) claims to be the original Ethereum and well, from a technical perspective, it is. At one point, which will be covered in the background section, there was a hard fork and Classic Ethereum kept the original blockchain and Ethereum went another direction with a new blockchain. So technically that's a true statement: Ethereum is the original. However, Classic has been trying to distance itself from Ethereum by taking the project further and further away from what Ethereum does.
Here is a interesting analogy: Think back to when you were a kid in the late 80s, do you recall the two different Ghost Busters cartoons? Same idea, same name, but different. There was Ghostbusters and then 'The Real Ghostbusters'. It's sort of like that for Ethereum and Classic Ethereum. The Real Ghostbusters became the famous one and the ghostbusters, which seemed to be the original, maybe? Didn't become as widely known.
In this article, you'll learn about the history of ETC, Tokenomics, Technology and much more.
Ethereum Classic first set out to preserve the integrity of the existing Ethereum blockchain after a major hacking event led to the theft of 3.6 million ETH.
In 2016, there was a hack known as the DAO hack, which caused investors to lose money. There was a consensus: rather than have investors investing in a flawed blockchain project, most of the developers decided to roll back the software and fix the flaw. The small amount of developers that were opposed to this continued with the original project and renamed it Ethereum Classic. The opposed developers did want to create a precedent of bailouts in crypto. By rolling back the hack they were somehow able to recover the lost Ethereum. Not sure how they did this but you can read more about it here. It was that rollback that divided the team. Major founders Vitalik Buterin and Gavin Wood moved on to form Ethereum.
The above was just a summary of the whole story, read on to learn more about the details of the DAO hack.
So back in 2016, when ETC was having its token sale, better known as an Initial Coin Offering (ICO), that token sale was originally planned to last 28 days. At the same time ETC was planning on launching a Decentralized Autonomous Organization (DAO), which would be responsible for governing the business and partially technical side of ETC. Now, during that launch period as the DAO was being set up the tokens, corresponding to what would be offered in the sale, were 'locked up,' and after which the DAO would begin to operate.
Only three weeks into the token sale, The DAO had raised more than $150 million from more than 11,000 investors, making it one of the largest crowdfunding campaigns in history at the time. However, even before the token sale had concluded, several observers had expressed concerns about vulnerabilities in The DAO's code. More specifically, developers were concerned that a bug in The DAO's wallet smart contracts would allow them to be drained. While programmers attempted to fix the bug, an attacker exploited the vulnerability and began stealing tokens from The DAO.
In the meantime, the Ethereum community debated how to respond to the attack.
The DAO's failure would not only mean financial loss for investors, but it also bore dire repercussions for the nascent Ethereum network. The DAO had become such a heavily invested project that its contracts contained approximately 14% of all Ethereum tokens in circulation at the time. At only one year old, the promising Ethereum technology and community was faced with a genuine existential threat.
In the end, the group was divided on what to do. One group wanted to continue on and not start a precedent of bailing out blockchain and crypto currency projects and the other group, in order to render the stolen tokens invalid, wanted to roll back and fork Ethereum. In the end, both groups got their ways: There was a hard fork and Ethereum and Ethereum Classic were born and both went their separate ways. Of course, Ethereum is the more successful of the two, but ETC has had its share of smaller successes. Let's get into tokenomics now and see how ETC has fared financially.
Ethereum Classic uses a Proof of Work mining algorithm, which functions like Bitcoin - miners are rewarded with new coins for validating the blockchain in competition with each other. The ETC block reward decreases with time, with the next drop due at block 15,000,000, roughly in April 2022 falling from 3.2 ETC to 2.56 ETC per block.
The goal of Ethereum Classic is to be a global payments system that uses smart contracts akin to Ethereum.
Historical Pricing Data
At the end of July 2016, Ethereum hit the markets at $1.62 per token. It went down into the tens of cents throughout the rest of the year. ETC didn't really see any action until 1 June 2017 when the price spiked up to just shy of $20 and later hitting and surpassing the the $20-dollar mark, By the end of 2017, during the first crypto bubble ETC saw its pricing surpassing more than $40 before succumbing to the crypto crash of 2018 and tumbulling down. For most of the coming years until about 2021, the price of ETC stayed relatively flat, hovering between $5 and $6 until February 2021, when the price was just shy of $15. That was a big jump for years of inaction. By 5 May 2021, ETC hit an all time high of $134 in an amazing buying frenzy. However, like all buying frenzies ended, there was a major crash right after that crash, as everyone was getting out and taking their profits with them. Within a month the price fell down to $60. Then by the end of 2021, the price fell down to $26. Now the price is currently trading around $15, at the time of writing. As you can see, like much of the crypto currency market, ETC has had many ups and downs. However it did create some great buying and selling opportunities to make some sweet profits, if you were so lucky to get in and out at the right times.
Keep in mind that Atomic Wallet is not offering investment advice. Please do your own research before trading or investing in any assets either digital or traditional. Let's now take a look at what is powering ETC and running under the engine.
Ethereum Classic runs on the original blockchain and technology, while Ethereum has diverged and changed its blockchain considerably.
Ethereum Classic unlike Ethereum will maintain its Proof of Work (PoW) mechanism, while Ethereum is planned to transition to Proof of State (PoS) by mid to late year 2022. However, it has suffered from attacks, most recently was one attack in 2020 where hackers got more than 51% hashrate power and were able to execute double spend transactions and other dubious things. Speaking of attacks, ETC is no stranger to them. Let's take a look at some of the big ones that ETC has experienced.
List of Attacks
ETC has had its share of bad luck, considering how many times it has been attacked and how many different kinds of attacks there have been.
The DAO fork replay attacks
On 20 July 2016, due to reliance on the same clients, the DAO fork created a replay attack where a transaction was broadcast on both the ETC and ETH networks. On 13 January 2017, the Ethereum Classic network was updated to resolve transaction replay attacks. The networks are now officially operating separately. That was a major scare for the two crypto currencies that were newly forked and separated from each other at that time.
RHG sells stolen ETC
On 10 August 2016, the ETH proponent Robin Hood Group transferred 2.9 million stolen ETC to Poloniex in an attempt to sell ETC for ETH on the advice of Bitly SA; 14% was successfully converted to ETH and other currencies, 86% was frozen by Poloniex.On 30 August 2016, Poloniex returned the ETC funds to the RHG. They set up a refund contract on the ETC network.
Classic Ether Wallet website attack
On 29 June 2017, the Ethereum Classic Twitter account made a public statement indicating reason to believe that the website for Classic Ether Wallet had been compromised. The Ethereum Classic Twitter account confirmed the details released via Threatpost. The Ethereum Classic team worked with Cloudflare to place a warning on the compromised domain warning users of the phishing attack.
51% double spend attacks
In January 2019, Ethereum Classic was subject to double-spending attacks.From July through August 2020, Ethereum Classic suffered from more 51% attacks.
Summing it all up, ETC is a fighter, it has been through a lot of challenges and it still keeps on fighting for its place in the crypto currency market.
Once you get some ETC, you are going to need a secure place to store it, check out Atomic Wallet.
Atomic Ethereum Wallet
Atomic Wallet offers you a great place to store your ETCi tokens. Besides just being a wallet for storing, sending, and receiving, you can do much, much more with an Atomic wallet. Atomic Wallet has some great features such as having a built-in decentralized exchange/swap where you can buy more than 300 crypto currencies and have them securely stored in your Atomic Wallet. What's more is that you can stake a number of tokens right in the Wallet! On top of that, for each transaction you make in Atomic Wallet, buying, selling, or swapping, you are eligible to get up to 1% back per transaction paid out in Atomic Wallet's native token, AWC.
What is Ethereum?
Ethereum is a blockchain-based crypto currency. Ethereum is a store of value and a smart contract. It is programmable and can be used to create smart contracts and other cryptocurrencies based on the ERC-20 standard.
Ethereum is second only to Bitcoin in market capitalization and possesses more features and functions. These features have made Ethereum integral to the cryptocurrency world: more than 450,000 cryptocurrencies are ERC-20.
What is an Ethereum Classic Wallet?
An Ethereum Classic wallet could be a simple application that allows you to store, send, and receive Ethereum Classic. Some wallets, though, are very advanced, allowing you to buy and sell NFTs, write smart contracts, and much more. Atomic Wallet is a great choice as it allows you to do more than just send and receive. It helps you buy, trade, exchange, stake your coins, receive rewards for using, Atomic Wallet, and much more. It's also really beginner-friendly, so it's a great option if you're just discovering the cryptoverse.
What are gas fees?
Gas fees make the current Proof-of-Work system work as they pay for the transactions. A portion of these fees also goes to the miners verifying the transaction blocks. Ethereum's network and popularity grew Non-Fungible Tokens. That led NFT exchange platforms, like Open Sea, to become the primary consumers of gas fees in NFT exchanges. In turn, that That's making gas fees becoming rather expensive. As of writing, you'll have to pay well over $100 per transaction.
How many Ethereum Classic tokens are there?
Ethereum Classic has a total of 210.7 million tokens and 134.9 million in circulation. Unlike Bitcoin, Ethereum Classic doesn't have a fixed supply. Miners receive rewards in Ethereum to keep mining. When Ethereum first debuted in 2015, it had around 72 million tokens.
What is the purpose of Ethereum Classic?
The Ethereum Classic project has seen several modifications and additions since the split.
The project's purpose is to develop a global payment network based on smart contracts that can operate with no centralized authority.
Ethereum Classic, like other cryptocurrencies, will most likely aspire to be a digital store of value, meaning you can save and exchange it while maintaining its worth.
A crypto's digital store of value includes its purchasing power, which may be swiftly converted to cash or used to purchase another asset, just like money.
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