Introduction
Ethereum is the second most popular blockchain and is ranked in the top 10 cryptocurrencies around the globe in terms of market cap and dominance. This article explores the differences, similarities, and origin of Ethereum Classic (ETC) and Ethereum 2.0 (ETH).
Origin of ETH and ETC
Ethereum 2.0 and Ethereum Classic are two separate blockchain networks. However, both projects were born from the same starting blockchain. Ethereum network was introduced as a smart contract development platform for DeFi developers.
The network integrated DAO or Decentralized Autonomous Organization in 2016 as a decentralized funding and investing platform. However, the DAO also incorporated split function that allowed the investors to withdraw their funds at their discretion.
Hackers managed to exploit the recursive feature of DAO’s split function and used it to siphon off $50 million from the platform. However, hackers were unable to withdraw the stolen funds on account of the 28-day rule.
The Ethereum community voted to opt for a hardfork that sent the stolen funds to a wallet address where the original owners could access them again.
However, a small number of Ethereum investors chose to not comply with the new version and stick with the old version of the platform that came to be known as Ethereum Classic.
Differences Between Ethereum 2.0 and Ethereum Classic
When it comes to discussing the aspects of Ethereum 2.0 and Ethereum Classic there are some major differences between both blockchains. Here are some of the most important points of distinctions that traders must know:
Mining Network
Ethereum 2.0 has recently upgraded to a Proof-of Stake mining model meaning validators have to stake their tokens to contribute.
Ethereum Classic has retained the Proof-of-stake mining mechanism that requires miners to verify transactions by competing against other miners.
Total Supply
The total supply of Ethereum Classic is not infinite. ETC blockchain is capped at 230 million total tokens. Meanwhile, the total supply of ETH is not capped but it has a limit of 4.5% growth per year.
Mining Reward
ETH has delegated 2 ETH per block rewards for miners with an average block time of 15 seconds and 5,760 blocks mined per day. However, since ETH has shifted to the PoS mining model, the validators on the network receive interest based on staked coin reserves.
New ETH tokens are distributed among all validators for each epoch with the block proposer getting the biggest portion. On the other hand, ETC has limited its total supply by reducing the block reward by 20% after every 5 million block is mined.
Immutability
Ethereum 2.0 has continued to incorporate upgrades and adopt new governance models. The network has also able editing for previous transactions. On the contrary, Ethereum Classic aims to remain immutable to retain the old version of the Ethereum blockchain and adhere to the rules of the Genesis blockchain.
Trade Economics
ETH has captured a greater market share and thus it has a bigger market cap. At the same time, the price movement for Ethereum 2.0 has remained higher consistently since the hard fork. The current ETH price is $1,892 with a market cap of $227 billion.
However, the Ethereum Classic price has not gained such massive traction as ETH and it has a smaller market cap of $2.5 billion with a unit price of $18.20.
Ethereum 2.0 has become one of the largest decentralized application hosts in the blockchain sector. However, various ETH protocols have been hacked on different occasions. Nevertheless, the core blockchain has maintained a secure outlook.
Meanwhile, Ethereum Classic has suffered from various 51% attacks that have damaged its goodwill and led to the loss of ETC price and traction.
Liquidity
ETH enjoys greater liquidity since it has greater traction and enterprise interest. At the same time, it also garners support from Enterprise Ethereum Alliance. In contrast, Ethereum Classic suffers from limited liquidity on account of lack of commercial investment and overall investment traction from the retail sector.
Scalability
ETC has limited scalability and can only process 15 transactions per second. In comparison, ETH can process up to 30 transactions per second and is on the path to processing as many as 100K TPS rate in the future.
Similarities Between ETH and ETC
There are also some similar points between ETH and ETC. Both ETH and ETC are decentralized and open-sourced blockchain projects.
Ethereum 2.0 and Ethereum Classic offer smart contract compatibility for decentralized protocols.
ETH and ETC operate in a pseudonymous manner with the public key remaining open providing details such as user id and transaction details. However, the personal details remain hidden.
Conclusion
Ethereum Classic and Ethereum 2.0 have the same origins but both blockchains have morphed into two different directions. When it comes to investing ETH is the most common and preferred choice.
