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What is Ethereum Classic?

What is Ethereum Classic

What is Ethereum Classic?

What is Ethereum Classic

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There will be no more Ethereum mining after the merger (ETH). The leading altcoin has abandoned its proof-of-work consensus mechanism in favor of proof-of-stake, eliminating the need for crypto miners. However, the miners are still stocked with expensive crypto mining rigs and are looking for a new job. Ethereum Classic is one of the most popular destinations for their skills (ETC). Let’s see how Ethereum Classic compares to Ethereum now that the merger is complete and the two cryptos have gone their separate ways.

What is Ethereum Classic?

One of the most important characteristics of cryptocurrencies is that they run on open-source software. The code for open-source software is developed and maintained collaboratively by the community. It’s open to the public and not owned by any single person or company.

The open-source nature of cryptocurrency raises the possibility of a blockchain being “forked.” When a crypto community decides to make significant changes to the codebase, the crypto’s blockchain—and its supporting community—are split in two.

A fork of the original Ethereum blockchain produced Ethereum Classic. ETC, like many other blockchain forks, arose as a result of an ideological and technical divide within the community. Following the fork, the resulting ETC and ETH blockchains had identical past blocks, but they diverged in the future. Although Ethereum and Ethereum Classic have a common history, they are now two distinct cryptocurrencies.

The DAO and Ethereum Classic

The fork that resulted in ETC occurred in 2016, following the launch of a project known as the DAO—decentralized autonomous organization—on Ethereum. The DAO received $150 million in crowdfunding funding, but there was a flaw in the code. Hackers stole $50 million from the DAO as a result of the flaw.

Because of the magnitude of the hack, some members of the Ethereum community proposed that the ETH blockchain be reversed in order to compensate the exploited users. Others contended that this would set a dangerous precedent and that blockchain should be immutable by definition. To settle the dispute, a vote was held, and the pro-fork side received more than 85% of the votes. The ETH blockchain was forked, and the minority faction kept the original, unaltered Ethereum blockchain, naming it Ethereum Classic.

Ethereum Classic vs. Ethereum

When it comes to basic functionality, Ethereum and Ethereum Classic are very similar. The majority of Ethereum’s major features are also available on Ethereum Classic. However, there are significant differences between ETH and ETC. Most importantly, Ethereum Classic is incompatible with Ethereum blockchain updates.

This was especially noticeable in September 2022, when the Ethereum blockchain completed its transition to a proof-of-stake consensus mechanism. Ethereum Classic has always been a proof-of-work system. The blockchain and code will always be immutable in the eyes of the Ethereum Classic community. The pre-merge, proof-of-work system is preserved. As a result, miners must still validate ETC transactions.

Proponents of the merger and opponents of Ethereum 2.0 argue that a proof-of-work mechanism is more secure and decentralized than a proof-of-stake mechanism.

Miners switch to Ethereum Classic after the Merger

Following the merger, many miners switched to Ethereum Classic, propelling the smaller cryptocurrency into the spotlight. The ETC hash rate, a measure of the total power used by mining, increased by 280% following the merger, highlighting the extent to which miners have migrated to Ethereum Classic.

The main cause of this increase has been centralized staking pools. An Ethereum staking pool is a tool that enables multiple ETH holders to pool their tokens to gain validator status. To obtain a “set of validator keys,” Ethereum requires 32 ETH (approximately $44,000 at the time of writing).

Tornado Cash, a virtual currency mixer that helped obfuscate the origin and destination of funds on the Ethereum blockchain, was sanctioned by the US Treasury in August. Tornado Cash was accused by the Treasury of facilitating money laundering. This has added to the concern about Ethereum’s proof-of-stake mechanism.

This news highlights the ideological gap between Ethereum and Ethereum Classic. Crypto purists prefer a libertarian, censorship-resistant, decentralized model, whereas crypto pragmatists prefer Ethereum’s more adaptable and malleable nature.

The majority of the Ethereum community has supported the proof-of-stake conversion through the merge. Proponents cited a few significant benefits. First, the move will significantly reduce the blockchain’s energy consumption by up to 99.95% compared to the previous proof-of-work consensus mechanism.

As a result, Ethereum Classic miners continue to consume a lot of energy. To put this in context, Bitcoin mining is said to consume an amount of electricity each year that is slightly greater than Kazakhstan’s annual consumption. Scalability is another disadvantage of Ethereum Classic. Because of its less malleable code, crypto analysts are skeptical that ETC will be able to overcome scalability issues, which are a major barrier to mass crypto adoption.

While Ethereum’s scalability is also an issue, the community is working to improve the situation. It’s easy to see why Ethereum is so much more popular because of the much greater attention paid to it by developers—resistance ETC’s to change.

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