Ethereum Classic (ETC) - an open source platform based on a public blockchain network with its own decentralized cryptocurrency ETC. The Ethereum Classic platform, similarly to Ethereum (ETH), allows to create decentralized applications (dApps), smart contracts and tokens. Ethereum Classic existed until 25 October 2016 under the name of Ethereum, and after a hard-fork network split caused by security problems with The DAO smart contract, it took on its current name, and the disconnecting chain took on the name Ethereum (ETH).
Ethereum Classic - basic technical information
Technically, Ethereum Classic is obviously related to Ethereum. The Ethereum Classic network is based on the Proof of Work consensus algorithm with the Ethash hash function, but unlike ETH, which plans to move to the Proof of Stake consensus algorithm in the future, ETC developers have decided to stay with Proof of Work, as demonstrated by the hard fork of May 29, 2018, which aimed to remove the Difficulty Bomb algorithm.
In the ETC network, as in the ETH, the cost of a transaction is calculated using Gas units, the number of which depends on the computing power needed to perform the operation. Ethereum Classic does not have a limited supply (number of units), such as Bitcoin (BTC), therefore it is inflationary.
Mining Ethereum Classic
ETC is a cryptocurrency, in which the mining process takes place using the Ethash hash function (similar to ETH). ETC is one of the most profitable cryptocurrency mined using GPUs (graphics cards), while maintaining a much lower and more stable mining difficulty than Ether (ETH). In February 2018, Bitmain China produced the first ASIC-based excavator for ETH and ETC - Antminer F3.
DAO Hack and network division into Ethereum Classic and Ethereum
It is often said that Ethereum Classic was created as a result of the hard-fork of the Ethereum network, but this is not true. Ethereum Classic has been in operation from the very beginning, on 30 July 2015, before the hard-fork of 25 October 2016, simply called Ethereum. After the memorable events of The DAO, it was the current Ethereum network (ETH) that decided to disconnect, and the "old" chain was called Ethereum Classic. So it is worth remembering that it was the current ETH that decided to disconnect and revoke The DAO's transactions, while ETC has consistently recognized the security gap in the smart contract as irreversible.
Why did the Ethereum network become divided?
In May 2016, an innovative Venture Capital fund called The DAO was established to raise capital for the development of blockchain start-ups as well as non-profit organizations. The fund took the form of a decentralized, autonomous organization built on Ethereum's blockchain in the form of a smart contract containing DAO tokens. The sale of the tokens started on 30 April 2016 and lasted 28 days. During the sale, 11.5 million ETHs (worth almost 140 million dollars at the time) were collected from over 18 thousand investors. In the meantime, on 26 May 2016, a group of three blockchain developers published a document entitled "A Call for a Temporary Moratorium on The DAO", in which they analyzed seven significant security issues contained in The DAO's smart contract, while at the same time recommending that investors refrain from purchasing DAO tokens until security gaps are eliminated from the code. On June 16th, the necessary corrections were already waiting for the acceptance of The DAO developers in the project repository on GitHub. Unfortunately, two days later (June 18th), an attack took place, in which one of the users took advantage of the previously described security vulnerability of the smart contract and gained control over 3.6 million ETH, then worth about 54 million dollars.
The situation divided the Ethereum community - it was obvious that the user who took over 3 million ETHs did not break the law because he performed the operation as part of a mistake in the smart-contract; however, it was highly unethical. Supporters of "code is law" (the smart-contract code is the law) have decided to consistently acknowledge the error contained in The DAO's code, placing the responsibility for this situation on the smart-contract developers and granting the attacker ownership of the funds derived from The DAO. The second group (including the Ethereum Foundation) had a different opinion and decided to revoke transactions that contained funds derived from the smart contract, thus violating one of the basic principles of blockchain networks, which is immutability.
Both groups did not manage to come to an agreement within one blockchain network, so on October 25, 2016, a hard-fork was formed, in which the supporters of the "code is law" idea remained on the "old" chain, which took the name Ethereum Classic (ETC). The supporters of The DAO intervention and transaction reversals disengaged and their chain became Ethereum Classic (ETH).