Ethereum Classic is the original Ethereum blockchain. Both blockchains were one until July of 2016 when the Ethereum community decided to fork and split from the original chain to reverse a hack that happened to a dapp called "The DAO". This split occurred on the block 1,920,000.
At the time, a large portion of the Ethereum community decided to continue working and operating the forked Ethereum blockchain and a minority continued with Ethereum Classic to preserve its principle of "Code Is Law".
Main Differences Between Ethereum Classic and Ethereum
Ethereum will move to Proof of Stake as its consensus mechanism and has no fixed monetary policy.
Ethereum Classic will stay with Proof of Work as its consensus mechanism and has a fixed monetary policy. Like Bitcoin, which will have a total final amount of BTC of 21,000,000 in its history, Ethereum Classic will have a total final amount of ETC of 210,000,000.
In other words, Ethereum Classic is the technology of Ethereum with the philosophy of Bitcoin.
As Ethereum Classic is, in practice, the same as Ethereum, the components that make it programmable are the following:
- A virtual machine (the Ethereum Virtual Machine or EVM): It is a software component to the node software, that is replicated across all the participating machines, that can receive and execute computing instructions.
- State transition: Instead of using the UTXO model that Bitcoin uses, which means that all the history of transactions must be verified every time to know the balance of an account, Ethereum Classic debits an account and credits the other account in 2 steps. This enables something called "state transition" which is critical for computing. This model eliminates the need to verify the history of transactions for each account and enables programmability.
- The gas system: Because machines can enter into an infinite loop when executing complex software programs (e.g. when Windows or MacOS computers show the clock or infinite circle when programmes can't be executed) and they need to be shut down and re-started, this may happen in Ethereum Classic. But, because there can't be a central arbiter telling all the machines of the network to re-start every time this happens, the Ethereum Classic creators (Ethereum originally) invented the gas system, which basically puts a limit in "gas" per transaction. So, when machines enter into an infinite loop, they know they only have to use up the gas and cancel the transaction. Gas has a cost, so it is another form of income for the Ethereum Classic machines that produce blocks (miners).
- Stores programs in the ledger: As Bitcoin stores accounts and balances and nothing more, Ethereum Classic stores accounts, balances, and also software programmes inside the blockchain.
What Does Ethereum Classic Accomplish?
- Dapps: When a software programme or smart contract is sent to the Ethereum Classic network, it becomes decentralized because it is replicated across all the machines that participate in the network. This enables applications (apps) that become decentralized (dapps) when they "live" inside Ethereum Classic.
- Decentralization: Because of the above feature, dapps are essentially like apps in your phone or computer, but decentralized.
- Web 3: Dapps can be used for all sorts of functions. This includes for websites, domain names, money, payments, and many other applications. This is what is called the "web 3" because instead of dealing with centralized tech companies, people will use these decentralized apps or dapps in Ethereum Classic.
- Stablecoins: Among many of the applications that Ethereum Classic enables are stablecoins which are cryptocurrencies linked to national currencies, so they become pegged to them, hence "stable". Some examples may be USDT, USDC, and DAI.
- NFTs: Another kind of dapps are NFTs, which are collectables powered by a special kind of smart contract that makes them unique.
- Many more applications: Because Ethereum Classic is programmable, and programmability may be very complex and full of features, then it may enable many more kinds of applications in the future that we haven't even imagined!
Ethereum Classic Will Not Migrate to Proof of Stake, But Ethereum Will
An important point in the history of Ethereum is that it is moving to Proof of Stake, eliminating proof of work mining. However, all the functionality will be the same.
However, Ethereum Classic will not migrate from proof of work to proof of stake as it has opted to stick with its principles of Code Is Law and immutability.
The most important benefit of proof of stake systems networks is that they are more scalable so fees will be lower and they will process larger volumes of transactions. The tradeoff is that they are more centralized than proof of work blockchains.
As proof of work is much more secure than proof of stake, Ethereum Classic will offer services to dapp developers and end users of strong safety and decentralization, but with less scalability. This will make Ethereum Classic optimal for high value and low volume applications.