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Cryptocurrencies live in a highly competitive environment. Any cryptocurrency run on a decentralized network can be copied (also called ‘forked’) easily by anyone in the world. That’s why cryptocurrencies must derive their value from more than just their technology. Communities, history, and values are key drivers behind the success of blockchain networks, and nowhere is this clearer than in the difference between Ethereum (ETH) and Ethereum Classic (ETC).
If you want to be a competent investor and understand which cryptocurrencies to invest in, you should understand the ETH vs ETC difference. You’ll not only learn about these two currencies but also about some of the fundamental philosophical questions driving the development of blockchain projects.
What’s New About Ethereum?
Ethereum is the original smart contract platform launched in an ICO in 2014 and since then has become a giant in the crypto world and the center of DeFi and NFT development. It is also the second most traded cryptocurrency on pretty much every cryptocurrency exchange online. However, with this popularity, Ethereum has started to run into problems with scalability. For this reason, the team has decided to make a huge switch to a Proof-of-Stake consensus system.
This technical change will allow it to be more efficient, more scalable, require less energy to run, and be more decentralized. These are all goals of the Ethereum network, and if it can pull it off, it could be a huge win for the world’s biggest smart contract platform.
Why to Invest in ETH
Ethereum has perhaps the most important advantage in the smart contract platform ecosystem — the first-mover advantage. There are more developers, users, and applications on Ethereum than on any other network. This attracts even more developers and users, making it difficult for other blockchain networks to compete and gain significant market share.
Ethereum is already a solid choice for investors. If it can successfully migrate to Proof-of-Stake, it will become an even more formidable force in the blockchain world. However, it’s a very difficult task, and it might not go as expected. That’s where Ethereum Classic comes in.
What Is Ethereum Classic?
After the Ethereum ICO, a hacker broke the system and stole millions of dollars worth of raised funds. In response, the Ethereum community came together to reverse the transaction and recover the money. However, some in the community didn’t like this. They thought the foundation of cryptocurrency was immutability, and reversing a transaction destroyed this value. So, they decided to continue the old Ethereum blockchain, with the stolen funds still belonging to the hacker. The original, hacked blockchain is still going, and it’s called Ethereum Classic.
Aside from the ideological and historical differences, Ethereum Classic has struggled to differentiate itself from Ethereum. This can be seen in the price difference, with ETH at around $3K while ETC is around $35 at the time of writing.
Why to Invest in ETC
Ethereum Classic offers a values-based reason to use it instead of ETH. Now, with Ethereum changing to Proof-of-Stake, Ethereum Classic has a chance to differentiate itself further by sticking to its original PoS algorithm. It’s still up in the air how well the Ethereum network will go with PoS. Maybe something will go technically wrong, or maybe long-term problems will pop up, such as unwanted centralization. For these reasons, ETC can be seen as a hedge against these risks for ETH.
Comparing ETH and ETC
Here’s a brief summary of how Ethereum and Ethereum Classic compare on different points (as of 2022).
| A criterion for comparison | Ethereum | Ethereum Classic |
| Story behind the appearance | ICO, then reversed DAO hack | Original hacked blockchain |
| Blockchain Technology | Proof-of-Work (soon changing to Proof-of-Stake) | Proof-of-Work, no plans to change |
| Ideology of the company | Led by Vitalik Buterin to build an open internet and fairer financial system | Leaderless, untainted, immutable, code is law, truly decentralized |
| Supply of coins | No fixed supply | Fixed supply |
| Price (So far in 2022) | ~$2.5-5K | ~$25-$50 |
| Market Capitalization | >$300 Billion | >$4 Billion |
| Market Rank | #2 | #32 |
Which One Is a Better Choice for Investment?
Ethereum is a more established platform and has many more developers and users than Ethereum Classic. Soon, it may also have greatly improved technology, too. However, there will likely be a place for ETC for a while to come, with its decentralized ethics-based approach, and its decision to stick with the safe PoW algorithm. ETH is a must-have in any crypto portfolio, but ETC can act as a great diversifier and hedge against coming risks for ETH.
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