Ethereum has quickly become one of the most popular blockchains with its innovative capabilities such as smart contract support and dApp development. However, it had to face an unfortunate hack called “the DAO hack” in 2016, which resulted in a split in the network. That’s how Ethereum and Ethereum Classic chains have emerged.
The major difference between Ethereum and Ethereum Classic is that Ethereum relies on Proof-of-Stake consensus mechanism while Ethereum Classic sticks to the original Proof-of-Work consensus mechanism. Even though both share similarities like decentralization and smart contract support, they share multiple differences.
Let us discuss a few of the major differences between Ethereum and Ethereum Classic in the present article. But, before that lets first understand the history behind these two blockchains.
Ethereum brought a revolution with its launch by taking blockchain technology beyond mere peer-to-peer transactions. It enabled the development of decentralized applications and “The DAO” was one of the pioneering apps on Ethereum. The DAO project allowed retail investors to participate in crowdfunding of other projects.
However, the smart contract of The DAO project had a vulnerability called “Split Function”. The developers of the project deliberately included that feature to allow investors to withdraw their investment based on their preference. When investors withdraw their funds, they will get their ETH back and the data on the blockchain will get updated.
The Split Function feature paved the way for hackers to breach “The DAO” project and Ethereum suffered a major loss in 2016. Malicious hackers drained around $50 million dollars from the project without actually updating the transaction history.
To make the Ethereum blockchain secure again and to gain the trust of the community, Vitalik Buterin and other developers decided to hard fork the network. However, the entire community didn’t agree with the decision. Just like how the community split based on their decision, the Ethereum blockchain was also split, giving birth to two networks.
The original blockchain that remained immutable is today known as the “Ethereum Classic” network whereas the new network is the present “Ethereum” blockchain.
As we have explained above, after the hard fork in 2016, Ethereum community members divided into two parts, having different opinions. While a part of the community believed that it is important to have the hack in its history and the blockchain should continue as it was. On the other hand, the other part of the community believed that it is important to undo the hack and retrieve the lost money.
However, the decision to implement the hard fork gained more votes and the developers implemented the hard fork on July 20, 2016. The network that remained as it was became the “Ethereum Classic” network and the new network is the present “Ethereum” network. Thus, Ethereum and Ethereum classic differ based on their origin.
Consensus mechanism is another major difference between Ethereum and Ethereum Classic. Walking through the footsteps of the original cryptocurrency, Bitcoin, Ethereum also initially worked based on Proof-of-Work (PoW) consensus mechanism.
However, the developer team of Ethereum decided to change it into a Proof-of-Stake (PoS) network to make it sustainable. The Ethereum network transitioned from PoW to PoS mechanism after the historical “Ethereum Merge” event in September, 2022. This not only saves energy but also helps the network process transactions faster. On the other hand, Ethereum Classic remained a PoW network, sticking to the traditional mining process.
Token supply and monetary policy behind Ethereum and Ethereum Classic are top differences between them. While Ethereum has no fixed token supply, Ethereum Classic’s token supply is fixed at around 210.7 million.
Furthermore, the inflation rate of Ethereum is capped at 4.5% and developers can make changes to its monetary policy as per requirements. But this is not the case with Ethereum Classic. When all the 210.7 million ETC are mined, miners will only get transaction fees as rewards.
Ethereum holds a large market value compared to Ethereum Classic, being the second largest cryptocurrency by market capitalization. As of January 2024, the total market capitalization of Ethereum is more than 300 billion. On the other hand, the market capitalization of Ethereum Classic is over 3 billion.
Both Ethereum and Ethereum Classic differ a lot when it comes to their market prices as well. Adding to that Ethereum has a wide user base and adoption with its functionalities and huge number of dApps. When it comes to Ethereum Classic, the community is smaller and more focused on PoW mechanism and immutability rather than dApp ecosystem.
The developer team behind Ethereum is relentless with network developments and upgrades. From London upgrades to the Merge and Shapella upgrade, Ethereum went through several major events. All of these Ethereum upgrades aim to improve scalability, sustainability, and overall functionality of the Ethereum network.
When it comes to Ethereum Classic, there isn’t much activity in terms of its development and network upgrades. It focuses more on stability and doesn’t undergo frequent upgrades. The Ethereum Classic community prioritizes immutability. Thus, the network completely sticks to PoW and traditional functionalities.
Ethereum and Ethereum Classic are two notable cryptocurrencies in the industry. Even though they came from the same blockchain, they share several major differences. While the smart contract functionality and decentralization features are available on both of them, they differ based on token supply, origins, market value, and network upgrades.
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