Ethereum or Ethereum Classic: which coin to choose?

In this article we will look at Ethereum and Ethereum Classic: why their paths diverged, what is the difference and which cryptocurrency to choose for investment.

One of the hottest and most fascinating debates in the crypto community is about the confrontation of Ethereum vs Ethereum Classic. Despite the similarity of names, these cryptocurrencies have fundamental differences - both in terms of market capitalization and concept in general.

What is Ethereum and Ethereum Classic

The first question a person who first learns about the parallel existence of the cryptocurrencies Ethereum or Ethereum Classic asks is which one to choose.

Since 2015, under the umbrella of Ethereum there has been a united and friendly community, whose founder was Vitalik Buterin.

But the good times passed in June 2016, when Ethereum was hacked, resulting in the theft of more than $50 million. This sparked an intense debate about how to continue to exist. Eventually it was decided to hard-fork, a radical set of measures that effectively meant splitting the blockchain in two. Some critics warned that such an event could undermine the notion of blockchain's immutability and generally go against the principles on which Etherium was founded. However, 85% of participants voted for the hard-fork.

This event became the starting point for the confrontation: Etherium (ETH) and Ethereum Classic (ETC). The newly created blockchain inherited the name Ethereum, whereas the old platform was called EthereumClassic.

Facts about both cryptocurrencies

In terms of popularity, ETH is the winner, and there are several explanations for that: a larger group of developers, so there are hundreds of decentralized applications available for all occasions. Etherium's blockchain has become a hub for many decentralized financial platforms - in particular, projects related to cryptocurrency loans.

At the time of writing, Ether's capitalization was 47 times that of Ethereum Classic. ETH is also the leader by such an important parameter as the volume of any crypto asset (total spot trading volume reported by all exchanges over the last 24 hours). Now it exceeds $18.8 billion a day. ETC has a more modest figure - just $3.2 billion. 

If you analyze the value of both coins from the moment of hard-fork, you'll see that ETH definitely has a significant advantage. From year to year, ETH price dynamics was noticeably better than ETC. However, during the last year the situation has changed a bit: ETC grew about 12 times, while ETH grew 7 times. However, taking into account the constant market fluctuations, we can consider that in this period both currencies grew almost equally. But what will happen next?

A recent major update to the Ethereum blockchain led to the long-awaited transition from the Proof-of-Work algorithm to Proof-of-Stake. Enthusiasts say the benefits of PoS are obvious: higher security and lower power consumption. Ethereum co-founder Joseph Lubin even said the blockchain will become 1,000 times more scalable in 18 to 24 months after the update is complete. On the other hand, the new algorithm has reduced the profitability of ETH mining and therefore its current miners will be forced to look for other coins, and ETC may be the number one candidate.

ETC has no plans to switch to PoS yet, and the network plans to continue working with the old PoW algorithm.

Therefore, it is very likely that the confrontation between ETH vs. ETC will only intensify. 

Is there any hope for Ethereum Classic?

Despite the fact that ETC is completely in the shadow of its big brother, the developers are still optimistic and believe that the currency has something to offer the crypto community.

The developers of Ethereum Classic have not abandoned their brainchild, making regular updates to the platform. After the Ethereum Classic network suffered a "51% Attack" three times in the summer of 2020, the ETC team was still able to solve the problem by implementing a technology called MESS. And more recently, in July 2021, another hard fork of Magneto was made to further improve the security and usability of this cryptocurrency.

Grayscale, a cryptocurrency asset management company, believes that Ethereum Classic has a number of advantages:

"There is a growing community of developers, entrepreneurs, nonprofits and just active participants involved in the development, training and implementation of Ethereum Classic".

The largest teams are ETC Core, The ETC Consortium, and The Ethereum Classic Cooperative.

In addition, Grayscale representatives point out that ETC mining is more affordable because it is not as demanding in terms of hardware - power costs are lower and less equipment resources are needed to confirm transactions compared to bitcoin as well:

"Ethereum classic mining could potentially be of interest to low-margin miners because it requires less energy and lower operating costs."

But it's not without a fly in the ointment, either: ETC holders carry a number of key risks. For example, there are scalability issues, as well as concerns about the level of decentralization of the network, because the two largest pools control 50% of the hash rate:

In any case, Grayscale is positive about ETC's prospects and expects that the network will definitely hold and strengthen its position, even despite the growing advantage of its big brother, ETH:

"Thanks to the global network of developers, entrepreneurs and just apologists, ethereum classic was able to prove its sustainability and maintain a good development momentum, while being able to benefit from the innovations being introduced in Ethereum."