Hey there Wirex community! I’m Daniel, a new member of the Wirex team, and my first order of research was to look into these two cryptocurrencies and see what I could learn.
Ethereum is a well-known currency in the crypto-sphere. Second only to Bitcoin in Market cap. Because of this, Ethereum is often looked to as the heir to the cryptocurrency throne. It has some awesome features, including smart contracts and fast block completion times. But there is also a lesser-known sibling of Ethereum: Ethereum Classic. In fact, long ago (well, long ago for the cryptocurrency market), these two coins were one and the same. But which one is best? Which one should you buy? Well for you to make your decision, you must first know a little bit of Ethereum history…
The DAO (distributed anonymous organisation) was a capital venture fund of sorts. It allowed anyone with ‘ether’ (The currency used in the Ethereum network) to buy ‘DAO tokens’. With these, you could vote on what the DAO would spend the funds on. If you wanted out of the DAO, you could leave. your tokens would be converted back into ether and put into another smart contract.
But there was a loophole that hackers found and exploited. Long story short, It resulted in $50 million of ether stolen from the fund. The community was in a frenzy and split down the middle on what to do.
Due to the terms of the smart contract, there was a period of 28 days where no funds could be extracted by the hacker. A vote was then held by the DAO over what to do.
The vote caused a divide within the community. Some wanted to reverse the hack, which would bring the ether back to the DAO and away from the hacker.
But to a vocal minority, this was sacrilege. The blockchain was built to be immutable and unchanging. Wasn’t that the whole point of it?
And from this dispute arose Ethereum(ETH) and Ethereum classic(ETC). A ‘hard fork’ occurred, creating two separate blockchains. The majority, including the founders of Ethereum Vitalik Buterin and Gavin Wood, moved on with Ethereum. In this blockchain, the hack was effectively reversed and the money refunded. Those who were against this stuck with the old blockchain.
Those who support ETC believe it to be a stand for everything cryptocurrencies should be. One hack should not be an excuse to change the blockchain. Whilst this is noble, it does leave ETC with some issues. For one, most of the community went with Ethereum, including the majority of the developers. As it was a hard fork, any new improvements and updates to Ethereum cannot be accessed by ETC. Many also see ETC as a direct attack on Ethereum, and a convenient opportunity for Ethereum haters to disrupt the community.
Ethereum has gone from strength to strength despite the contentious decision to change the blockchain. At the time of writing, Ethereum stands at around $300 and is consolidating its position as the second biggest cryptocurrency. The community by and large stuck together and pulled through, all spurred on by a belief in the potential of Ethereum.
So, which do I choose?
This comes down to your own personal choice. Most believe that Ethereum is the real deal. And so far, with the second largest market cap of any cryptocurrency, it’s proving it. New updates are released regularly and many believe it has the potential to disrupt multiple industries.
Yet, many big names are also backing Ethereum classic, such as investor Barry Silbert. Not only that, Ethereum’s price may well be overly inflated due to all the ICO’s building on the network and using ether. There are also new coins such as NEO which have many features that improve upon Ethereum’s system. We could see a move towards these platforms for up and coming ICO’s for speed and scalability reasons, leading to a drop in Ethereum’s price.
It is hard to tell whether Ethereum classic will surge again, or if the buzz around it will die as Ethereum rises higher. Ethereum certainly has potential and a great team. But ideologically, you may find yourself siding with the ETC community. They stuck to their guns despite the majority of the community moving on. If this is the case, having some ETC on your portfolio could turn out to be a solid choice.
Do you own ETH or ETC? Thinking of investing in either of them? I’d love to hear your thoughts on this debate. Head down to the comments section below for a discussion.
This article is intended to ignite discussion, and should not be taken as investment advice.