ETC is the native cryptocurrency of Ethereum Classic, a blockchain project that was created in 2016 when Ethereum’s blockchain split into two separate chains following a disagreement among members of its community.
The old chain that remained after the split became known as Ethereum Classic, and has further separated itself from Ethereum over time by adopting a deflationary monetary policy with a hard cap on the total number of ETC that will be created.
When the split first happened, everyone who held ether at the time (the native cryptocurrency of Ethereum) received the exact same amount of ethereum classic in their wallets for free.
But even though the two coins initially had the same future supply projections, differences came about over time as each coin evolved. While Ethereum doesn’t have a hard cap on how many native tokens will be created, Ethereum Classic executed a number of upgrades to change its monetary policy to be deflationary, meaning the number of tokens created decreases over time. That is supposed to make ETC a better store of value than Ethereum, because its tokens are scarcer.
Because of the upgrades, Ethereum Classic’s supply is capped at 210.7 million and its block reward declines by 20 percent every 5 million blocks, or roughly every two and a half years.
According to CoinDesk’s historical price data, ETC’s price surged to a peak of $42 during the 2017 bull run, before crashing to a low of $3 during the crypto-wide bear market. Amid the resurgence of buying momentum in 2021, ETC’s price skyrocketed to an all-time high of $134.
How does Ethereum Classic work?
Ethereum enacted a big upgrade known as a “hard fork” in order to reverse a massive hack that took place on a decentralized Ethereum-based platform called “The DAO.” A hard fork is a non-backward compatible change that requires all users to upgrade to the latest version. With the intervention by Ethereum’s team, the platform was able to return all of the stolen funds to their owners.
While the original Ethereum blockchain was supposed to die out (known as Ethereum Classic), some users disagreed with the hard fork and stuck around – they argued that one of the key rationales for blockchains is that transactions are “immutable” and aren’t supposed to be able to be reversed. That’s how Ethereum Classic was born.
Despite these philosophical differences, Ethereum Classic and Ethereum work similarly. After all, Ethereum Classic is the original Ethereum blockchain.
As with ethereum, the primary use for ethereum classic is executing smart contracts, which is software code that can replace intermediaries in a range of applications from finance to web apps. Each transaction and smart contract on the network requires a unit called “gas.”
Ethereum Classic differs from Ethereum in terms of its monetary policy, as described above, as well as in its commitment to the algorithm proof-of-work for securing its blockchain. Ethereum is switching to proof-of-stake.
Most Ethereum users moved on to the new hard fork, leaving Ethereum Classic with a significantly smaller community.
Key events and management
Ethereum Classic doesn’t have any single creator because it was born out of community conflict, though Barry Silbert, the CEO of Digital Currency Group (the parent company of CoinDesk), and Cardano creator and Ethereum co-founder Charles Hoskinson were two early driving forces behind Ethereum Classic following the initial split.
Hoskinson’s company, IOG, spearheaded an Ethereum Classic node client, and, in 2021, Digital Currency Group announced plans to buy $50 million in shares of Grayscale Investment’s Ethereum Classic Trust (a portfolio company of DCG).