Bitspark is a bankless money transfer company that helps you convert cash to cryptocurrency, globally.
From a single coin, a little over ten years ago, cryptocurrency has grown into a highly diversified asset class, containing more than 2200 different types of assets, each linked to different technological setups, algorithms, communities, and functions - some more successful than others.
Whether you’re looking into Bitcoin, Dash, Zephyr, or Ethereum, there’s always a story to discover and to come to an understanding of a coin’s background is part of forming a view on the market.
In this post, we want to have a closer look at Ethereum (ETH) and Ethereum Classic (ETC). Why are there ‘two’ of them and how do they differ?
Ethereum is the creation of Vitalik Buterin, a Russian programmer, and one of the brilliant minds in the crypto community. He developed Ethereum at the end of 2013, to be able to do things Bitcoin was not built to do.
In a nutshell, Ethereum is a decentralised smart contract platform, built to function as a global supercomputer. It is fueled by Ether (ETH) and used to execute smart contracts, as well as DApps, without censorship, downtime, or third party dependencies.
As you may have guessed, Ethereum and Ethereum Classic are derived from the same blockchain and share a history. What essentially happened is that following a massive hack (of around $50 million), the Ethereum community decided to fork the blockchain - this meant that the stolen funds could be retrieved and the loopholes could be fixed, but it also meant that the blockchain would split in two.
Ethereum Classic (ETC) is the old blockchain, as we know it from before the duplication. Ethereum (ETH) is its shiny, new counterpart; it shares the same roots but it should nevertheless be regarded as a brand new blockchain - it is also the most popular one of the two.
From a business point of view, the difference is big. The tiny portion of loyal supporters of the old Ethereum (around 10%) operates in the shadows. Their loyalty springs from their commitment to the blockchain as an immutable ledger - built against corruption and abuse of power. The value of ETC is largely speculative in nature, meaning it’s less about its utility and more about how people value the principles with which it is associated.
ETH is best compared to a commercial software company. Their leaders, including Vitalik, are publicly active - their goal is to grow ETH as an ecosystem. Beyond the speculative market, the value of the coin lies in its potential use cases and support base. For example, ETH is supported by the Ethereum Alliance which counts Accenture, JP Morgan, Microsoft, and UBS among its members.
ETC’s market cap currently stands at around half a billion US dollar, whereas ETH - the second-largest cryptocurrency - has a market cap close to $20 billion.
From an ideological perspective, there is also a difference.
Following the hack, the community could have chosen to do nothing and accept their loss, but instead, they chose to execute a hard fork. Essentially, it meant manipulating the blockchain, and while the majority of participants agreed to this measure, for some it went against the very principles upon which the blockchain was founded in the first place.
The downside of Ethereum Classic is that following its split, it cannot benefit from any upgrades that occur on the Ethereum blockchain, such as Ethereum’s recent move from Proof of Work (PoW) to Proof of Stake (PoS).
The downside of Ethereum is that it now operates against the historical backdrop of intervention, with no guarantee that there will be no more hard forks in the future. This is cause for a certain degree of fear, uncertainty, and doubt - or FUD - which adds volatility to the long-term price.
Having said that, one could also argue that the hard fork was a major victory and an example of how a blockchain community was able to come together and overcome one of the worst hacks in the history of this industry.
The split between the two is really a choice between ideology and pragmatism. Whereas the former must appeal to the crypto community, which at its core is the outcome of an ideological stand against centralisation and unjust power structures, the latter cannot simply be dismissed: in the end, the future of blockchain technology and cryptocurrency depends on their ability to offer a workable alternative financial system to the world, and as such pragmatic solutions are vital.
Ethereum is a powerful concept, backed by a large community of supporters. It’s not just its market cap, but more importantly, its track-record of ingenuity which should in still confidence into the Ethereum investment community.
As such, next to Bitcoin, BitShares, and a wide range of stablecoins, we are supporters of Ethereum and have listed it on the mobile app and Sparkdex for everyone to trade.
Bitspark is a bankless money transfer ecosystem that enables businesses and people to cash in and cash out cryptocurrencies across Asia and Africa.