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What is Ethereum Classic? The Beginner’s Guide

Many investors see Ethereum Classic as a forgotten project. You don’t really see “the little brother of Ethereum” making headlines, at least, not positive ones. Some investors thought the project is dead, but the spring of 2021 has proven this narrative false. This article is the Ethereum Classic beginner’s guide. We’ll walk you through the history, technology, and investment potential of Ethereum Classic.

Ethereum Classic is an old smart contract platform

Let’s place Ethereum Classic in the correct cryptocurrency category. We like to use three main categories: currencies, platforms, and tokens.

Bitcoin is the best-known cryptocurrency. Litecoin, Bitcoin Cash, and Dash can be also placed into this category. They are all developed to function as P2P digital money.

Ethereum is the king of platforms. These projects are operating systems for distributed apps (Dapps) and smart contracts. You can think of them as iOS or Android. Cardano, Binance Smart Chain, and Polkadot are other well-known platforms.

Tokens are always issued on platforms, which means they don’t have a blockchain. Many investors are familiar with DeFi tokens, such as Chainlink, Aave, and Uniswap. Tokens have utility or governance use inside a specific application.

Ethereum Classic is a smart contract platform. It is, in fact, the original chain of the Ethereum blockchain. We’ll investigate the common history of these two in detail.

Ethereum Classic is not well-known despite its high market cap. This is because the project is almost never mentioned on social media or by the biggest news outlets. Ethereum Classic isn’t considered as one of the major platform players.

The native token is called Ethereum Classic too. It’s also referred to as Ether, just like Ethereum’s native token ETH. The ticker of Ethereum Classic is ETC. The token is used to pay for transactions and smart contract fees on the platform.

Ethereum Classic was born out of The DAO hack

To explain the history of Ethereum Classic, one must start from the history of Ethereum. This is because Ethereum and Ethereum Classic were the same projects for the first couple of years.

The founder of Ethereum is Vitalik Buterin. He is a Russian programmer, who worked for the Bitcoin Magazine in the early 2010s. Buterin described the Ethereum white paper in late 2013.

He wanted to turn Bitcoin into a smart contract platform and create a programming language for Dapps. Since this plan didn’t work out, the solution was to create a new project entirely.

Ethereum was founded in early 2014. The founding group had half a dozen other members too besides Buterin. Cardano founder Charles Hoskinson was among them with Polkadot founder Gavin Wood. Both Hoskinson and Wood left Ethereum early on.

The Ethereum blockchain was started in July 2015. Less than a year later, the community faced a crisis. This led to the birth of the Ethereum Classic. It was The DAO hack.

The DAO was an ambitious project trying to create a crowdfunding platform. Unfortunately, there was a critical bug in The DAO program code. A hacker (or a group of hackers) managed to drain a lot of funds out of it.

This event is described in detail in the next chapter. Check the video below for more information.

The DAO hack led to widespread discussion about the future of Ethereum. Should the event be erased by rolling back the blockchain? The majority (incl. Ethereum founders) supported this but some disagreed by stating: the code is law.

This argument led to a hard fork, where the Ethereum blockchain was split in half. Ethereum Classic is the original branch of the Ethereum Classic while Ethereum was forked out of it. Ethereum Classic has The DAO hack in place, while this event is erased from the Ethereum blockchain.

The first official block of Ethereum Classic was block number 1,920,000 mined in July 2016.

The market agreed with the majority and accepted the hard fork. This can be seen by looking at Ethereum’s popularity vs Ethereum Classic. The difference between the market caps is about 40x. it has been over 100x at times.

Even if Ethereum was the winner of this event, it left a stain on Vitalik Buterin’s armor. A blockchain roll-back is against the principles of distributed systems. The project management shouldn’t get involved with the problems of a single application.

Ethereum Classic has been mentioned rarely in the crypto media. It is also smaller in terms of resources and community compared to many better-known platforms. The number of active addresses and the network hash rate went down in 2018-2020 as well.

Despite all this, the project keeps going forward. You find the most important events of Ethereum Classic from the official roadmap. There are about 10 fintech companies doing development work. The most important is Ethereum Classic Labs.

The previously mentioned gentleman, Charles Hoskinson, is also involved. He has supported Ethereum Classic’s development through IOHK.

In August 2020, Ethereum Classic was all over the news for all the wrong reasons. The network suffered three 51% attacks in one month. This led to changes in the hashing algorithm, which has prevented further 51% attacks.

Price development of the ETC token has also been poor for many years. As late as March 2021, ETC was still 50% down from its all-time high. Then, something crazy happened in April 2021. The price of ETC skyrocketed from $15 to $175.

etc price

There is no clear explanation for this 10x move. Some analysts claim it was done by Robinhood traders.

It might be that amateur investors of Robinhood bought Ethereum Classic as “cheap Ethereum” when seeing Ethereum’s price go up. Some argue that Ethereum’s change to Proof of Stake and Charles Hoskinson’s involvement helped Ethereum Classic to gain more popularity.

Ethereum Classic is surprisingly popular among institutional investors. When we look at the AUM figures of Grayscale, Ethereum Classic is the third biggest fund with a clear margin.

The DAO hack

Let’s have a deeper look at the previously mentioned The DAO hack. This is one of the biggest media events in crypto history and defines the principles of Ethereum Classic.

It all happened because of an organization called The DAO. You shouldn’t mix this with the common abbreviation DAO, which means a decentralized autonomous organization. There are thousands of DAOs in the world. In this case, we are talking about a specific fintech company.

The founder of The DAO was German software developer Simon Jentzsch. The DAO was established in 2016 and raised 120 million dollars in funding (eventually up to 170 million). At the time, this was a historical amount. The DAO’s fundraising was widely reported in the financial media.


This was an ICO where investors received DAO tokens in return.

The DAO was an application built on the Ethereum platform. You could compare it to the DeFi applications of today. Users gave funding to different projects and could create their own funding ideas on the platform.

All distributed apps (Dapps) are open-source programs. This means that anyone can look at the code and find critical bugs in it.

This is prevented by using code auditions. There are specialized auditor companies performing audits to Dapps before they are launched on Mainnet. This should, in theory, remove the risk of any bugs.

Not only there was a bug in The DAO code, but the founders were even alerted several times. The vulnerability wasn’t fixed, which made it possible for a hacker to drain 3.6 million ETH from the application worth 50 million USD at the time.

Even today, this would be about 3 percent of all circulating ETH. In 2016, it was almost twice as many.

The hacker could have stolen even more funds, but for some reason, did not. The hack led to the previously described debate: should there be a roll-back on the blockchain or not?

As a result, the community was split in two and Ethereum Classic was born. The identity of the hacker(s) isn’t known to date.

BitMEX has written an excellent blog post describing the event. There are also many Youtube videos about The DAO hack.

Ethereum Classic technology

Ethereum Classic and Ethereum are almost identical from the tech point of view. Both are powerful smart contract platforms. Ethereum Classic has pretty much the same tools for building Dapps as any other popular platform.

Smart contracts are programmed using Solidity, which is best-known from Ethereum. The virtual machine of Ethereum Classic is also EVM compatible. This means you can move Ethereum Dapps easily to Ethereum Classic.

Ethereum Classic is often titled as 2nd generation cryptocurrency. Bitcoin was the 1st gen. coin and modern Proof of Stake platforms (Cardano, Binance Smart Chain, Zilliqa, etc.) represent the 3rd generation.

It means that Ethereum Classic has a technological disadvantage compared to other popular platforms. It comes from the use of the Proof of Work consensus algorithm. Ethereum and Ethereum Classic are currently the only PoW-based platforms in the market.

Ethereum Classic can be mined with a GPU rig.

Proof of Work requires physical mining devices (see the image). The hashing algorithm of Ethereum Classic is etchash. See the small, but important, difference to Ethereum’s ethash. The hashing algorithm of Ethereum Classic was changed in late 2020.

The reason behind this change was a 51% attack. In fact, three 51% attacks, as mentioned in the history chapter. If a cryptocurrency uses the same hashing algorithm as another, but a much bigger coin, there is a serious risk for a 51% attack. Some of the miners can be easily switched to mine the smaller coin for attacking purposes.

The transaction capacity of Ethereum Classic is 15 TPS, which is identical to Ethereum. It’s 2x more compared to Bitcoin. The average block time is 14 seconds.

Ethereum Classic vs Ethereum

What are the differences between Ethereum Classic and Ethereum, then?

We described the technology and some of the shared features already in the previous chapter. At the time of writing this article (5/2021), there aren’t many differences in the “engine rooms”. There is one major change coming up, though.

Ethereum is moving fast towards Ethereum 2.0. See the video below for more information.

Ethereum is changing the Proof of Work consensus to Proof of Stake, which is also used by other modern platforms. The blockchain of Ethereum 2.0, titled Beacon Chain, was launched in December 2020.

The 2.0 version will be ready sometime in 2022 or 2023. This will change Ethereum’s transaction capacity significantly. Estimates are between 50x and 100x.

This is where these Ethereum versions will differ. Ethereum Classic is not going to switch to Proof of Stake consensus. It will remain as a Proof of Work platform. It’s interesting to see if this will increase its popularity.

Before the Ethereum 2.0 version is fully launched, there aren’t many technical differences. However, popularity is a whole another contest. Ethereum is dominating the Dapp market, where Ethereum Classic is more like a side note.

There is one major difference in tokenomics. ETC has a hard cap, which was set in December 2017 in the Gotham hard fork.


The token issuance was changed after 5 million blocks (11.12.2017). The block reward dropped 20% from 5 ETC to 4 ETC. A further 20% cut will be done after every 5 million blocks until the hard cap of 210,700,00 tokens is reached.

At the time this article is written, there are 116 million ETC tokens in circulations.

Ethereum Classic as an investment

How does ETC look like as an investment? This topic was briefly mentioned in the history chapter. The price development has been terribly slow. ETC didn’t show signs of life even during the bull markets of 2019 and 2020.

Then came the April of 2021. The price of ETC skyrocketed more than 1000% in a matter of weeks. This moved Ethereum Classic to the top 20 in the cryptocurrency rankings. It’s hard to see ETC keep this high status, but the move shows the project is far from dead.

The numbers from Grayscale are also very impressive. The AUM value in the Ethereum Classic trust is higher than smaller altcoins have combined.

We have also seen a rise in the number of active addresses. Is this just a short-term boom or is Ethereum Classic having a significant boost?

When Ethereum moves to the 2.0 version it means abandoning the Proof of Work consensus algorithm. This will put thousands of Ethereum miners out of work. Ethereum Classic becomes the number one PoW platform in the market.

ETC might benefit from this significantly. Many investors like PoW consensus and the principles the Ethereum Classic community is cherishing.

What about IOHK and Charles Hoskinson? The Cardano founder has invested more than a million dollars of his own money to Ethereum Classic due to philosophical reasons. IOHK has also become a bigger player in ETC development.

If you want to have a good overview of Ethereum Classic, check the video below.

The fact remains that Ethereum Classic is technically inferior compared to most smart contract platforms. It’s difficult to see this project ever becoming a popular Dapp platform.

Ethereum Classic will probably be the choice for those investors, who appreciate Proof of Work and the hard cap in tokenomics. Proof of Stake has been heavily criticized by Bitcoin fans. Maybe some of them might invest in Ethereum Classic in the future?

We don’t see Ethereum Classic as a great investment right now. The platform race is so competitive, even if you would have the market-leading technology. The valuation is also extremely high after the April-May 2021 pump.

It’s very likely we’ll see Ethereum Classic go forward and remain as one of the top 50 cryptocurrencies. There will be always Proof of Work fans in the crypto universe.

Ethereum Classic price and how to buy ETC

ETC is listed on all the major cryptocurrency exchanges. We recommend using Binance. It’s the reliable market leader supporting SEPA transfers and fast debit/credit card deposits.

Buy ETC from Binance

You’ll also find Ethereum Classic from Kraken and Coinbase. They are popular and reliable American exchanges.

There are lots of options for ETCH wallets as well. You can find dozens of options from the official Ethereum Classic website. Exodus (desktop & mobile) and TrustWallet (mobile) are popular wallets supporting ETC.

Follow Ethereum Classic on social media to stay up-to-date with the latest events. The Twitter handle is @eth_classic and the Reddit community can be found at /r/EthereumClassic. The official website is

Image by Лечение Наркомании from Pixabay