Ethereum Classic is an open source, decentralized, blockchain-based distributed platform that runs smart contracts and facilitates decentralized application development. This article explains the key concepts, components, working, and history of the Ethereum Classic platform.
Smart contracts are autonomous digital applications that are capable of running by themselves as per programmed instructions, and follow the principle of “Code is Law.”
The application code and the incorporated agreements are available across the decentralized Ethereum Classic blockchain network, and act as the self-governing rules for these smart contracts or applications.
Smart contracts enable seamless execution of trusted transactions and agreements among various parties while maintaining participant anonymity on the network’s global public nodes. They run without the need for any central regulator, legal framework, or external enforcement authority.
They facilitate transparency, traceability, and foolproof execution of the transactions. There is no possibility of any external interference, manipulation, or censorship for the working of such applications on the Ethereum Classic network.
Components of Ethereum Classic
Ethereum Classic provides a "Turing complete" virtual machine that is distributed on the blockchain network, and comes with built-in programming language capability. It gives developers flexibility to write code or develop applications that can solve any reasonable computational problem through the process of mining.
To prevent the network from getting spammed and to efficiently allocate the available resources, an internal transaction pricing mechanism, called Gas, is incorporated as an integral part of the Ethereum Classic system. All kinds of mining activities performed by the various participants are also rewarded by the Gas system.
In essence, Ethereum Classic enables the developer community to create and launch decentralized apps on its blockchain network which can cater to any purpose. Acting like a supercomputer on the blockchain, Ethereum Classic enables distribution of the processing power required to run these applications or smart contracts among the various peers on the network. Developers and participants get paid for their efforts for developing and launching smart contracts and related computational activities.
The currency token used on the Ethereum Classic network is the classic ether. Under the ticker ETC, the classic ether gets traded on all leading cryptocurrency exchanges. Classic ethers can be stored in a cryptocurrency wallet, be transferred from one holder to another, and are used to pay the member nodes for the work done and computations performed by them.
How Did Ethereum Classic Evolve?
Ethereum Classic emerged as a split version of the original Ethereum's blockchain, while the other version retained the original Ethereum name. (See also, Why are There Now Two Ethereums?)
The split, which led to the creation of Ethereum Classic and Ethereum, occurred following a hack on the original Ethereum in June 2016. The hack resulted in $50 million worth of ethers getting stolen. Being an open-source system, a hacker was able to exploit vulnerabilities in code that led to the theft.
However, the same smart contract had an explicitly programmed condition that any of the invested ethers, if taken out of the contract, can’t be accessed for 28 days. Essentially, the stolen funds were still lying in a smart contract, and were still part of the Ethereum network.
A workaround was needed to return the stolen funds to their original owners. Among available alternatives for solving the problem in the given situation, the majority decided to hard fork the original Ethereum.
The split was devised and performed at a particular point in the blockchain, which was just before the hacking took place. That resulted in the hackers’ siphoning transaction getting nullified, and the funds being returned to the original smart contracts. (For more, see Ethereum Reaches Consensus to Hard Fork, Fixing DAO Hack.)
However, a section of the Ethereum community disagreed with the hard fork and asserted that a blockchain must remain censorship-resistant and should remain free from any such tampering effects. Despite the hard fork exercise, this group continued with the original blockchain, while the remaining Ethereum community members switched to the new version.
Hence, the fork exercise led to the creation of two versions of Ethereum that came into existence simultaneously, and continue to operate ever since. The newer one was called Ethereum, while the older one was renamed Ethereum Classic. (For more, see Ethereum Classic, Which Resulted from a Hard Fork, Itself Hard Forks.)
The Bottom Line
The evolution of Ethereum Classic (and Ethereum) following the hard fork was a milestone in the blockchain world. On the one hand, the hard-forking is said to breach the inherent virtues of decentralization and censorship resistance of the self-governing, authority-free blockchain concept.
On the other hand, it was justified as a democratic decision made by community participants with a bottom-up approach, and was not a top-down dictate issued by Ethereum founders to safeguard the funds of the community.
Irrespective of the now split Ethereum Classic and Ethereum, both have enormous potential for revolutionizing smart contract applications of all shapes and sizes, similar to what bitcoin has achieved for money transfers and cash management. (See also, Is Ethereum More Important Than Bitcoin?)
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