History of Ethereum Classic
Ethereum classic was created after a large-scale attack on one of its most successful ICOs, The DAO. On 17 June 2016, a loophole in the code was found and a hacker managed to drain 3.6 million $ETH affecting over 18,000 investors.
Due to the scale of the attack, investors proposed a reversing of the blockchain to aid investors. It affected such a large portion of the community that a majority voted in favour of a fork, which meant a split in the Ethereum network.
The newer network used the name Ethereum and uses ETH or ether as its cryptocurrency. The older one, known as Ethereum Classic, uses ETC.
Few maxis remain in the belief of Ethereum Classic, the network faced multiple hacks, all within a month.
Catalysts for its recent pump
1. Words of Vitalik
Fast forward to 25th of Jul 2022, Vitalik sang praises about ETC saying “If you like Proof-of-Work, you should go use Ethereum Classic. It’s a totally fine chain.”
Ethereum blockchain’s transition from Proof-of-Work to Proof-of-Stake would mean ETC will be the largest Proof of Work smart contract network.
As crypto miners look for networks to carry out their mining, ETC might be the alternative for them.
2. S$10M Investment into ETC
AntPool, the mining pool affiliated with mining rig giant Bitmain, has invested $10 million to support the Ethereum Classic ecosystem and play, ns to continue investing more causing the price to pump to a high of US$44 from its low of US$23.
Should we keep an eye on ETC before the Merge?
Research Analyst, Dun Leavy, from Messari ran through metrics we can employ to answer the question above.
Fundamental metrics
Looking at the fundamental metrics, nothing has changed for ETC.
Volumes and users have been remained on the low for years, even the applications are non-existent.
Nothing meaningful has changed for the developer activity as well.
Stagnant hash rates on Ethereum Classic
As 97% of mining comes from ETH, only 2% is derived from ETC.
When miners migrate to ETC, there will be a hash rate jump potential pushing the big players in the ETC out of the money. The only way to remain profitable is if the C price jumps.
Ethereum Classic leading up to the Merge
Messari planted this graph nicely, along with the milestone upgrades leading up to the Merge. It revealed interesting insights into how investors trade Ethereum upgrades.
Closing thoughts
ETC might see a comeback in popularity, especially amongst the miners looking to shift their resources. Along with the falling prices of mining rigs, there might also be a price advantage triggered by the migration of miners to the Ethereum Classic as we see the increase in popularity in ETC investment.
All this though comes at the expense of higher competition. As there is an increase in GPU mining on ETC, its hash rate will increase accordingly as well, meaning fewer profits going around.
At the end of the day, actual demand and utility are the key growth drivers. ETC now has a “Second chance” to become more attractive, especially when projects that prefer PoW consensus mechanism for decentralization purposes.
[Editor’s Note: This article does not represent financial advice. Please do your own research before investing.]
Featured Image Credit: Chain Debrief
