Ethereum Classic is a blockchain that was created after a contentious hard fork of the ethereum blockchain took place in 2016.
Like ethereum, it supports smart contracts and decentralized applications (dapps). Its native asset is referred to as ethereum classic or ETC.
In 2016, blockchain startup slock.it built and launched a decentralized autonomous organization, dubbed The DAO, on the ethereum blockchain. The DAO was intended to serve as a decentralized venture capital fund for projects launched on ethereum, and approximately 10,000 people invested more than $168 million in the project through a crowdsale.
During the course of the crowdsale, several vulnerabilities were identified in The DAO’s code and it was subsequently hacked. The attacker stole approximately $60 million worth of ether, which amounted to roughly 14 percent of all ether at the time.
After much debate within the ethereum community, a hard fork was executed on block 1,920,000, which altered ethereum’s code to return the lost funds to investors. However, some ethereum nodes objected to the fork on the grounds that it would mean that the blockchain would not be immutable, among other reasons, and decided that they would not run the updated software.
These nodes continued to run and mine the pre-fork version of the ethereum blockchain, which is now known as ethereum classic.
In January 2019, ethereum classic suffered a 51 percent attack, meaning that a miner (or miners) gained control of the majority of computing power on the network, allowing them to stop or reverse transactions on the blockchain and double-spend coins.
Launch and issuance
Ethereum Classic launched in July 2016. ETC was distributed at a 1:1 ratio for all holders of the ethereum blockchain’s original currency, ETH, after the fork. This meant that the Ethereum Foundation automatically became a large holder of ethereum classic, though it subsequently sold the majority of its coins. Additionally, it is notable that the hacker of The DAO holds approximately 3.4 million ETC, which represents approximately 4% of the supply.
Network design & security model
Ethereum classic’s code is an implementation of the original ethereum blockchain, however the project is not static and continues to develop and change. Whereas, ethereum will eventually transition from a proof-of-work consensus mechanism to a proof-of-stake mechanism, ethereum classic forked its code in 2018 to retain its proof-of-work model.
Ethereum classic’s block reward was initially set at 5 ETC and decreases by 20 percent every 5 million blocks (roughly every 2.5 years). ETC is a deflationary currency with a total supply that is not expected to top 230 million coins.
The block time for ethereum classic is roughly 10 to 15 seconds, with an average of 6 transactions processed per block.