Since Bitcoin began the blockchain-based cryptocurrency revolution back in 2009, there have been many attempts to create other forms of cryptocurrency - some seeing success, some not. Arguably leading this charge is Ethereum which is second only to Bitcoin in market capitalisation. Since the initial creation of Ethereum, much has transpired. This changed its projection and spawned a forked blockchain, which drove the creation of Ethereum Classic. In this article we'll explore how Ethereum began, the events that lead to a hard fork creation of a second Ethereum blockchain and how each coin differs from one another.
In 2015 a group of blockchain enthusiasts created Ethereum with the intention of offering the security and tamper-proof nature of a blockchain-based platform to developers. This allowed them to create smart contracts and applications without the need for a third party. This is differentiated from Bitcoin which was developed simply as a way to trade currency.
Smart contracts are terms of a transaction written directly into code. This allows for these transactions to take place between anonymous parties completely decentralised and independent of a third party. These smart contracts are actioned automatically once the terms of the contract are met.
Things were going well for the creators of Ethereum and the blockchain-based platform seemed to be going from strength to strength. This was until 2016, when a cyber-criminal managed to exploit a weakness in the smart contracts being used for a crowdfunding campaign.
A promising idea was developed to resolve this exploit, whereby a decentralised autonomous organisation (DAO) would be born to allow investors to essentially vote on which apps and projects should be developed on the Ethereum platform. In order to allow investors to withdraw their support from certain projects, there had to be a way to return their Ether. Because of this a weakness was built into the platform and in-turn exploited and millions of dollars worth of Ether was withdrawn from the DAO. Whilst there was a second protection that stopped the cyber-criminals from being able to access the Ether and the weakness was within the DAO blockchain and not the Ethereum platform itself - the damage was done.
It was determined that the best way to separate from this reputation-damaging incident was to create a hard fork which created a new blockchain to continue as Ethereum (ETH) and invalidate the old blockchain which would now be known as Ethereum Classic (ETC).
Both remain popular, with supporters of Ethereum Classic maintaining that the purpose of cryptocurrency is to ensure that outside intervention will not manipulate the currency and therefore it should not be changed. However, since the hard fork, Ethereum has excelled and continues to follow on the original projected path. Currently it holds the position as the second highest value cryptocurrency and there are plans to scale in the coming years which will involve another name change to Ethereum 2.0.
So what are the differences between Ethereum Classic and Ethereum 2.0?
Both are cryptocurrencies and operate using smart contracts, but otherwise they are quite dissimilar.
Based on these key differences, it's safe to surmise that Ethereum Classic opts to protect the integrity of its blockchain whereas Ethereum 2.0 prioritises scalability and performance.