Introduction:

Ethereum has emerged as a leading platform in the blockchain world, offering innovative features like smart contracts and decentralized applications (dApps). However, in 2016, a significant event known as "the DAO hack" caused a split within the Ethereum network, resulting in the creation of two separate chains: Ethereum and Ethereum Classic. This article aims to explore the differences between these two blockchain networks.

Why Are There Two Networks?

Ethereum revolutionized blockchain technology by enabling the development of decentralized applications like "The DAO," a crowdfunding platform that allowed retail investors to fund various projects. Unfortunately, a vulnerability in The DAO's smart contract, known as the "Split Function," led to a major hack, causing significant losses to Ethereum. To restore trust and security, developers decided to implement a hard fork, leading to the formation of Ethereum and Ethereum Classic networks.

Key Differences Between Ethereum and Ethereum Classic:

1. Origin of Crypto:

After the hard fork in 2016, the Ethereum community split due to differing opinions. The majority supported implementing the hard fork to reverse the hack, resulting in the creation of the current Ethereum network. Conversely, Ethereum Classic remained loyal to the original blockchain, preserving the history of the hack within its network.

2. Consensus Mechanism:

Initially, Ethereum operated on a Proof-of-Work (PoW) consensus mechanism, similar to Bitcoin. However, Ethereum transitioned to a more sustainable Proof-of-Stake (PoS) mechanism after the "Ethereum Merge" event in September 2022. In contrast, Ethereum Classic continues to rely on PoW, maintaining the traditional mining process.

3. Token Supply and Monetary Policy:

Ethereum has a flexible token supply with no fixed limit, allowing developers to adjust its monetary policy as needed. Conversely, Ethereum Classic maintains a fixed token supply of approximately 210.7 million, with no room for alterations once all tokens are mined. Additionally, Ethereum implements a capped inflation rate of 4.5%, while Ethereum Classic miners receive transaction fees as rewards once the token supply is exhausted.

4. Market Value & Community:

Ethereum boasts a significantly higher market value compared to Ethereum Classic, with a larger user base and adoption of dApps. As of January 2024, Ethereum's market capitalization exceeds 300 billion, while Ethereum Classic's stands at over 3 billion. Ethereum's community is more diverse and focused on dApp development, while Ethereum Classic prioritizes immutability and PoW mechanisms.

5. Network Developments & Upgrades:

The Ethereum network undergoes frequent developments and upgrades aimed at enhancing scalability and functionality. In contrast, Ethereum Classic focuses on stability and immutability, resulting in fewer network upgrades. While Ethereum embraces changes such as the London upgrade and the Merge, Ethereum Classic remains committed to PoW and traditional functionalities.

Conclusion:

Ethereum and Ethereum Classic, born from the same blockchain, exhibit notable differences in their origins, consensus mechanisms, token economics, market values, and network developments. Despite sharing similarities such as smart contract functionality, their divergent paths underscore varying philosophies and priorities within the blockchain community.