Is Ethereum Classic A Good Investment?
After its launch in 2016, Ethereum Classic (built from the old Ethereum network) sparked a wave of controversy among crypto traders and investors. Many questions ensued like how is it different from its cousin, Ethereum? How are two Ethereum’s going to work? Who will stand out in the competition? Can Ethereum Classic be as good as Ethereum?
Although it began with a shady reputation, Ethereum Classic is much more developed than what meets the eye. This article will discuss Ethereum Classic, how it is different from Ethereum, whether it is a good investment option and many other questions about the coin.
What is Ethereum Classic (ETC)?
Ethereum classic is a blockchain network that has a token known as ETC. The open-source blockchain network supports smart contracts and decentralized applications.
Ethereum classic was created in 2016 after a major hack into the system prompted Ethereum to abandon the Blockchain. However, those that still believed in the blockchain picked it up and renamed it Ethereum classic.
History of Ethereum Classic
In the early 2010s, Vitalik Buterin brought about the existence of Ethereum. He created a platform with smart contracts and dApps, and many other features after studying the shortcomings of cryptocurrency pioneer Bitcoin.
However, in 2016, a major attack threatened the existence of the blockchain. The network experienced a 51% attack where its DAO was affected. Over $50 million of Ether coins were stolen.
The DAO (Decentralised Autonomous Organisation) is a smart contract network that holds funds in the blockchain.
With over $50 million drained, the attacker took control of the blockchain’s computing power and was then able to manipulate transactions. This attack prompted the creation of a new version of Ethereum Blockchain.
The new version of Ethereum Blockchain was created. The proponents of this new blockchain reverted the hack and returned the stolen funds to its owners.
However, some others supported the older version. They believed in the ‘Code is Law.’ They claimed that regardless of the result, blockchains should not be tampered with. They built their blockchain on the old version abandoned by Ethereum and named it Ethereum Classic. They also believe that Ethereum Classic is the real Ethereum, which perhaps, is technically correct.
Ethereum Vs. Ethereum Classic
People would say Ethereum Classic and Ethereum perform the same functions. Why duplicate them? Well, they don’t. They do share some basic similarities. However, they run independently as fully-fledged blockchains.
Both have a platform for smart contracts, tokens and decentralized applications. That is where their similarities end.
Ethereum is the 2nd largest cryptocurrency after Bitcoin, while Ethereum Classic is 20th; the former also has better established smart contracts. Its platform has been used to create many other coins and dApps like Binance Coin and Crypto games. Ethereum is regarded as the leading smart contract cryptocurrency and Ethereum classic is far behind.
Being equipped with a seasoned development team, Ethereum goes through a lot of updates which is lacking in Ethereum Classic. The latter is even incompatible with the Ethereum network; it can’t move to the Proof of Stake. Although Ethereum Classic is now going through its updates with Project Mantis, it is not as advanced as Ethereum’s.
We can say that the Ethereum classic is closer in functionality to Bitcoin than Ethereum. Bitcoin and Ethereum Classic are mined using Proof of Work while Ethereum is preparing to move over to Proof of Stake next year.
The two altcoins also have high disparities in price. Ethereum Classic is very cheap compared to Ethereum. So, the former could be favoured by newbies. Ethereum has reached an all-time high of $4859.50, while Ethereum Classic’s all-time high is just $176.16
ETC and ETH
Being the native coin of Ethereum Classic, ETC has a limited supply of 210,700,000, expected to reach its hard cap by 2065. There are roughly 140 million ETC in circulation.
Ethereum Classic Price Predictions
Ethereum classic’s price was $2.08 when the 2016 attack and subsequent splitting occurred. By December 2016, its price had fallen to $0.75. It climbed higher with the 2017 general cryptocurrency boom — reaching $46 in December of the same year. Then it crashed back to $3.76 exactly a year after.
It was attacked in January 2019, after which it started rising back. It was trading at $9.33 in June but returned to $3.54 by December. The price went back up in February 2020 but plummeted in March when lots of holders sold off due to fears of uncertainty as a result of the pandemic. For the rest of 2020, it didn’t trade above the $4 mark.
Then, 2021 came. The general price hike of cryptocurrencies and the upgrade on the Ethereum Classic Blockchain improved its price. It reached an all-time high of $176 on May 6, 2021.
Then, it dropped back to $32.51 by June 22. It started another rally to $62.01 by the end of June, dropped back, and went back up to $76.94 on August 15. November 3, it was priced at $55.49. It has been somewhat stable since then. At the time of writing, the ETC price is $50.79.
With many spikes and troughs in Ethereum Classic’s price, there are contrasting predictions made by various cryptocurrency forecasts.
WalletInvestor predicts that the price will reach $104.78 by the end of 2022 and that its price will be $298.80 by the end of 2026.
Digitalcoinprice predicts that its price will be around $78.04 by the end of 2021 and $151.7 by 2025. Coin price also predicts an increase to $226.14 by 2028.
Is Ethereum Classic A Good Investment?
Even though Ethereum classic is not as fully-fledged as Ethereum, it is a good option for investment notwithstanding. Determining whether an investment is good is due to several factors including, potentials, price forecast, future happenings and technological innovations. Here are the pros and cons that could determine the sway of ETC prices over the next few years.
Smart contracts and dApps:
Even though this is now a widely accepted feature among other blockchains, it would stand Ethereum Classic in good stead over the coming years. These decentralized applications and smart contracts built-in Ethereum Classic could spike the blockchain development and increase the demand for and value of the coin.
Ethereum Classic collaborated with Input Output Hong Kong, a company that developed Cardano, to improve the Blockchain’s security. This company is also behind the development of Ethereum Classic; the company introduced a specifically written project for Ethereum known as Project Mantis. This project eliminated attacks and improved the security of the network. It also fosters future upgrades on the system
Large Community of Backers:
Ethereum Classic has many supporters who believe in the ‘Code in Law’; they believe blockchains should not be forked out or tampered with regardless of hacking or manipulation of the system. These people are the main backbone investors in Ethereum.
ETC also has a hard cap of 210,700,000 tokens which can only be good for the coin. It will hopefully shoot up demand over the long term as limited tokens are in circulation.
It has a decentralized network where transactions can be performed seamlessly without relying on any financial institution and so, like any other cryptocurrency, it is free from government monetary restrictions
Being built on the original Ethereum Blockchain, Ethereum Classic always appeals to those that believe in the immutability of the platform. Old school Ethereum pioneers who were never part of the new version will always root for Ethereum Classic.
- Incompatibility With Ethereum: As Ethereum is a better-established network, it goes through a series of reviews and updates by the best professionals. Ethereum Classic would not be part of the updates, including the pending upgrade of Ethereum to Proof of Stake.
This is because the two networks now operate on different blockchains and so, they are incompatible. The more upgrades these two Blockchains undergo, the more different they become.
- Safety Concerns: Ethereum Classic is seen as unsafe after suffering major attacks in less than five years. The blockchain suffered a 51% attack in 2016, which led to the Ethereum fork off and its creation. The token is still using the blockchain that Ethereum abandoned.
However, with its recent collaboration with IOHK on Project Mantis, its security is better consolidated. But unfortunately, given the series of past attacks, the network’s security will always be questioned. If it suffers another attack, that could very well be the end of Ethereum Classic.
- Non-Integration into New Technological Needs: Ethereum Classic doesn’t plan to adopt the Proof of Stake mechanism just yet, despite the glaring advantages. The developers believe it has a stronghold of ETC holders who do not support Proof of Stake.
- Disappearing Interest In ETC: There has been a decrease in interest in ETC after suffering a series of attacks, which has affected its price and demand. The lesser the demand, the lower the price of the token.
By comparing these potentials and risks, if you think Ethereum Classic has high potential, then you should invest in it. However, only invest a tiny part of your cryptocurrency portfolio as Ethereum Classic is a medium-risk investment with potential returns for the future.
Although Ethereum Classic has made a spectacular comeback into the market, its previous attacks did leave it undesired. It is also a far less powerful Blockchain than Ethereum, and the gap only seems to be growing wider.