Hard fork sets stage for ethereum classic's second major departure from ethereum

For any casual readers on cryptocurrency, one of the first things lớn note with Ethereum Classic (CCC:ETC-USD) is not lớn confuse it. That’s because casual readers might conflate Ethereum Classic with the more well-known, more valuable, Ethereum (CCC:ETH-USD).

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And that’s probably a good place khổng lồ start when discussing Ethereum Classic. There was an event called the hard fork which occurred in năm 2016. And it’s important to understvà what happened in order to understand both Ethereum Classic and Ethereum today.

There are actually two hard forks which have sầu occurred, và this article looks at the original hard fork and the more recent hardfork.

Initial Hard Fork

Ethereum Classic, as the name hints, is the granddaddy of the Ethereum blockchain. If not for what happened in năm 2016, it may still be the only Ethereum in existence today. But that was not lớn be.

It all started with something called the Decentralized Autonomous Organization, or DAO. The DAO was created lớn act as a sort of decentralized funding community and platkhung. The DAO was built on the Ethereum blockchain with the purpose of funding blockchain applications. It acted as a sort of venture fund in which successful blockchain applications would return gains to investors. Token holders could vote on which projects lớn fund, with those receiving more than 20% approval moving on khổng lồ development.

Investors in the DAO also needed a function by which they could withdraw their tư vấn for a given project. This is where the trouble started. A so-called split function was created which enabled investors lớn get their Ether back. The investor would get their Ether bachồng và the ledger would update. But the Ether holder wouldn’t be able to use their Ethereum for 28 days.

Cryptos Are Vulnerable

This splitting function was identified as vulnerable in May và June of 2016 until it was finally exploited on June 17, 2016.

On that day “The hacker or hackers stole 11.5 million of Ether, worth approximately $50 million at the time, by repeatedly triggering the splitting function. The network continued to lớn refund Ether for the same DAO tokens without registering the transaction on the public ledger. However, the stolen Ether was still subject khổng lồ the 28-day holding period. Because the Ether was technically recoverable, the Ethereum community could either create a fork to lớn reverse the illegitimate transactions or vị nothing.”

The community was split between those who wanted the blockchain lớn remain immutable, and those who wanted the hachồng reversed. Of course, the hard fork occurred và the rest is history.

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That was the first major hard fork between Ethereum Classic and Ethereum. But another happened not long ago. Fortunately this was proactive sầu rather than reactive sầu.

Proof of Work and Proof of Stake

Ethereum Classic remains a proof of work blockchain. Bachồng in 20đôi mươi Ethereum switched to lớn proof of stake marking another hard fork between the two.

The point here is that blockchain projects and cryptocurrencies are becoming increasingly concerned with efficiency & environmental impact. The choice to remain a proof of work blockchain may indeed be a costly one for Ethereum Classic as it relates khổng lồ price.

It’s clear that Bitcoin’s (CCC:BTC-USD) proof of work Model is not en vogue with investors currently. The mention of a proof of work Model is going lớn conjure up images of excessive sầu electricity use & environmental degradation.

It’s probably another reason that ETC is going to lớn have sầu trouble garnering much attention in the broader cryplớn world of 2021.

On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject khổng lồ the bacninhtrade.com.vn Publishing Guidelines.

Article printed from bacninhtrade.com.vn Media, https://bacninhtrade.com.vn/2021/06/understanding-ethereum-classic-hard-forks-that-limit-its-progress/.