With the Ethereum blockchain merger expected next month, the price of Ethereum Classic (ETC) today reached a highest level for four months.
The coins are traded at the time of writing at $43.33up 15% in 24 hours according to CoinMarketCap.
Ethereum Classic, what is it?
Ethereum Classic was born from a hard fork of the Ethereum blockchain, co-founded by Vitalik Buterin and Gavin Wood. A hard fork is a major protocol upgrade that involves a backwards incompatible change on the chain. Launched in 2015, the Ethereum blockchain was canceled and relaunched in 2016 after its DAO was hacked for $50 million. At the time, this decision led to a split within the Ethereum community.
In fact, some did not support the update and decided keep the original blockchain. This was then renamed Ethereum Classic. Much of the original code can be found on both projects, so both channels have a lot in common. The same purpose at first, is to allow users to execute smart contracts without the presence of third parties and without fraud. The size of the blocks and their average creation time, as well as the reward granted to miners, are otherwise identical.
However, the differences between the two projects not a little. The Ethereum Classic (ETC) token issuance cap is between $210 million and $230 million. In contrast, Ethereum (ETH) does not have a pre-established issue cap. The other difference is based on market capitalization. For Ethereum Classic (ETC), it is $5,771,664,856. On the other hand, with Ethereum (ETH), the market cap is around $230 billion. ETC is today the nineteenth largest cryptocurrency by market capitalization.
Finally, Ethereum Classic is now based on a Proof-of-Work type protocol, just like Ethereum, but the merger of the latter will add a new Proof-of-Stake a size difference that could explain the interest that ETC awakened.
How to explain the ETC pump?
Although it is no longer part of the Ethereum network, ETC is experiencing a spike in activity thanks to theincreased interest in transferring from Proof of Workvery energy intensive, at Proof of Stakewhich Ethereum plans to undertake at the end of September.
For its part, Ethereum has just breached the $1,900 mark. ETH benefits from favorable market conditions for most cryptocurrencies. But the biggest reason for this investor’s enthusiasm is undoubtedly the closely watched Merge approach. Some analysts believe soEthereum Classic takes advantage of this renewed interest in Ethereum. Although the two projects have now moved away, it is sometimes considered by some to be a cheaper version of Ethereum.
We saw above that the merger would create a size difference between the two chains: Ethereum Classic remains in Proof-of-Work and Ethereum enters Proof-of-Stake. This means that mining on this blockchain will stop. In other words, this event will generate a strong influence on minors. As this merger approaches, some members of the Ethereum community are again debating whether another hard fork of the Ethereum blockchain will be executed to preserve the Proof-of-Work approach.
Finally, it seems that many miners are trying turn to Ethereum Classic to continue their business. With its large capitalization (it is the second largest PoW type blockchain after Bitcoin) and its age, it is the most obvious solution for miners who have worked on Ethereum so far.
Therefore it remains to be followed the evolution of ETC until the merger, and the impact of the big and long-awaited event on the price of the crypto currency.