In the summer of 2016, a crisis rocked the cryptocurrency world. A new, experimental investment fund called The DAO was hacked, and the Ethereum community had to make a choice. One side argued for rewriting the blockchain’s history to get the money back. The other insisted that the blockchain, once written, could never be changed.
This fight over Ethereum’s core identity split the network in two, creating the Ethereum we know today (ETH) and its ideological counterpart, Ethereum Classic (ETC).
The conflict wasn’t about technology; it was about philosophy. It forced everyone to answer a tough question – Is the “code is law” principle absolute, even when it protects a thief? Or can the community step in to correct a disaster?
The community couldn’t agree, and that disagreement is now permanently etched into two separate blockchains.
The DAO – A good idea until it wasn’t
The project that started it all was The DAO, launched in April 2016. It was designed as a venture capital fund with no leaders, run entirely by its members. You could buy DAO tokens with Ether, which gave you voting rights on what startups to fund. The idea was electric, and a crowd of over 11,000 investors poured in more than $150 million worth of Ether. For a moment, The DAO held about 14% of all Ether in existence.
However, the code that made this possible had a critical bug. In June 2016, someone found and exploited a “reentrancy” flaw in The DAO’s smart contract. The bug let the attacker withdraw the same money over and over before the system could register the first withdrawal. For hours, the attacker drained millions. In the end, they made off with 3.6 million ETH, worth about $50 million at the time.
The hack was a gut punch to the Ethereum community. The size of the theft put the entire Ethereum network, just a year old, in jeopardy.
The great debate – Reverse the heist or live with it?
What happened next was a frantic, bitter debate over how to fix the mess. Two factions quickly formed around opposing beliefs.
The “Roll it back” camp
Most of the community, including Ethereum co-founder Vitalik Buterin, pushed for a “hard fork.” This meant creating a new version of the Ethereum software that would effectively erase the hack from the ledger. The stolen funds would be moved to a new contract so the original investors could get their money back.
Their argument was simple and pragmatic,
- Losing that much Ether was a threat to the entire network’s economy.
- Many of the investors were regular people who believed in the project. The community should protect them.
- The hack was the fault of The DAO’s bad code, not a weakness in Ethereum itself.
- Yes, immutability is important, but not if it means letting a catastrophe stand.
An initial idea for a “soft fork” that would just block the thief’s funds was scrapped after developers found it could be used to attack the network.
The “Code is law” camp
A smaller but louder group fought against the hard fork. They believed changing the blockchain for any reason, even a theft, was a betrayal of its purpose.
- Their mantra was “code is law.” They argued that the smart contract’s rules, flaws and all, were the only rules that mattered. The thief’s transactions, though malicious, followed those rules.
- A blockchain’s main selling point is that it’s unchangeable. A fork to reverse transactions would set a terrible precedent.
- Bailing out investors encourages risky behavior. People should be responsible for vetting the code they invest in.
- This kind of intervention would make the blockchain political, opening the door for future changes based on popular opinion rather than rules.
The fork that made two Ethereums
Despite the protests, an informal vote showed that over 85% of users wanted the hard fork. On 20 July 2016, at block 1,920,000, the change went live. Most people and miners switched to the new, corrected chain, which became the official Ethereum (ETH).
But the dissenters didn’t give up. They kept running the original, unchanged blockchain, where the record of the hack remained intact. They named this original chain Ethereum Classic (ETC).
Many expected this minority chain to fade away, but it didn’t. Backing from influential people like Barry Silbert of Digital Currency Group and a quick listing on the Poloniex exchange gave Ethereum Classic the support it needed to survive.
Ethereum Classic’s plan – Digital gold with a hard cap
In a crypto market full of competitors, Ethereum Classic (ETC) tries to be different. It isn’t trying to beat Ethereum at its own game. Instead, it aims to be a store of value, like a digital version of gold. This strategy is built on a simple promise – A fixed supply.
An upgrade known as ECIP-1017 locked in this policy, creating a stark difference from Ethereum’s more flexible approach to creating new coins.
ECIP-1017 – A promise of scarcity
The core of Ethereum Classic’s identity is ECIP-1017. This update, implemented in December 2017, set a strict monetary policy modeled on Bitcoin. It capped the total number of ETC that will ever exist at roughly 210.7 million coins. This finally answered the long-standing question of whether the supply of ETC could inflate forever.
To enforce this cap, the network slowly reduces the rewards for mining new blocks in a process called “the fifthening.” Every 5 million blocks, or about every two and a half years, the reward for miners is cut by 20%. The reward dropped from 4 ETC to 3.2 ETC, and later to 2.56 ETC. This schedule is public and locked into the code, giving investors a clear picture of how many new ETC will be created in the future.
Is it really a store of value?
An asset holds its value well if it’s scarce, durable, and predictable.
- The Argument For ETC – Supporters point to its strict “code is law” philosophy and its fixed supply. This combination offers a predictable asset, a safe haven from the inflation of government currencies and even other cryptocurrencies like Ethereum, which has no supply cap. Its commitment to Proof-of-Work mining, which many see as the most secure system, is also a key part of the sales pitch.
- The Argument Against ETC – The project has serious weaknesses. Its network security is a huge question mark. As the smaller chain, ETC has been hit by “51% attacks,” where hackers took control of the network. The shadow of these attacks lingers. It also faces fierce competition from Bitcoin, the original “digital gold” with a much bigger brand and network. And while ETC’s inflation is slowing, it has often been higher than Bitcoin’s. Finally, the ETC ecosystem is tiny, with few developers, apps, or users, which hurts its value.
Two chains, two destinies – How ETH and ETC grew apart
The 2016 split sent Ethereum (ETH) and Ethereum Classic (ETC) down completely different paths. Looking at their history, from market price to the health of their ecosystems, shows just how far apart they’ve drifted.
Price and popularity – A landslide victory for ETH
Since they split, the two chains have had wildly different fortunes. Ethereum cemented its place as the second-biggest cryptocurrency, with its price hitting an all-time high of nearly $4,900 in November 2021. Ethereum Classic is a much smaller player. Its own peak price of around $176 in May 2021 is a fraction of ETH’s.
This gap reflects their ecosystems. Ethereum is the foundation for the world of decentralized apps (dApps). It hosts thousands of them and secures tens of billions of dollars in its DeFi markets.
Ethereum Classic, meanwhile, feels more like a quiet town. It has a tiny developer community and hosts only about 100 dApps, with less than $1 million locked in its DeFi ecosystem. Miners flocked to it after Ethereum switched its own consensus mechanism, but that hasn’t brought in a flood of users or developers.
Security – Constant threat of attack
Network security has been a major dividing line. Because its mining network is so much smaller than Ethereum’s, ETC has been an easy target for 51% attacks. This is where an attacker can seize control of the network’s processing power to rewrite transactions and steal money.
Ethereum Classic was hit hard by these attacks. In January 2019, about $1.1 million worth of ETC was stolen in a double-spend attack. A series of even worse attacks in August 2020 resulted in over $7 million being stolen across several incidents. These breaches badly shook investor trust.
The ETC community fought back with security upgrades, like changing its mining algorithm (ETChash) and adding a defense system called MESS. The network’s hashrate jumped after Ethereum’s Merge, and these defenses seemed to work. The community deactivated MESS in January 2024, feeling the risk had lowered now that ETC was the main chain for its mining algorithm.
By contrast, Ethereum’s major upgrades, like The Merge, have been viewed as successful moves toward a more secure and scalable network.
What’s next for Ethereum Classic?
Ethereum Classic has a choice to make. Its absolute commitment to an unchangeable ledger and Proof-of-Work mining makes it stand out, but its future is far from certain. Experts are divided on whether it can grow beyond its small, loyal base.
Struggle for relevance
Mainstream adoption is a steep climb for Ethereum Classic. Its ecosystem of apps is tiny, compared to rivals, and few developers are choosing to build on it. This creates a vicious cycle – No apps means no users, and no users mean no developers.
To break the cycle, the community started the ETC Grants DAO. With support from big mining companies like Bitmain and Antpool, the program funds new projects building on the network. It has already given out nearly $700,000 to projects working on finance, NFTs, and developer tools.
The sales pitch to new developers is built on ETC’s core beliefs,
- Immutability: A promise that records are permanent and censorship-proof.
- Proof-of-Work: A belief that this is the most secure and decentralized system.
- Fixed Supply: An appeal to investors who want “hard money” like Bitcoin.
Price forecasts – Wildly unpredictable
Predictions for Ethereum Classic’s price are all over the map, reflecting both the market’s wild nature and ETC’s specific problems.
- Near Term (2025): Forecasts for 2025 are split. Some analysts see a path to highs between $55 and $60, but this depends on a healthy crypto market and ETC finding a real purpose.
- Long Term (2030+): Looking further out is pure speculation. The most optimistic see ETC possibly reaching $100 to $150 by 2030, but that would require it to finally attract major companies and investors.
The Grayscale Ethereum Classic Trust (ETCG) offers one window into what big money thinks. While the fund lets traditional investors buy into ETC, it has often traded for much less than the value of the coins it holds, hinting that institutions are still skeptical.
Conclusion – An idea in search of a purpose
Ethereum Classic is a living monument to a philosophical war. The miners who came over after Ethereum’s Merge have strengthened its security and given it a second chance. Its ultimate test won’t be whether it can catch up to Ethereum, but whether it can build a thriving ecosystem based on its principles alone. The next few years will show if it can become a vital, secure platform or if it will remain a historical curiosity—a testament to one of crypto’s most important fights.