At this point, I’m going to assume that everyone knows what Ethereum is. It is practically the largest Cryptocurrency right after the original Bitcoin.
Let’s dig right into the first creation of Ethereum. Now you can choose to believe this or not, but the original Ethereum was created by a 19-year-old Russian kid named Vitalik Buterin. In 2013 he wrote what is called a white paper, which is basically a road map that looks like a college thesis, but it outlines an idea. This white paper would go on to be the foundation of the beginning of Ethereum. In his own words from the white paper, Ethereum is a next-generation, smart contract, and decentralized application platform. Now, if you don’t know what a smart contract is, it’s an agreement written in code that has a set of rules that needs to be followed. Using these smart contracts, we can write entire programs or applications commonly called decentralized applications or DAPPS for short.
Now DAPPS are useful because they can replace any tool that a financial institution has, for example, you can send and receive Ethereum. You can lend Ethereum for an interest rate. You can even borrow Ethereum.
You can create margin trades on Ethereum. You can even write a smart contract that acts as an insurance payout. This means smart contracts are the building blocks that allow us to essentially copy banks and insurance corporations and other financial businesses, and then just put them on the Blockchain for everyone to use.
So now that we have a brief overview of what Ethereum is and how it got started, let’s talk about the DAO, there is this organization on the Blockchain called the DAO, and the DAO was essentially a group of crowd-funded investors that got together and threw a bunch of money into a certain protocol that money was then to be used to grow things on the Ethereum network, which would then return a profit and be given back to the investors. Now, when I say a bunch of money, I mean like 150 million dollars from around 11 000 investors. Now on to the important part, the DAO got hacked, someone found a bug in the code and just anonymously, stole 50 million dollars worth of Ethereum.
Before we move further, let me explain one of the huge advantages of using a Blockchain see, a Blockchain is composed of a bunch of blocks. Each block starts with quite literally a summary of all of the past blocks, and then it adds some new information. In the case of Ethereum, the new information was transactions and smart contract interactions. So, each time a new block is added, there’s a new summary of the Blockchain, and the advantage of this is that you can never go back and change the Blockchain because if you do, you mess up all the Future Summaries, they’ll be wrong and you can see it immediately. These summaries are mathematical hashes, but I want to explain this idea as simply as possible, so one of the advantages of a Blockchain is quite literally that you cannot change anything in the past. This is quite literally, where Ethereum classic all got started so Vitalik The creator of Ethereum saw that 50 million dollars was hacked and he got a little upset at first. He was like, let’s add, a snippet of code into the Blockchain that won’t let this hacker spend their money and if most of the people on the network agreed, they could add this into Ethereum’s code. But a lot of people had to agree.
Not being able to change the Blockchain is one big advantage. Another big advantage is something called decentralization. So decentralization is a fancy word that no one single person can control the Blockchain and make changes themselves.
Unlike the US government, where a president can do all kinds of things without consulting with anyone, changes on the Blockchain require a ton of people to agree. We say that the power is not centralized. We say that the power is decentralized.
Naturally, people didn’t like the idea that Vitalik could offer to change the Blockchain so quickly. The attacker even wrote a letter explaining that he did nothing wrong. In his opinion, he just used a smart contract as it was written.
He just used some code that someone else wrote and it allowed him to do something that benefited him. If you think about it throughout our entire lives isn’t that what we’re all doing.
Ethereum classic proponents say that you can’t do anything immoral on the Blockchain. They say that the onus of responsibility is for those who write the code to make sure that there are no flaws or bugs one of the famous sayings is code is law, which is a way of saying that code sets the foundation for what is right and wrong. If you don’t want someone to do something with your code, you should have thought about it and tried to proactively prevent it.
Anyways, that’s what decentralized means. So what happened next well, instead of writing a snippet of code, Vitalik then proposed that they roll back the Blockchain and reverse the hack like it never happened, and then they could also fix the bug. So it couldn’t happen again. This proposal got approved, the Blockchain was changed and this is exactly how Ethereum classic got started.
So the changed Blockchain, the one where the funds were given back to the DAO, the investors, This is the regular mainstream Ethereum that we hear about today. The people who didn’t like Vitalik changing the Blockchain, like the people who believed in the ideas of decentralization in the finality of the Blockchain they stuck around and they grouped – they quite literally just kept adding new blocks to the original Blockchain.
So now we have two Blockchains, the original unchanged one called Ethereum classic and the new one that we just call Ethereum. This was a fork in the road for both Blockchains. Speaking of that, there are two types of forks, soft forks, and hard forks.
Soft forks require no action from the users to make a change to the network, and this was Vitalik’s first idea to solve the solution. Hard forks, on the other hand, are when people in the network must update their software to keep adding blocks. Moving On there may be one big question that you might have: were the coins duplicated? Technically, if you had any Ethereum before the hack, you now have coins on both the mainstream Ethereum chain and the Ethereum classic chain, and since they both have value, you could say you made money from this fork now, even though the price of Ethereum classic Is much lower the community behind it is very passionate. Let’s talk about something they’re, quite passionate about mining profitability.
So right now you can still mine the mainstream Ethereum one day in the future, though they are intending to change from their proof of work mechanism to the proof of stake mechanism. Now we have articles explaining both of these if you’re new to them, but the big change is that to mine coins, Instead of buying computer parts, you just have to buy the coin.
Ethereum classic has always been proof of work and intends to stay that way because they believe that proof of work is much more decentralized. Lots of people have computers and lots of people can mine. Also, Ethereum 2.0 uses proof of stake and is going to require a set amount of 32 Ethereum to become a staker, which inherently means it is more centralized because heck, I don’t have a hundred thousand dollars laying around almost anyone can mine Ethereum classic.
The cool thing is Ethereum Classic is also quite profitable to mine. It usually floats around the second to the 10th, most profitable coin, depending on market prices and how many other miners there are competing. Finally, I want to talk about some hacks on the Ethereum classic network, because it is worth mentioning there have been a few 51 attacks on Ethereum classic, which means someone controlled over half of the network and were able to make fake transactions where they spend their money in more than one place, this first happened around January of 2019, then happened again a few times in July and August of 2020, but they fixed this with an upgrade called the Thanos upgrade and basically, what it did is it changed the mining algorithm a bit And it hasn’t happened since so that wraps up Ethereum classic.
Thanks for Reading.