The ‘True Ethereum’ has always been interesting, but now it’s in trouble. What lies ahead?
It seems that every year holds at least one defining moment for crypto, and sometimes more. One of 2016’s critical events was the hack of The DAO, a decentralised, investor-directed fund that raised a then-unprecedented $150 million in ETH – around 7% of all the ETH in existence at the time.
This article does not constitute investment advice. Traders and investors are encouraged to do their own due diligence.
When a hacker found a way to compromise the smart contract and drain tens of millions of dollars from the fund, the Ethereum community was left with a quandary. Take the hit, or fork the blockchain to fix the problem. The first would impose enormous losses on investors; the second would compromise the integrity of the blockchain. Never again could Ethereum claim to be a permanent, immutable ledger.
The community – more specifically the miners who control the network – went for the second option. A vocal minority continued to maintain the original chain. The blockchain forked into two: the majority hashrate chain kept the title and brand, Ethereum, while the minority and ‘true’ chain ended up being known as Ethereum Classic (ETC).
Classic didn’t have the devs or funding of Ethereum, but it’s always been interesting because its community upheld one of the key principles of blockchain, and didn’t fold to pressure from investors. The DAO’s funds were lost to investors in that version of reality. Ethereum’s pragmatism in recovering funds over upholding the integrity of the chain have been glossed over ever since. ETC is Ethereum, unedited.
Anyone who held ETH at the time of the fork automatically received the equivalent amount of ETC, and while ETC has never enjoyed ETH’s market cap, it’s always been high on CoinMarketCap and had substantial trading volumes.
Now, ETC is struggling. A recent tweet from ETCDEV – one of the leading dev teams for Ethereum Classic – has announced they are shutting down due to lack of funds. The tweet states that the market downturn, combined with a ‘cash crunch’ in the company, has done for them. ETCDEV CTO Igor Artamonov says they appealed to investors in the community for funds, and to external investors, but nothing was forthcoming. Game over?
Now, the situation doesn’t look great for ETC, with the loss of one of its major developers. Technically, too, ETC isn’t in great shape. Volumes have dropped, it looks like it’s painting a bear flag, and recent support has been broken. Down would not come as any surprise. But let’s take a look at the other side of the coin.
1) The counter narrative. The community does have dev funds; those who hold them have suggested they were willing to help, but that a formal request was never received. There is an implication of a fallout, and ETCDEV unnecessarily shutting up shop.
2) It’s a bear market. Everything is suffering. It’s not a valid approach to try to correlate news with the ups and downs of the chart.
3) There are other developers. ETCDEV is not the sole dev for Ethereum Classic. The project doesn’t just stall here.
4) Ethereum has been here before. Back in 2015, the pre-fork Ethereum was rocked by speculation and ultimately confirmation of a lack of funds. In the subsequent months, it did just fine.
TL;DR don’t write off Classic just yet. Sure, tough times may be ahead, but that’s true for most cryptos – and the ones that make it through the bear market will have been forged in fire.
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