Ethereum Classic (ETC): How It Happened and Why?

We all know about Ethereum – an active community with a decentralized platform that runs on blockchain technology and operates with smart contracts to make transactions easy and straightforward within a safe and secure environment. If you are familiar with Ethereum, then you also must be familiar with the hacker attack that took away 50$ dollars from Ethereum.

Needless to say that this occasion caused much controversy with some people even blaming Ethereum itself, which later caused doubts over whether or not Ethereum is safe enough. That is how Ethereum Classic appeared. But there is a lot to it in between that we want to tell you about, so sit back, buckle up and get ready for a ride.

The Hack Attack

One of Ethereum’s creators said that blaming Ethereum for the hack attack would be like blaming the internet for having a website crashing. Of course, no sane internet user could say that, so all Ethereum users and investors were interested in finding out who is to blame if not Ethereum itself because every time something bad happens, we naturally want to know what caused the problem in the first place.

Now, to provide the answer to that question, we first need to explain what exactly happened.

In June 2016, someone decided to take advantage of a loop found in DAO – now watch closely because DAO is our primary cause of distress here. So, the person who decided to take advantage of the loop in DAO took away the third of DAO’s funds, which resulted in DAO losing 50 million dollars. Now, to be able to understand how that happened, you first need to know what DAO is.

What is DAO and how it works?

Ethereum, as you know, works on smart contracts, which is what moves Ethereum in the first place. All things done through this decentralized network thanks to the existence of smart contracts that determine the action and value of action within the ecosystem. The entire process is automated.

Now, DAO, short from Decentralized Autonomous Organization, represents a smart contract – the kind of a smart contract that was supposed to be the next big thing in Ethereum and make this network revolutionary. DAO was created as a complex smart contract that was supposed to represent a capital fund of decentralized nature that was supposed to fund all future DAPPS that was ever going to be made within the Ethereum ecosystem.

The term of Dapps is very important within Ethereum as it represents blockchain technology revolutionized in creating apps supported within the decentralized platform, all based on white paper. You can quickly launch your idea and create crowdfunding campaign through Ethereum to fund your idea (DAPP) and once your idea gets funded you can distribute your application of any type within Ethereum and earn through that process.

DAO was created to fund those types of ventures, but it obviously had a loop that caused 50$ million to disappear from the system. Now, the thing we do know is that Ethereum cannot be blamed for that as this system works impeccably. DAO is the one to blame (or whoever made it) as this complex smart contract only runs on Ethereum blockchain and does not power it. DAO does not make a crucial part of Ethereum, so Ethereum would still be able to work amazingly well without it.

The main problem was the Split Function created in DAO. The function was built to enable people who are not willing to fund DAPPS they didn’t like to back out and take their share. But there was one condition to go through before getting the money back – you can’t take the money unless it’s past 28 days. This is our loop.

A lot of people said that this loop is a problem and that it may cause problems to the way DAO works, and it eventually did when  50$ dollars disappeared during the hack attack. The worst thing was that the hacker who did it didn’t even have to work too hard to find the loop because it was already there sticking out from the equation.

Ethereum Classic

After all the fuss about having Ethereum not safe enough, which showed to be untrue as Ethereum wasn’t the one to blame for the stealth of 50 million dollars, Ethereum Classic was born. Ethereum Classic was a product of Ethereum users that didn’t want to work in Ethereum after the Hard Fork.

Hard Fork means that the entire system is being changed, In case you are not willing to change everything with the change of system you won’t be able to gain access to any new features. As well, you won’t be able to interact with other people, which of course make the entire thing have no sense at all in case you don’t want to suppress to the new changes.

That is exactly how Ethereum Classic was born – people who didn’t want to use Ethereum after Hard Fork decided to stick with the old chain, which was then named Ethereum Classic. That is how we got ETH and ETC where ETC is not suppressing any changes done with ETH, included the newly added Proof of Stake which ETH is now using instead of Proof of Work. Ethereum Classic is still at Proof of Work.

A lot of people think that ETC is even made as a way of opposing Ethereum and some people indicate that ETC is not recommended to be held or traded with because in case Ethereum would become a publicly traded company which could be the case in the future, ETC would then be considered illegal.

As for now, ETC is doing pretty great with 43$ per one coin and with the latest increase of almost 17% in the last couple of days.

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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.

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