With ETH Remaining Dominant, Does ETC Have a Future?

Currently, the crypto industry is grappling with regulatory issues, with the US cracking down on crypto and the Securities and Exchange Commission (SEC) not wanting to clarify its stance on crypto regulations while the UK is pushing for crypto to be classified as gambling.

While addressing these local issues, a more expansive situation unfolds. On a macroeconomic scale, the US government is anticipated to run out of cash on June 1. Paradoxically, this looming reality is predicted to bolster risk assets. In tandem with this broad economic context, the cryptocurrency market is experiencing a resurgence. The market capitalization has increased by 1.2%, pushing the total value up to $1.18 trillion, indicating a positive response to these macroeconomic events.

While Bitcoin is trading just above $27,000, the second-largest cryptocurrency, Ethereum, is exchanging hands at $1,826. According to cryptocurrency data provider Kaiko, the correlation between Bitcoin and Ethereum prices has reached its lowest point since 2021, standing at 77%, which can potentially enhance trading activity within BTC and ETH pairs going forward.

Among altcoins, ETC is also in the green in USD but is in the red against BTC and ETH. Let's take a look at Ethereum Classic and if it has a future!

Click here to learn how to buy Ethereum Classic (ETC) in just four steps.

The Distinction Between Ethereum & Ethereum Classic

Ethereum is a layer 1 blockchain that pioneered smart contracts, the self-executing programs that automatically carry out certain functions when predetermined conditions are met.

First proposed in 2013 by Vitalik Buterin, Ethereum was designed to expand the utility of cryptocurrencies by allowing developers to create their own special applications called “decentralized applications,” or dApps.

ETH is the native token of the blockchain that is used for sending and receiving value globally without any third-party interference. The token powers the Ethereum ecosystem and is used to pay the gas fees, which refers to the amount of Ether that's needed to perform a certain function on the network, such as creating smart contracts, interacting with dApps, minting NFTs, and sending transactions.

When it comes to Ethereum Classic (ETC), it was the result of the Ethereum network experiencing a hard fork in July 2016. 

The original Ethereum blockchain was supposed to die out after the upgrade, but some users disagreed with the hard fork, arguing that immutability is one of the key points of blockchains and transactions shouldn't be reversed. 

This split the chain into two and resulted in the creation of Ethereum Classic. When the separation first happened, those who held ETH at the time received the exact same amount of ETC tokens in their wallets for free.

The old chain, or Ethereum Classic, executed a number of upgrades to adopt a deflationary monetary policy with a hard cap of 210 million on the total number of ETC that will be created. This step was taken to make ETC more attractive than Ethereum and supposedly make it a better store of value as its tokens are scarcer. Ethereum, meanwhile, has no limit to how many Ether can enter circulation.

The key difference between the two has been their goals, specifically, Ethereum Classic's special focus on immutability and ‘Code is Law'. 

However, much like Ethereum, Ethereum Classic is a decentralized computing system that can run a wide variety of applications. Additionally, ETC is its native currency, which is used to power smart contracts and transactions on its network. 

Users pay gas fees in ETC which is rewarded to miners who solve “proof of work” puzzles. While ETC can be mined using widely-available graphics processors, you'd need ASIC miners and specialized devices designed for crypto mining to be profitable.

Click here if you wish to learn more about this: ETH vs ETC – What You Should Know?

What's the Price Doing? ETH & ETC Performance

In 2014, ETH was launched through an ICO, during which the project raised over $16 million by selling some 50 million ETH tokens at a price of $0.31 per coin.

Between the period of 2014 and March 2017, the token's price remained range bound between $0.70 and $21. But when the bullish momentum resurfaced in the second half of the year, ETH price spiked above $100 for the very first time. In June 2017, Ether went to hit $414 before correcting only for the bullish momentum to regain strength about five months later that not only sent ETH's price to $1,418 but elevated almost every crypto token to new highs. 

Three years later, ETH retested its previous all-time high (ATH) price only for Eth's price to more than triple to set a new ATH of $4,880. Currently, the $220 billion market cap ETH is down 62.57% from this peak but up 52.33% in 2023 so far.

In contrast, ETC's price surged to a peak of $42 during the 2017 bull run before crashing to a low of $3 during the crypto-wide bear market. Amidst the bull market of 2021, ETC's price soared to a new peak of $167 but has since lost almost 89% of its value. ETC is only up 17.76% YTD.

While ETC has managed to rally some against USD, it is struggling against other cryptos. ETC is down 1.40% against ETH and 1.34% against BTC in the past year, while ETH is up in the green by 0.05% against BTC during the same period.

As of writing, the 27th largest crypto with a $2.6 billion market cap, ETC, is trading at $18.62 while managing about $69 million in 24-hour trading volume compared to the $6.6 bln volume recorded by Ethereum during this period. 

While up 1.8% in the past 24 hours, the ETC price is down by over 15% in the past month and more than 12% in the past year. For ETC to continue seeing bulls, the price must stay above the $15 support. For now, ETC's price seems to be consolidating between $18 and $25 and could break on either side. 

The token, however, has resistance near the 200-day EMA, reflecting the downward trend. More importantly, the volume of the cryptocurrency is decreasing, and fewer participants are active. 

Click here to learn all about investing in Ethereum (ETH).

ETH Continues to Improve, While ETC is Stagnant

Ethereum constantly goes through upgrades to make it more efficient. Ethereum 2.0, also known as “Serenity,” is a major upgrade that aims to make it faster and more scalable by migrating the network from proof-of-work (PoW) to proof-of-stake (PoS) consensus mechanisms.

In Dec. 2020, by launching Beacon Chain, Ethereum completed Phase 0 of ETH 2.0, which introduced staking to the network. The network users lock up their coins to become validators instead of using expensive, energy-intensive mining equipment. 

Each staker needs to lock up 32 ETH, or they can join a staking pool to combine their Ether with others to participate in creating new blocks on the Ethereum PoS blockchain. 

Beacon Chain was launched separately from the Ethereum blockchain, that's also responsible for transaction verification, staking rewards, and managing new Ethereum blockchains called “shard chains.”

On Sept. 15, 2022, Ethereum executed The Merge, marking the completion of its transition to the PoS system. Then in April 2023, with the Shapella upgrade, the network finally allowed for the unlocking of staked Ether. 

Next in line for Ethereum development is sharding, which creates multiple mini-blockchains. After this, further tweaks will be made to enhance the network's security. 

Recently, Ethereum reached a new milestone by locking away more than 20.5 million ETH, worth $37.4 billion, amidst the recent withdrawals. In addition to 18.28% of ETH supply being locked, a portion of gas fees is also being burned daily, which together makes ETH a deflationary asset. 

With Ethereum's increasing popularity and adoption, the demand for ETH will likely rise while its supply continues to decline. This can potentially drive up ETH's price.

On the other hand, Ethereum Classic has no such plans to migrate to the PoS system and intends to keep traditional mining on its own blockchain. However, Ethereum Classic hasn't stopped its attempts to grow its network and join the latest trends of DeFi and NFT.

Several projects have built on Ethereum Classic, namely Wrapped ETC, TurbineSwap, ghostNFT, Shiba Classic, ETCPlanets, SHP, Billionaire Boys Classic, ClassicHeroes, MVRSWood – Become Metaverse Degen Royalty, Matrixport, SoyFinance, Fusion, Nova USD Stablecoin, MonkeyDoo, ClassicDAO, ETCswap, Multichain, CoinRabbit, The Man Who Sold The World Metaverse, Canonical Wrapped Ether, Classic Rewards, Nft List, Lazy, ETC Bit Pixel, MoonLama, HENS, Token Factory, SwapCat, ETCZunks, and ETC HODL Contract. 

However, ETC's development and usage activity is nowhere near Ethereum, the most used blockchain and home to billions of dollars in assets.

According to DeFi Llama, Ethereum Classic has less than $240k in total value locked (TVL), down from $1 million in August 2022, with HebeSwap accounting for over 94% of it. But ETC's TVL is immensely dwarfed by Ethreum's impressive $27.22 billion TVL, reflecting just how far behind the network is in the DeFi race.

What Does the Future Hold?

Ethereum is a clear winner as Ethereum Classic has struggled to compete with Ethereum in every facet, be it market capitalization, developers, and network security since its creation. 

On top of it all, throughout its history, Ethereum Classic has been subject to numerous “51% attacks,” also known as a double-spend attack. In such an attack, malicious actors control a majority of the mining power and, as a result, can spend coins they didn't actually own.

While Ethereum Classic doesn't really have a thriving community, Barry Silbert, the CEO of Digital Currency Group, who was an early driving force behind ETC following the initial split, announced its plans to buy $50 million in shares of Grayscale's Ethereum Classic Trust (ETCG) in 2021. Currently, there are $218.6 million in assets under management (AUM) in the trust.

Despite this, the future of Ethereum Classic (ETC) is uncertain due to the continued dominance of Ethereum (ETH). While ETC has a small community and offers a similar blockchain technology, it faces challenges in terms of market adoption and developer support. 

With its larger network effects, extensive ecosystem, and ongoing development, ETH remains the preferred choice for most projects and investors. ETC's future depends on its ability to differentiate itself and attract users and developers, but it may struggle to compete effectively against ETH's established position in the market, as seen over the past many years.

Click here to learn how to buy Ethereum (ETH) in just four steps.