Last updated on August 16th, 2017 at 09:24 am
You’ve probably heard of Ethereum, which is the second most valuable cryptocurrency in the world, currently second only to bitcoin. You’ve also probably heard of Ethereum Classic, which is currently ranked as the 5th biggest altcoin according to its market cap.
This short guide will explain the difference between the two coins and how you can buy Ethereum Classic. If you’re looking for the “other” Ethereum read this post.
What’s the difference between Ethereum and Ethereum Classic?
The story goes back to the first half of 2016, when a project called theDAO (short for Decentralized Autonomous Organization) was trying to build a decentralized corporation on top of the Ethereum network.
Through an ICO theDAO crowdfunded over $140 million in ether (Ethereum’s currency), the biggest crowdfund in history at the time, which was sent to be locked into a smart contract.
A short while after the crowdfund ended, a hacker exploited a critical bug in the contract’s code, allowing him to drain the funds from theDAO into another contract under his control.
The ethereum development team, many of which were involved in theDAO project, were shocked. Ethereum was much smaller back then, theDAO held about %14 of all of the ether in existence and ETH price was dropping. Due to the way theDAO contract was writtten, Ethereum developers had a month before the hacker can start draining out the funds.
The proposed solution was to roll back the entire Ethereum blockchain to the point of before the attack took place, and changing the code so that theDAO investors would be able to undo their investment and get their ETH back. Basically they rewrote history, something that shouldn’t be possible in a true decentralized immutable ledger.
Some people didn’t like the rollback idea at all – that’s when Ethereum Classic was born. The argument went as follows:
The unique proposition of Ethereum is being an unstoppable code, a system in which code is law, and whatever you program into it just runs and no one can stop it. Arguably such a system does not take into account if the code is solid, or behaves as intended, it just runs it.
The very fact that the Ethereum development team were able to undo theDAO conundrum was a warning sign to many. If a few phone calls between some key parties and some piece of code can change the Ethereum blockchain, how unstoppable is it really?
The way Ethereum Classic proponents see it, they are the original Ethereum. They are using the original code without the rollback and with a significant following. After all, having hundreds of millions of dollars worth of market cap means a lot of people are buying into the Ethereum classic paradigm.
At the time of the split, due to a lot of uncertainty, both ETH (Ethereum) and ETC (Ethereum Classic) had some pretty volatile price swings. The split has been quoted as the cause for a downtrend in price that lasted close to a year long. We have since seen the trend change and both currencies experienced strong price growth.
How to buy Ethereum Classic in 3 Simple steps
Step 1 – Get an ETC wallet
As a mobile solution you can use the multi-currency wallet Coinomi, which allows multiple types of assets, ETC being one of them. Coinomi Works on android and soon on iOS too.
ClassicEtherWallet CX Is a Chrome extension which lets you hold ETC with ease, without having to resort to a web wallet since the extension is used as a local lite wallet.
There’s also a full fledged Mist wallet, which is the native software that runs Ethereum, adjusted to work with Ethereum Classic. You can get it on github and become a part of the network.
Step 2 – Buy Ethereum Classic
Kraken and Bitfinex allow you to buy ETC with fiat currency as well as with Bitcoin. In Poloniex however you can only trade Bitcoins for ETC (you can’t deposit USD, EUR or any other fiat currency there).
We’ll quickly guide you through the process of buying it at Poloniex.
- Sign up to the exchange.
- Validate your email address by clicking the validation link sent to you.
- On the upper right corner where the “Balances” tab is, point on it and hit “Deposits & Withdrawals”.
- Click “Deposit” at the Bitcoin (BTC) line is, this should give you a Bitcoin address that you send bitcoin to in order to fund your account.
- Go back to the “Exchange” tab on the upper left corner. Use the search bar to look for ETC and click on it.
- Fill up the price you want, denominated in BTC, and the amount you want. You can see the bottom line of how much BTC is it going to cost, and then click “Buy”.
If the price you’ve entered is above market price, you’ll get your order fulfilled pretty quickly. If it’s below market price, you’re order will be added to the order book. Once sellers reach the point that they are willing to sell at that price, your order will be executed and the ETC will be bought.
Step 3 – Withdraw your Ethereum Classic into your wallet
When you’re done buying, don’t forget to get your coins out of the exchange, as this is vital to keeping control of your money and minimizing the trust you put in third parties, like exchanges.
Go to the wallet you’ve chosen and get a receiving address. Make sure to follow best practices such as backing up your wallet (see our complete wallet tutorial here).
After you have your ETC address go back to Poloniex. At the “Deposit & Withdrawal” tab look for the ETC line and hit “Withdrawal”.
Put in the address you got from your wallet, chose the amount, which should be the entire amount that you’re not actively trading, and hit “Withdrawal”. Keep in mind that some daily and monthly withdrawal limits apply, and to increase them you should verify your identity with the exchange.
I Hope you now have a better understanding of what Ethereum Classic is and why it exists. If you have any more comments or questions feel free to leave the in the comment section below.
He is also a serial entrepreneur, founder of Bitcoin Academy, a self proclaimed moustachier and an AcroYogi.