If you are new to crypto and looking at the coin market for the first time, you may notice that some coins have very similar names, with different variants of different coins. What is the difference between these coins, and what is the point in having different names for the coins if they are the same coin?

We see it quite a bit in the cryptocurrency community. Some newcomers to crypto may be curious why there is Bitcoin, along with Bitcoin Cash, Bitcoin Gold, Bitcoin Diamond, and Bitcoin SV. This can confuse people who don’t know the differences, and the above-named coins have plenty of differences.

The same is true for another set of coins that sound very similar: Ethereum and Ethereum Classic. This article will explore the differences and similarities between Ethereum and Ethereum Classic, the story behind each coin, and more.

Ethereum

Ethereum (ETH), also known as ether, is a coin started in July 2015. It shares many similarities with other major coins in how it was built, such as Bitcoin. It was started by Vitalik Buterin, a programmer and researcher passionate about crypto.

Ethereum itself is an open-source and blockchain-based computing platform and operating system. Applications (known as D’Apps or decentralized applications) can be built on top of the Ethereum blockchain by developers all over the world. The open nature of Ethereum invites everyone to publicly review the code, make contributions, and build their own applications on top of the Ethereum blockchain.

The coin that comes from the Ethereum blockchain is known as ether. Ether is the unit of currency that is mined and used for transactions on the Ethereum blockchain. People who want to hold ether can do so in many ways, as there are plenty of wallets available for every single operating system imaginable.

Whether you’re running Windows, Mac OS, or Linux, you have an ether wallet. Mobile ether wallets are available for smartphones, which you can find on the Google Play Store (for Android users) or the Apple App Store (for iPhone and iPad users).

Trading Ether

For folks interested in trading ether, it is available to buy and sell on all of the major exchanges, such as Binance, Poloniex, ShapeShift, KuCoin, and so many more. Whatever exchange you decide to sign up for, you can rest easy knowing that ether will be able to be traded. It is, after all, one of the top three big coins, along with Bitcoin and Litecoin.

To get started trading ether, simply choose your favorite exchange (or exchanges), sign up for an account, transfer some coins into your exchange wallet to begin trading, and stock up on some ether. At this point, you will be able to either hold your ether in your exchange wallet for further trading or you can withdraw it to a personal wallet you control for safekeeping. The choice is yours.

Mining Ether

People who love the technology behind cryptocurrency will surely be big fans of Ethereum. This is because it is one of the most open coins, one of the easiest ones to mine, making it an inviting coin for people who want to get into mining crypto but who most likely can’t afford the expensive ASIC (Application Specific Integrated Circuit) machines for mining Bitcoins.

The good news is that you can mine with your desktop computer with Ether. Ethereum can be mined with CPU (Central Processing Unit) or GPU (Graphical Processing Unit) power. Many setups worldwide exist with people plugging several GPUs into their machines and mining ether.

If you’re interested in mining on the Ethereum network, simply make sure your machine is able to be used for mining, download the necessary software for mining, open up your terminal and connect to a mining pool, and you’re off to the races.

You’ll be mining ether to your personal wallet in no time, and if you’d like, you can transfer some of your mined ether to the exchange wallet you created earlier for further trading. You can also swap some of the Ether you mined for Bitcoins or any of the hundreds of altcoins on the market.

Smart Contracts

One of the key points of the Ethereum blockchain is the ability for people to execute something called smart contracts. Smart contracts are, essentially, contracts that are completely controlled, created, and executed on the Ethereum blockchain. They do not require any human interaction, and they automatically execute when certain conditions are met.

This means that contracts can be created between two parties, and then those people will not have to worry about messing with the smart contract again. It will automatically execute when the specified conditions are met by the parties who created them. The involved parties will not have to interact with it further for it to do what it is intended to do.

Since this is a blockchain we are talking about, it is also important to remember that anything stored on the blockchain is immutable and irreversible, which means anyone who is curious can take a look at every single transaction that has ever occurred on the blockchain if they so choose. This means private citizens, governments, police officers, and anyone really can publicly view the blockchain anytime they wish, just like with every other cryptocurrency out there.

The DAO and the Split

For the people reading this and wondering, “So, just how did there become two versions of Ethereum?” we haven’t forgotten about you. If you’re curious about why there is a regular Ethereum along with an “Ethereum Classic” coin, then this part is for you.

It mostly begins with an organization referred to as the Decentralized Autonomous Organization, simply known for short as the DAO.

The DAO was created primarily for funding D’Apps. The D’Apps that got funding were chosen by leaders in the Ethereum community. Then, the DAO would be able to purchase DAO tokens using ether crypto units. The D’Apps that were chosen for potential funding were then voted on by members of the DAO who held DAO tokens. If a proposal got approval of at least 20% in the vote, then they would get shares of the required DAO funds to begin.

This seemed to work for a while, and in the first month after the initial formation of the DAO, over $150 million worth of ether coins was raised and used for funding D’Apps on the Ethereum blockchain.

The DAO seemed like a great idea and was doing just fine, raising $150 million through crowdfunding alone, but there was a hole in this ship that seemingly no one was aware of. The DAO had some security vulnerabilities that were quite serious, and apparently, not a single person had a clue until it was too late.

There was a function referred to as the “split function” used by the DAO that would give someone who provided funding the same amount of ether they had invested, at which point they could create a Child DAO. This acted as, essentially, a smaller version of the DAO itself. The only catch to this rule was that the funder would have to hold onto their ether coins for at least 28 days before they would be able to spend those coins.

What the DAO members didn’t know, however, was that this split function ability was going to expose a huge security flaw in the system. On June 17 2016, an unknown hacker was able to breach the rather poorly protected system and make off with roughly $50 million worth of coins.

The Hack on the DAO: The ETH and ETC Split

This is where we answer the question of why there are two different types of Ethereum coins. You see, when someone wanted to leave the DAO, all they had to do was submit a request, and the split function would refund the user all of their Ether in exchange for any DAO tokens that they may have held. The ledger would then be updated with the transaction and their updated token balance.

The problem is that the hacker who broke into the system and stole millions had created what is called a “recursive function” in the request, allowing them to make multiple requests for the exact same DAO tokens before the transaction was registered and updated on the ledger.

For you to fully understand the gravity of the situation, you should remember that the recursive function the hacker programmed in was actually able to run continuously until a massive third of all the DAO’s money was siphoned away.

At this time, the DAO controlled at least 14% of all the ether in existence. When the hacker broke in and stole $50 million, which was at least a third of the supply held by the DAO, the community went into an uproar and immediately set themselves to the task of finding a solution to the problem they now faced.

Their solution, as it came to be, was to create a fork, which means completely stopping the blockchain and creating an entirely new one from scratch. This new blockchain is now known as Ethereum, or ETH, while the old blockchain is now known as Ethereum Classic or ETC.

Naturally, not everybody in the community was on board with the decision to fork the blockchain. This created a lot of strife and division, and while the majority chose to fork the blockchain, there were still about 10% of the community who wanted to stay on the original blockchain.

The new Ethereum chain, however, was able to retrieve the $50 million that was hacked and stolen from them.

ETH vs ETC: Just What Are the Differences?

It is important to keep in mind that what is now known as ETH is the new blockchain, and most miners, traders, and holders of ether use this version of the blockchain. Ethereum Classic runs on the exact same protocols, but the ETC community has some stark differences.

The 10% of people who stayed loyal to the original blockchain tend to stay relatively “in the dark” and believe in the concept of an immutable ledger that anyone can view. The new ETH version, on the other hand, is looking to grow as much as it can, kind of like a startup software company. The community behind Ethereum is very much out in the open, and they are all out to grow the Ethereum network as much as they can.

Inviting developers all over the world to build D’Apps on top of the Ethereum blockchain, along with finding alliances with huge tech and finance companies, Ethereum is looking to grow as big as it can.

The Ethereum Alliance consists of huge companies such as JP Morgan, Microsoft, Accenture, UBS, and more. This support and backing from billion-dollar companies has seemed to give a huge edge and much credit to Ethereum over Ethereum Classic.

Most people will look at Ethereum and Ethereum Classic and know that they both have their strengths and weaknesses, differences and similarities, but let’s not forget that the power of the market cap is real, and ETH currently has a market cap of about $15 billion. Ethereum Classic, on the other hand, has a smaller market cap of about $1.5 billion.

The Takeaway

While most people wouldn’t know the difference between Ethereum and Ethereum Classic if you didn’t explain it to them, the fact that two different platforms for essentially the same coin will confuse many folks. Crypto enthusiasts will want to be up to date on all the relevant information between the two coins, which is what we are bringing you today.

The real power of Ethereum lies in its massive community. There is definitely a strong sense of community in the Ethereum and Ethereum Classic camps.

After the massive hack on the DAO, the community rallied together to find a solution to the gaping security problem that the hacker exposed. Though not everyone agreed on the solution, a solution was found, and the coins were recovered.

The most staunch and active supporters of Ethereum wish to see it continue growing, inviting developers worldwide to contribute code to the blockchain and build their own applications on top of it. The huge market cap size and the vocal and active community behind Ethereum only mean good things for the platform's future. On the other hand, Ethereum Classic seems to be shrinking more and more over time.

However, Ethereum Classic was recently added to Coinbase, so the battle may not yet be over. A little competition is always healthy, and there is no question that the Ethereum community will continue to grow and thrive, no matter which side of the ether fence they land on.