Some people new to crypto think Ethereum (ETH) and Ethereum Classic (ETC) were different projects from the start. However, both were once on the same blockchain with identical histories.

This difference arose after the DAO Hack in 2016, which triggered one of the largest splits in blockchain history. This event gave birth to two networks with different development directions.

In this article, we will discuss the origins of Ethereum and Ethereum Classic, the reasons for their split, and the differences that persist today.

Before the Split: When Ethereum and Ethereum Classic Were Still One Blockchain

Before becoming two separate networks, Ethereum (ETH) and Ethereum Classic (ETC) actually originated from the same blockchain. Here’s some historical background.

Ethereum in the Early Days

Ethereum was launched in 2015 with the vision of delivering smart contracts that could run automatically without a third party. This technology became the foundation of many modern blockchain applications used today. It enabled the creation of decentralized applications (dApps) directly on top of the blockchain.

The Rise of The DAO

The DAO was one of the largest experiments in Ethereum’s early days. The project used smart contracts to create a digital organization that could manage funds and decisions automatically.

The concept is similar to crowdfunding, but the fundraising and management process was carried out through code on the blockchain.

Why Did The DAO Become So Popular?

The DAO gained popularity because it successfully raised significant funds from the Ethereum community.

Many users supported it because it was seen as a prime example of using smart contracts to build a more open and decentralized system.

The DAO Hack: An Event That Changed Ethereum’s History

The DAO Hack in 2016 was a pivotal point that changed the direction of Ethereum’s development. This incident sparked a major debate and ultimately led to Ethereum splitting into two networks, with the following explanation.

What Happened in the DAO Hack?

The DAO Hack occurred when a vulnerability in The DAO’s smart contract was exploited by an attacker. This vulnerability allowed ETH funds to be moved without authorization before the system could prevent it.

How Much Loss Was Incurred?

The attack resulted in approximately 3,600,000 ETH being moved. The incident led the Ethereum community to question the security of smart contracts and the best way to address the issue.

Why Was This Event Controversial?

The Ethereum community was divided. Some supported a hard fork to alter transaction history and restore funds, while others wanted to preserve the original blockchain according to the principle of “Code Is Law.

Ultimately, this division gave rise to two distinct networks: Ethereum (ETH) and Ethereum Classic (ETC).

 

Ethereum Hard Fork: The Beginning of the Split

Following the DAO Hack, the Ethereum community faced a major decision to determine the future of the network. This debate ultimately led to a hard fork that split Ethereum into two blockchains, explained below.

What Is a Hard Fork?

A hard fork is a major change to a blockchain’s rules that splits the network into a new and an old version. This mechanism is often used when the community cannot reach a consensus on the direction of a network’s development.

In the case of Ethereum, the hard fork was chosen to restore funds lost due to the DAO Hack, as reported by blog.chain.link.

Groups Supporting the Hard Fork

Hard fork supporters want to restore the funds of DAO victims by changing the transaction history. They believe this change is necessary to maintain community trust in Ethereum.

Groups Opposing the Hard Fork

Some in the community oppose the change because they adhere to the principle of “Code Is Law,” which states that blockchain rules must run according to the code without any changes. Changing the transaction history is considered contrary to the concept of blockchain permanence.

Final Result of the Hard Fork

These differing views ultimately resulted in two distinct networks: Ethereum (ETH), the blockchain resulting from the hard fork, which returned the DAO funds.

Meanwhile, Ethereum Classic (ETC) retained the original blockchain with its old transaction records unchanged. Both are still operating today with different visions and development directions.

Ethereum vs. Ethereum Classic: What Are the Key Differences?

Despite originating from the same blockchain, Ethereum (ETH) and Ethereum Classic (ETC) developed in different directions after the 2016 hard fork. Here are some of the differences.

1. Blockchain Philosophy

Ethereum is more flexible in making network changes and updates. Meanwhile, Ethereum Classic maintains the principle of immutability, which means keeping the blockchain records unchanged.

2. Community and Developers

Ethereum has a larger community and number of developers with more active development activity. Ethereum Classic still has supporters focused on upholding the blockchain’s original principles.

3. Application Ecosystem

Ethereum has a larger ecosystem with numerous DeFi, NFT, and dApp projects. This is supported by a larger user base, developers, and infrastructure, which is why many projects choose to build on Ethereum.

4. Network Security

Network security is influenced by the size of the network and the computing power it supports.

Ethereum has a larger network and higher validator participation. Meanwhile, Ethereum Classic still relies on a system and community of miners to maintain its network.

5. Consensus Mechanism

Ethereum has switched from Proof of Work (PoW) to Proof of Stake (PoS) to improve energy efficiency. This change is one of the biggest updates in Ethereum’s history.

Meanwhile, Ethereum Classic (ETC to IDR) still uses Proof of Work, relying on miners to secure the network.

 

Why Did Ethereum Switch to Proof of Stake?

Ethereum underwent the Ethereum Merge in 2022, replacing its Proof of Work (PoW) system with Proof of Stake (PoS).

This change aims to reduce energy usage, make the network more efficient, and support Ethereum’s long-term development.

PoS is a crucial step in Ethereum’s roadmap to increase scalability and strengthen ecosystems like DeFi, NFTs, and dApps.

This change also differentiates Ethereum from Ethereum Classic because ETH chose a new, more modern system, while ETC retained Proof of Work as part of its original principles.

Why Does Ethereum Classic Continue to Use Proof of Work?

Ethereum Classic continues to use Proof of Work (PoW) because its community wants to maintain Ethereum’s original principle, “Code Is Law.” This principle holds that blockchain rules should run according to code without changing existing records.

For ETC, retaining PoW is a way to maintain Ethereum’s original approach, which emphasizes decentralization and rule consistency.

However, this system also faces challenges such as higher energy consumption and slower network development compared to Ethereum, which has transitioned to Proof of Stake.

Are Ethereum and Ethereum Classic Still Relevant Today?

Ethereum (ETH) remains one of the largest blockchains with a vast ecosystem of DeFi, NFTs, and dApps. Its development continues through Layer 2 to increase network capacity and institutional support through products like ETFs.

Ethereum Classic (ETC) remains steadfast with Proof of Work (PoW) and a community that supports the principle of immutability. ETC is the choice for supporters of Ethereum’s early approach, which maintains immutable blockchain records.

Both remain relevant with different focuses, as Ethereum pursues ecosystem development, while Ethereum Classic maintains the blockchain’s original philosophy.

What Can Investors Learn from the Ethereum Split?

The DAO Hack is a significant case study in blockchain history, demonstrating that crypto technology relies not only on code but also on community decisions.

This event demonstrates the significant role governance plays in determining the direction of a project.

Fundamentally, understanding how the community makes decisions is crucial to assessing the risks and development of a crypto project.

Ethereum vs. Ethereum Classic: Which is Better for Investors to Understand?

The discussion of Ethereum vs. Ethereum Classic isn’t about finding a winner, but rather about understanding the direction of their development.

Ethereum and Ethereum Classic originated from the same history, then separated due to differing visions. Ethereum evolved by adapting to market needs, while Ethereum Classic maintained the original principles of the Ethereum network.

This difference helps investors see that blockchain isn’t just about technology, but also about the evolution of ideas, community decisions, and the philosophy that shapes its development direction.

Conclusion

So, that was an interesting discussion about Ethereum vs. Ethereum Classic and the reasons why these blockchains separated. You can read more about it in the INDODAX Academy Crypto Academy.

In conclusion, Ethereum and Ethereum Classic started out as the same blockchain until the DAO Hack in 2016 became an unavoidable point of contention.

From that incident, two perspectives emerged: one favored changes to recover funds and maintain system trust, while the other maintained the original record according to the original blockchain principles.

These differing views then developed into two distinct paths, both in terms of philosophy, development direction, and how each is used in the crypto ecosystem today.

Ethereum has become more adaptive to technological and market needs, while Ethereum Classic remains committed to its original approach, emphasizing data immutability.

For investors, this story illustrates that a blockchain is shaped not only by code, but also by collective decisions made when facing critical situations.

This demonstrates that governance, risk response, and community direction can directly influence a project’s future, just as importantly as the technology used.

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FAQ

1. What are the main differences between Ethereum and Ethereum Classic?
   Ethereum (ETH) and Ethereum Classic (ETC) originated from the same blockchain but split after the DAO Hack in 2016.Ethereum chose to hard fork to refund victims, while Ethereum Classic retained the original blockchain without changing the transaction history.
2. Why did Ethereum and Ethereum Classic split?
   The split occurred due to differing community views after the DAO Hack.Some supported changing the blockchain to refund victims, while others maintained the principle that the blockchain should not be changed.
3. What was the DAO Hack?
   The DAO Hack was a hack of The DAO project in 2016 that exploited a vulnerability in its smart contract and caused millions of dollars in ETH to be transferred to addresses controlled by the attackers.
4. Why did Ethereum use Proof of Stake while Ethereum Classic remained Proof of Work?
   Ethereum switched to Proof of Stake through The Merge to improve energy efficiency and support its long-term roadmap.Ethereum chose to retain Proof of Work because it was considered more aligned with the network’s original principles.
5. Is Ethereum Classic still in use today?
   Yes. Ethereum Classic is still actively used and has its own community, although its ecosystem size and number of developers are smaller than those of Ethereum.
6. Does Ethereum Classic have smart contracts like Ethereum?
   Yes. Ethereum Classic still supports smart contracts because it is derived from the base code of Ethereum before the hard fork.
7. Which has a larger ecosystem, Ethereum or Ethereum Classic?
   Ethereum has a much larger ecosystem with thousands of DeFi, NFT, Layer 2 applications, and global institutional support. Ethereum Classic has a smaller ecosystem, but still maintains a loyal community.
8. What is the biggest lesson from the Ethereum and Ethereum Classic split?
   This event shows that blockchain is not only defined by technology, but also by community decisions, network governance, and the philosophies adopted by its users.

Author: Boy