Ethereum Classic Gets More Interesting: More Developers and a New Monetary Policy

8 months ago
64 in ethereum

Ethereum Classic (ETC) was one of the first major revolts of a successful cryptocurrency community, the point of contention being the hard fork bailout of The DAO. The core Ethereum project, founded and led by Vitalik Buterin, considered the $70 million compromise too big of a deal to let unfold in order to stick to the principle of impartiality. On July 20th, Ethereum hard forked and essentially erased the hack from its blockchain. 

Most in the Ethereum (ETH) community supported the move, but a minority considered it a violation of one of the key principles of cryptocurrency: immutability. Immediately following the fork for the original project, on block 192001 Ethereum Classic was born.

Here's a good article to help with understanding the DAO attack.

Immediately following its birth, ETC shot up to a market capitalization of almost $225 million, but has since fallen to about $85 million. Given that the project initially only had one core developer, many market participants considered it mainly a speculative pump-and-dump and steered clear. 

All that seems to be changing. In "Ethereum Classic Forges New Path; Revamped Monetary Policy Could Be Next" Bitcoin Magazine points out two important new developments:

  1. There are now 34 developers with commit rights to Ethereum's GitHub, up from the initial 1.
  2. ETC is considering a major divergence in monetary policy from ETH to impose scarcity on its tokens.

I'll add a third difference that many in the community care about: ETH is migrating to Proof-of-Stake, while ETC is committed to maintaining Proof-of-Work. @heiditravels does a great job explaining the difference between Proof of Work vs Proof of Stake.

The jump in number of core developers for ETC speaks for itself. Every cryptocurrency lives and dies by those with the right talents developing its software.

Investors should take note of ETC's proposed change in monetary policy, the original inherited from ETH essentially has unlimited token production over time.

Ethereum’s emission schedule releases a stable amount of new tokens each year. The project started off with a 72 million ether premine, allocated to presale investors, the Ethereum Foundation, and developers. Since then, about 13 million new ethers are mined each year; theoretically forever.

The ETC team is now proposing "a 20 percent reward reduction about every 2 years, so the supply will level off at some 200 million ETC around the year 2070 — with a hard cap of around 210 million ETC."

Speculating on ETC's Future

Forecasting is mostly art, some science; this is especially true for cryptocurrencies that lack valuation models. Nonetheless, recent developments and proposed changes in ETC seem bullish from a speculative perspective. 

More developers joining the community, a core team with a solid vision, and a token supply reduction are all positively related to value. What that value ultimately means is another question! At $85 million is the project already fairly valued? 

My hunch is that ETC's relative value to ETH will increase, perhaps substantially. This could mean ETC increasing faster than ETH, or ETH declining as part of that community migrates over to Classic. Or none of the above!

What are your thoughts? 

If you like this post, please upvote, resteem, or share below! Please check out my other articles and follow @finpunk to keep in touch with future content.


Rob Viglione is a PhD Candidate in Finance @UofSC with research interests in cryptofinance, asset pricing, and innovation. He is a former physicist, mercenary mathematician, and military officer with experience in satellite radar, space launch vehicles, and combat support intelligence. Currently a Principal at Key Force Consulting, LLC, a start-up consulting group in North Carolina, and Head of U.S. & Canada Ambassadors @BlockPay, Rob holds an MBA in Finance & Marketing and the PMP certification. He is a passionate libertarian who advocates peace, freedom, and respect for individual life.  



Image source: http://www.altcointoday.com/ethereum-classics-value-hypothesis/

Price chart source: https://coinmarketcap.com/

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35
  ·  8 months ago

Crap article.

Moving to PoS nullifies this: "about 13 million new ethers are mined each year; theoretically forever."

Including the word "theoretically" is typical etc scammery weasel wording.

Using "bailout fork" is more etc scammery. Shows a distinct lack of understanding on the author's part repeating this mantra. It has been explained time and time again why using that word is technically incorrect.

More nonsense: "The jump in number of core developers for ETC speaks for itself"

Those hired hands are solely there to port Charles' pet project to the blockchain. It could have been any block chain which it is specifically designed to do. It serves Charles' purpose to use this one as he can influence his way as those trying to develop for this blockchain are not very good and will take anything from anyone at this time. Like wise the pump and dumpers that pretend to believe in this chain will also take any news of any kind provided it tickles the price movement. They have zero interest or care in the technology or the chain itself.

Bizarre article form a seemingly intelligent fellow. Wholly inaccurate in more ways than three. Not sure why he would want to post this crap under his real name and affixing his academic credentials, which will come back to haunt him when he tries to seek real employment in the future and all of these inaccuracies surface under his name. :-(

61
  ·  8 months ago

It's hard to say anything. I prefer to simply watch and take note. As you say, this is the first big split in a well known blockchain.

I definitely agree with the ETC people about the importance of immutability. I'm also more comfortable with POW over POS. I've been following ETH to see if it was principle or popularity that won the argument. Now I see that ETC is defining it's own space. I expect a name change will come as it garners more support. My money would have been on ETH. My skepticism about human nature led me to favor greed over principle being the winner. Reality has proven to be far more complex!

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64
  ·  8 months ago

Some great points, and, yes, reality always has a way of proving to be much more complex! i'm agnostic on PoW vs PoS, mostly interested in the vibrancy of the dev community and the economics of any crypto project. The verdict won't be out for some time on ETH vs. ETC, but things are certainly getting more interesting.

29
  ·  8 months ago

awesome
NICE ARTICLE
Thumps Up
ETC to the moon ↑↑↑↑↑↑↑

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64
  ·  8 months ago

lol ETC has rallied quite a bit recently.

64
  ·  8 months ago

I don't re-steem very often, but I had to re-steem this one. The market is not a fan of potential unlimited amounts of a coin. I would say those that toss money into cryptos are more into deflation when it comes to their stores of value. If ETC really defines itself with a hard cap of 210 mile (10x the amount of BTC out there by next century) and if it sticks with POW then we could see ETC/ETH parity in 2017. The market has already boosted the ETC price simply based on the Bitcoin Magazine article that talks about the potential cap. This article also is a good one: https://btcmanager.com/news/ethereum-classic-considers-bitcoin-esque-monetary-policy/

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64
  ·  8 months ago

i agree, i'm also not a fan of potential unlimited payouts. it's good we have experiments with all sorts of supply parameters, but my preference are for those that are limited. interesting thought re: ETC/ETH parity...we'll see. i see these changes boosting its relative value to ETH, but ETH still has the most valuable development and community around it. of course, things change with time, but for now ETH still has a huge lead.

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64
  ·  8 months ago

This surge inspired me to make this post/video: https://steemit.com/ethereum/@bitcoinmeister/the-ethereum-classic-surge-explained-my-most-bullish-etc-video-of-2016-etc-learns-from-bitcoin I talk about parity possibility brought on by ETC solidly differentiating itself from ETH and at the same time replicating the strong aspects of BTC. 2017 could be very interesting for ETC.

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64
  ·  8 months ago

Cool video, i agree with your sentiment on supply cap and their desire to stay PoW adding nice diversity to the mix.

54
  ·  8 months ago

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