Is Ethereum Classic (ETC) a Good Investment? In-depth Analysis and Near to Longer-Term Expectations

Hard forks occur every now and then, and they bring with some vitriol and shouting matches. A hard fork is a pretty big deal for every blockchain network, as it means permanent change and, sometimes, dissension.

There have been few incidents more controversial than that of Ethereum’s DAO incident, which saw the blockchain split into Ethereum (ETH) and Ethereum Classic (ETC). Widely covered by the media, and a main talking point for years, the hard fork saw both supporters and detractors, though if current market numbers are anything to go by, Ethereum is in a far better place.

This is an ideological split for sure and like many others of its kind (See: Bitcoin Cash squabbles), the outcome is likely to favour one token over the other for sure. While it may be that Ethereum is the winner, there is perhaps time yet for Ethereum Classic to turn into something much better than predicted.

Here I’m going to talk about Ethereum Classic and whether it’s a good investment. This is a tricky one to analyze, and although the general consensus would be that Ethereum is the better investment,it is still worth examining Ethereum Classic’s prospects.

So let’s dive straight into it, looking first at how Ethereum Classic was formed.

The Origins of Ethereum Classic (ETC)
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Everyone knows what Ethereum (ETH) was originally about. It was intended to be a more versatile blockchain network that offered smart contracts, which would let developers build all sorts of applications on top of blockchain. This was a revolutionary upgrade for the industry and many entities saw more potential in Ethereum than Bitcoin (BTC).

Smart contracts greatly increased what one could do with the strengths of a blockchain technology, allowing decentralized applications (DApps) to run on top of a blockchain.

Soon, a Decentralized Autonomous Organization (DAO) was formed on Ethereum, with the intention of funding development of DApps on the Ethereum blockchain. Decentralized being the key word, bringing together individuals that could choose how the Ethereum ecosystem would pan out with DApp development. These stakeholders had power like those on a board, they could exercise voting rights with the tokens that they held.

Without getting into the technical details, there was one mechanism in the process of exiting funding that possesses a serious flaw. At that point, the funding process had really taken off, and about $150 million in Ether had been invested. But on July 2016, that flaw was exploited and someone managed to nab $50 million in Ether.

Because there was a lot of Ether involved, the attack affected both the DAO ecosystem and Ethereum’s, as the former accounted for a lot of Ether in supply.

So there was a decision to be made: should a hard fork be made so that the siphoned funds could be returned? The majority of voters decided this was the case. Ethereum, as we know it today, was born, and that missing $50 million remained. The older blockchain, with the missing $50 million, came to be known as Ethereum Classic (ETC).

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A small portion of the community disagreed with the need to fork, saying that it went against the principles of immutability. The masses had made a decision though, and Ethereum had split into Ethereum and Ethereum Classic. The DAO was a separate entity from Ethereum but the latter’s reputation took a huge hit with the hack. People lost confidence in a project that was heralded as the future of cryptocurrency.

Ethereum Classic vs. Ethereum
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So how does Ethereum Classic compare against Ethereum, and what are the differences between the two?

The hard fork meant that Ethereum and Ethereum Classic would not be compatible. Ethereum followed new rules and the vast majority of network stakeholders shifted towards the new network. It went back to the block right before the DAO attack, and refunded users with 1 ETH for every 100 DAO.

For the most part, Ethereum and Ethereum Classic are similar, but there are some differences. It is largely a matter of ideology - people do not like the fact that Ethereum went against the principles of immutability.

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The real difference between the two comes with the fact that Ethereum has seen years of constant development and support from major players, with DApp, Decentralized Finance (DeFi) and enterprise players taking to Ethereum blockchain for their agenda. It has the support of the vast majority of original members, greater hash rate and perhaps most importantly, the Ethereum Enterprise Alliance (EEA), which is as good a reason to think that it will be the only Ethereum blockchain platform worth talking about.

How Has Ethereum Classic Fared?
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Unfortunately, it has not panned out too well for Ethereum Classic. Much of the development, investment and attention has turned to Ethereum, and Ethereum Classic has begun to fade in the minds of investors.

The price is a reflection of Ethereum Classic’s downfall, which has tumbled and not shown the same kind of confidence that Ethereum has. This is a definite indicator that the ETC may not be a good investment.

The Ethereum Classic roadmap also puts it in a poor light, when compared to Ethereum’s. There have been some notable developments, like the introduction of a monetary policy that created a fixed cap like that of Bitcoin. It has also made some upgrades that increased the security of the network.

Current and future plans for development include compatibility with Ethereum’s Byzantine and Constantinople forks, support for classic Geth, a DApp deployment tool, multi-network explorer, a smart contract IDE, among other things.

Having said all of this, on the whole, Ethereum Classic has not done the best in the years since 2016. Ethereum, while it has gone through its own difficulties in development, is the much more robust choice. Ethereum Classic will have to do a lot if it wants to reach the same heights as its competitors, but the damage may have already been done.

There have been other issues with the Ethereum Classic project as well, including one incident in 2017 where the official Twitter account announced that the Classic Ether Wallet website had been compromised.

In what is an even worse incident, the Ethereum Classic blockchain was subject to double spending attacks - with over $1.1 million in crypto being affected this way. Reorganizations involving more than 100 blocks, indicating a 51% attack, was reported by Coinbase.

None of these speak well for a blockchain that already has a difficult reputation. That said, what does the future hold?

What Does the Future Hold for Ethereum Classic?
It’s hard to say how Ethereum Classic is going to do in the future. Ethereum is certainly looking like it has better prospects, and development efforts for Ethereum have been much greater.

One large issue for Ethereum Classic is that it does not have the benefits of development that Ethereum has received. This includes the switch to Proof-of-Stake (PoS) that Ethereum will be subject to, as well as all of the other upgrades that come with Ethereum 2.0.

With Ethereum already seen as the go-to platform for DeFi and DApps, Ethereum Classic’s prospects don’t look particularly good. Ethereum Classic has a lot of catching up to do and frankly, it may be far too late for it to catch up and offer anything on the same level as other similar projects. Even projects like EOS and Cardano are better alternatives to Ethereum, and they are newer projects built on different technologies, giving them some unique selling points.

So what could be the specific predictions for Ethereum Classic? It’s hard to say in the crystal ball of prediction that is cryptocurrency price speculation, but it does not look very good for Ethereum Classic.

Ethereum Classic Price History
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Ethereum Classic has had an interesting price history. Like most other tokens, its price reached its all-time high in late 2017/early 2018, that all-time high being roughly $44. For most of its existence though, it has been hovering at a far lower valuation of about $450 million in market cap.

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Ethereum, on the other hand, has done incomparably better than ETC. With an all-time high of about $1,500, and a current price of about $150, there is no doubt that Ethereum has seen better growth and support since the split.

ETC’s price and history does not paint a flattering picture, and given that it is a direct competitor to Ethereum, EOS (EOS), Cardano (ADA), TRON (TRX), and has been less successful than them in recent times, it is certainly not the best investment one could make. The funds could definitely be budgeted elsewhere.

Conclusion
Ethereum Classic is a project that has been on the receiving end of a lot of bad news and is in a tougher spot than its competitors. The fact that Ethereum is far ahead in terms of development and that there are general trust issues surrounding the ETC network does not speak well for it.

As for whether or not this could be recommended for investment, it’s quite clear that ETC may not be the best investment, especially for a new investor who is looking to diversify his or her portfolio. There are better alternatives, both as general choices and in the niche of smart contracts and DApps.

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