Ethereum Classic (ETC) – what’s behind the price explosion?

Ethereum Classic (ETC) has risen nearly 300 percent in the past seven days. What is behind the rapid price increase and what actually distinguishes the Ethereum offshoot from its big brother?

On a daily basis, the Ethereum Classic price rose by 48.78 percent, even though the crypto currency has already been taken over by hackers three times in the past. Many have already written off the project because of this, but the price has continued to grow. On May 1st, a single ETC token could be purchased for just under $ 35. The price of the cryptocurrency is now US $ 134.71.

Many wonder why a coin that was so often the target of 51 percent attacks in the past is currently generating so much enthusiasm among investors.

What is Ethereum Classic?

Ethereum Classic is the original version of the Ethereum blockchain. In 2016, 3.6 million ETH were stolen on what was then the Ethereum network. As a result, the developers made the controversial decision to implement a hard fork to return the stolen funds.

The hard fork with the returned funds became Ethereum. The original Ethereum blockchain with the hacked funds became Ethereum Classic. Since that event, the Ethereum community has been divided. There is a small group of people who sharply criticize the split and consider it unfair. They are of the opinion that the code of a blockchain should be unchangeable – according to the motto “Code is Law”. Their argument is that the developers broke this law on Ethereum and therefore regard the ETC brother as illegitimate. Because of this, they decided to stick with Ethereum Classic instead, with the aim of preserving the Ethereum blockchain as they think it should be.

Today we know that after these events, the Ethereum blockchain prevailed. An overwhelming majority of developers have chosen Ethereum as a playground for decentralized applications (dApps). Therefore, there have been hardly any exciting innovations on the Ethereum Classic blockchain in recent years and there are also no well-known applications from Decentralized Finance (DeFi) or the non-fungible token sector (NFT) that use the ETC blockchain.

Why is the price rising anyway?

There could be several reasons why ETC is currently rising. A decisive factor is probably the fact that the price of its big brother, Ethereum, has been moving from one all-time high to the next for some time.

The success of Ethereum has led many investors to look for cheaper coins that also have strong potential for appreciation. It is therefore not surprising that some investors have turned their attention to Ethereum Classic as well. But not only private investors are currently buying ETC. Various institutional investors are currently gambling on a large scale with ETC. Grayscale’s Ethereum Classic Investment Trust alone, which is used by many institutional investors, held $ 1.7 billion at the time of going to press.

Another factor that could give Ethereum Classic a tailwind is the fact that Ethereum is moving to proof-of-stake. It is conceivable that some investors want to protect themselves against a failure of this project and therefore continue to buy the Ethereum Classic, which is based on proof-of-work. The renewed interest in ETC could therefore also be a side effect of the consensus change on Ethereum.