Ethereum, Ethereum Classic, and EthereumPOW: A Brief History of Ethers
It’s a multichain world out there folks, and we’re just livin’ in it. What’s the difference between these blockchains? To answer this very legitimate question, we will first have to explore some of Ethereum’s history, and the difference between Proof of Work (PoW) and Proof of Stake (PoS)–from where “Mining” and “Staking” were born, respectively.
There once was a skinny Russian-Canadian kid named Vitalik.
This kid loved Bitcoin. So much. So so much in fact, that he co-founded Bitcoin Magazine in 2011. He just thought Bitcoin was the greatest thing since sliced bread. The only problem was, he wanted it to do more. So he petitioned the Bitcoin Foundation to make the smartest money the world had ever seen… even smarter! Only–and perhaps this is why so many crypto kids call Bitcoin “Boomer Coin”–the Bitcoin community and devs didn’t want to make Bitcoin any smarter than it already was. So Vitalik said; “Forget you guys, I’m going to make my own smart money!!”. Which he did–with the help of Charles Hoskinson (Cardano), Anthony Di Iorio (Decentral), Gavin Wood (Polkadot) and Joseph Lubin (ConsenSys)–when Ethereum was born…
Only it wouldn’t be all sunshine and lollipops for too long…
- Ethereum is a decentralized platform that enables the creation and execution of smart contracts and decentralized applications (DApps).
- It was proposed by Vitalik Buterin in late 2013 and went live on July 30, 2015.
- Ethereum originally operated on a Proof of Work (POW) consensus mechanism, similar to Bitcoin, but has transitioned to Ethereum 2.0, a Proof of Stake (POS) consensus mechanism.
The DAO Hack
The DAO (Decentralized Autonomous Organization) Hack occurred in 2016 and to call it a significant event in the history of Ethereum would be an understatement. The DAO was a smart contract-based investment fund built on the Ethereum blockchain, allowing participants to vote on and fund projects–a concept referred to as an ICO (Initial Coin Offering). During this ICO, Ethereum traded from 2000 ETH/BTC ‘up to’ 1337 ETH/BTC… Everything went well–Ethereum had raised $150m in the ICO–until a vulnerability in Ethereum’s code was exploited, resulting in the theft of a substantial amount of ether. (The attacker drained 47% of the funds from the DAO, leading to a contentious debate within the community about how to address the situation…) The choices: 1) Take their lumps (with everyone enduring a just-over-50% haircut–the founders stood to lose the most if this happened as they’d already minted (or pre-mined) over 50% of the Ether supply pre-ICO) and continue with the blockchain intact (no fork)... Or 2) Turn back the hands of time and bail everyone out (hard fork). Ultimately, the community decided to implement a hard fork to reverse the effects of the hack, creating Ethereum (ETH) and Ethereum Classic (ETC) as separate blockchains.
Ethereum Classic (ETC)
- Ethereum Classic is a separate blockchain that emerged as a result of a contentious hard fork in the Ethereum network in 2016.
- The Ethereum community disagreed on how to handle the situation, leading to the split.
- Ethereum Classic retained the original Ethereum chain.
The Merge: Ethereum 2.0
Later, when Ethereum implemented its PoS consensus mechanism (between 2020 and 2022 proper), there would again be a hard fork: This time, with adherents of the disappearing-the-DAO-hack blockchain (Ethereum) wanting to continue mining new Ethereum the old way (PoW) instead of new supply being minted and distributed to current holders of Ether (PoS), there was yes another split. The new chain which resulted was the version of Ethereum where the DAO Hack had never occurred, but who’s proponents wanted to forego the move to PoS and continue with a PoW consensus mechanism. (We’ll cover the main pros and cons of PoW vs. PoS in another post, friends, fear not! And you’ll be happy to know dear reader, that NDAX was by far the first crypto platform in Canada to offer ether–or any–staking, and is still the market leader, offering 5% APY. For more info, visit How to stake your Ether on NDAX.) Onwards!
EthereumPOW (Proof of Work)
- Ethereum initially operated on PoW, similar to Bitcoin, where miners competed to solve complex mathematical problems to validate transactions, earning the privilege of adding new blocks to the blockchain.
- The move to Ethereum 2.0 involved transitioning to a PoS consensus mechanism, aiming to improve scalability, efficiency, and security.
- EthereumPOW refers to the original Ethereum network before its transition to PoS, which stayed with PoW.
As we’ve seen, Ethereum, Ethereum Classic, and EthereumPOW are related but distinct. Ethereum is the original blockchain that introduced the concept of smart contracts and DApps. Ethereum Classic is a separate blockchain that continued with the original Ethereum chain after a hack/contentious fork. EthereumPOW refers to the Ethereum network operating on a PoW consensus mechanism post-hack but before its planned transition to Ethereum 2.0 and PoS. To learn more about using NDAX to stake your PoS assets, visit https://ndax.io/staking.
Disclaimer: This article is not intended to provide investment, legal, accounting, tax or any other advice and should not be relied on in that or any other regard. The information contained herein is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of cryptocurrencies or otherwise.