In 2013, Vitalik Buterin proposed a new cryptocurrency based on blockchain technology that sought to create the world’s largest decentralized supercomputing system that was equipped to handle an unlimited amount of decentralized applications and smart contracts. This new platform brought with it a new cryptocurrency, called ether, which was used to power the computing on the network and incentivize users to keep it secure.
Along Comes the DAO
One benefit of utilizing Ethereum was building new types of organizations, which were completely democratized and not owned by one entity. This type of entity would become known as a decentralized autonomous organization, or DAO for short.
As Ethereum gained traction, more and more people looked to invest in Ethereum-based projects and support the ecosystem. One group of investors, known now as “The DAO” locked up $150 million worth of Ether in a smart contract to be used to invest in decentralized applications and projects to build the Ethereum ecosystem.
Unfortunately, the way the smart contract code within The DAO was written was done so with a bug, which was exposed by an anonymous hacker who eventually made out with 3.6 million ETH, which was worth about $70 million at the time.
Immediately following The DAO hack, most of the Ethereum community (an estimated 90%), including its co-founder and figurehead Vitalik Buterin, wanted to roll-back the Ethereum blockchain to undo the massive theft and return the funds to their owners. This group forked the Ethereum blockchain to revert the theft, while keeping the Ethereum name.
The other part of the community viewed the blockchain as an immutable record, one that should never be altered or changed for any reason. These individuals sought to continue the Ethereum blockchain in perpetuity, never making any alterations to data or transactions that have occurred, even ones that were malicious at the time. This second group decided to continue with the un-edited Ethereum blockchain, making no changes, and taking on the name Ethereum Classic.
The fork of the Ethereum blockchain has brought into question in which other instances the chain will be allowed to fork by the community. If 5,000 ETH are stolen, will the blockchain be forked again? What if 50 ETH are stolen? Why wasn’t the chain forked when crypto-personality Ian Balina’s wallet was hacked, compromising an estimated $2 million. Or, how about when the Ethereum Parity wallet was hacked, compromising an estimated 500,000 ETH?
What Ethereum Classic has done is set a standard for its chain, ensuring that no matter what happens, transactions will never be altered in any way, creating a truly immutable platform. Although at the moment this may not seem like a benefit, it provides future security for anyone using the chain that their transactions will not be reversed for any reason. Ethereum Classic has decided to take the immutability nature of the blockchain to heart and see it all the way through, something its counterpart has not lived up to.
Blockchain technology was envisioned as a fully immutable distributed ledger that would never be censored or changed for any reason. Yes, Ethereum has done justice to The DAO by returning stolen funds, but in doing so, it has opened up the door for more questions and uncertainty surrounding what its chain is if it’s not fully immutable.
Dan is a freelance cryptocurrency and blockchain content writer. He has written content for startups, ICOs, financial planners, venture capital firms, and more. Previously he founded an e-commerce company that grew to $1 million in revenue and profitability in less than 3 years. Dan has a degree in Economics and Finance from Bentley University.