Ethereum is the most widely used blockchain in existence and the second most popular cryptocurrency in the world, next to Bitcoin. But like Bitcoin, different Ethereum derivatives have different functions, including Ethereum Classic (ETC) and Ethereum Proof of Work (ETHW). But what exactly is the difference between ETC and ETHW? What is their purpose and are they useful?
What is Ethereum Classic (ETC)?
As the name suggests, Ethereum Classic was the first Ethereum blockchain to be developed. This blockchain is now used to run smart contracts, programs that run when predetermined conditions are met between a buyer and a seller. The Ethereum Classic network came into existence via a hard fork in July 2016 after tensions began to mount between users of differing views within the network.
In 2016, an Ethereum-based project known as The DAO (Decentralized Autonomous Organization) was hacked via a code exploit, stealing $50 million in investor money. The Ethereum community could not agree on how users should be compensated for the loss.
Some wanted the blockchain to be rolled back, including Ethereum co-founders Vitalik Buterin and Gavin Wood, while others believed the ledger should remain immutable (which aligns with the cryptocurrency ideology). A compromise was eventually reached, leading to the Ethereum Classic hard fork.
Those who were in favor of the fork switched to the main version of Ethereum that most people know and use, while those who opposed it stayed on the original chain, which was renamed Ethereum Classic. A group of miners decided that they would be responsible for taking Ethereum Classic in a different direction from Ethereum, while preserving the original code. As a result, Ethereum Classic does not track updates on the Ethereum blockchain like the Ethereum 2.0 Merge.
The original currency of this blockchain is also known as Ethereum Classic (ETC). Like Ethereum, Ethereum Classic can also be used to develop decentralized applications (DApps) that can use native ERC-20 tokens.
Ethereum Classic Mining
Ethereum Classic became especially popular in the summer of 2022 due to the Ethereum proof of stake blockchain merger. As the Ethereum blockchain has moved from proof of work to proof of stake, miners are no longer required to verify transactions. Instead, Ethereum will use validators to secure the blockchain.
This means that thousands of miners are now looking for a new coin to make a profit from. Enter Ethereum Classic.
Ethereum Classic still works with a proof of work consensus, can be mined with both GPUs and ASICs, and can be profitable.
The Ethereum merger also gave way to a new blockchain known as Ethereum Proof of Work. So, how is this different from Ethereum Classic?
What is Ethereum Proof of Work (ETHW)?
Ethereum Proof of Work (ETHW) came as a result of the highly anticipated Ethereum Merge. The main Ethereum blockchain used the proof of work consensus mechanism, forcing miners to work. Miners would solve complex math problems to verify blocks of transactions and would be rewarded for doing so.
However, Ethereum planned to switch to the proof-of-stake mechanism for a long time, as it is a more energy-efficient protocol.
In addition, one of the biggest problems associated with the Ethereum blockchain is gas costs, which can be very high depending on the state of the network. Gas tariffs are paid to offset the computing power required to run the network. So, with a more energy-efficient consensus mechanism, these costs could be reduced (although lower costs are not expected to occur until later updates to the Ethereum PoS blockchain introduce gas-saving technology such as blockchain sharding). In addition, switching to proof-of-stake Ethereum could help it become more environmentally friendly overall.
But not everyone is happy with the Ethereum 2.0 Merge, especially the miners who are now out of money. So, along with Ethereum Classic, Ethereum Proof of Work can also be mined for a profit.
The main purpose of Ethereum Proof of Work is to give previous Ethereum miners the chance to make a profit anyway. A miner, Chandler Guo, has developed Ethereum Proof of Work to house miners who are out of work due to the merger. Ethereum Proof of Work has a native currency known as ETHW.
The price of ETHW rose to nearly $140 after its launch in August 2022, but has since fallen to around $9. Such swings are not uncommon for a brand new crypto, although it is not known how the price will perform in the coming months. That is the nature of the cryptocurrency industry!
Overall, the Ethereum Proof of Work blockchain sounds like good news for miners, but it has already faced a significant challenge related to its chain ID. Ethereum Proof of Work uses the same chain ID as a Bitcoin Cash (BCH) testnet, meaning the MetaMask software wallet could not decipher which blockchain was which.
Ethereum Proof of Work Mining
ETHW mining is a very new venture and can be done using an ASIC miner or GPU. A series of ETHW mining pools have already been created for new miners. Most notably, Binance now allows users to mine Ethereum Proof of Work via Binance Pool. ETHW mining rewards can be converted to Binance USD or Tether via Binance Convert, both stablecoins. 2miners now also offers an ETHW mining pool.
However, Binance has not yet listed Ethereum Proof of Work for trading. Most of the other well-known crypto exchanges have also not added ETHW for trading. At the moment, ETHW appears to be primarily a mining reward coin.
ETC vs ETHW: What Will You Mine?
While both Ethereum Classic and Ethereum Proof of Work use the same consensus mechanism, the two blockchains are certainly not one and the same. Ethereum Classic can provide you with both a blockchain for building DApps and a solid mining option, while Ethereum Proof of Work mainly serves as a reward crypto in the mining process. But any of these blockchains and cryptos can be right for you depending on what you want to do in the crypto industry.