ETH, ETC - WTF?
More than just a couple of my friends asked me today – what the f@ck is going on with the cryptocurrency market. So I decided to write a short article about current events. If you are interested in Ethereum project, you may find it interesting. Disclaimer – I am not an “expert”! What I am trying to do, is describing current events to the best of my knowledge. I may be mistaken somewhere, but hope that you won’t hold it against me.
It all began while we were asleep. And by “we” I mean both European and US markets. Poloniex (one of the largest cryptocurrency exchange marketplaces) added ETC to listing, allowing users to trade it. If you weren’t observing latest events, you may wonder WTF is ETC? Allow me to explain.
After the hacker’s attack on the DAO (Decentralized Autonomous Organization) which resulted in the loss of 3.6m ether tokens, part of the Ethereum community decided to roll back, regaining lost tokens. The problem with that decision was that the hacker in fact did not break any rules, he just found a way to exploit them. So according to the original Ethereum’s “code is law” idea, that was a completely fair move. Also a forced attempt to “roll back” proved that the Ethereum is not 100% decentralized and is subject to manipulations.
As a result, not everyone in the community was ok with the “roll back” idea. Nevertheless, the “hard fork” was executed, basically meaning that attack on the DAO never existed. And the Ethereum project carried on, trying to forget about this shameful event.
However, part of the community still believed that the true Ethereum cannot be manipulated and tried to stick to the ETH Classic (ETC), the version of this cryptocurrency where the attack on DAO wasn’t erased and ignored. This part of the community didn't actually have any influence on the market because of it's minority. That was true until today. When Poloniex allowed users not only to trade ETC, but also added ETC to everyone’s wallets who owned ETH by the time of the “hard fork”, it gave ETC credibility (and free money of course :) ). Thus, ETC trade volume skyrocketed today causing roller coaster trading.
Next step was even more interesting - miners found out that while difference in price between ETH and ETC is 20 times, difference in mining difficulty is 100 times. That meant that mining ETC was 5 times more profitable then ETH. Guess what? Miners switched to ETC. Right now it stabilized, the difficulty in mining is more or less relevant to the price difference.
What will happen next? I honestly don’t know. But, I am sure as hell, that we will remember this date 24th of July. Thank you for reading this.
So whose "fault" is it? If Poloniex had never added ETC to the exchange, would the minority fork have died? It seems all but certain that if no exchange ever added it, it would have died.
Of course, Poloniex is making a ton of money off fees from ETC, especially due to the roller coaster trading. So it's in Poloniex's very clear best interest to add ETC. How could the majority ETHers have incentivized Poloniex (and all other exchanges, for that matter) not to add ETC?
Nice writeup, by the way.
Thank you for your comment.
I do believe that Poloniex was directly involved in all this story, because as you correctly mentioned without Poloniex ETC would be dead or almost dead now.
Poloniex also made a tricky move adding free ETC to everyone's wallets, actually forcing people to trade - "free money, woo-hoo" :) Without this move a lot less people would have cared.
But if we look deeper into the situation, trying to find party responsible - "hard fork" was the event that literally opened a can of worms. Polloniex just followed
Do you feel like it is confusing that there are two Ethereum projects at this point? I just made a post about this. Please consider upvoting me. I just upvoted you! https://steemit.com/steem/@brianphobos/linux-distributions-aren-t-confusing-but-crypto-forks-are-why-is-that
A bit confusing, yes. We will see, how the situation will develop
Will read and upvote, not a problem
Thanks for the simple explanation of what's currently happening on the market. I was gearing up to write a post myself but you've done a great job here!
I'm honestly watching with excitement to see what's going to happen, but given that ETH is backed by major banking institutions and big business, it will likely win in the long run. ETC, while making an interesting and sudden introduction into the market has a much greater chance of failing due to lack of backing.
Thank you for your feedback. Glad I could help!
I believe, that we will see the outcome of the situation in 2-5 days. Be ready :)
I had some ETH on poloniex, which all of a sudden showed an equal amount of ETC on there.
I have some in my ethereum wallet, I voted for the hard fork. Do you know the process I need to go through to pick up my free parallel universe ETC?
I think that you can try to deposit ETC on Poloniex. Actually you should receive amount both in ETC and ETH
I would like to thank Steemit community for support and upvoting. It is my pleasure to be a part of this community.