Investors looking for a decentralized computing platform may consider Ethereum Classic (CCC:ETC-USD). With hundreds of cryptocurrency options to consider, ETC has many advantages. Applications run as designed, leaving out any censorship, downtime or third-party interference.
ETC runs on a distributed network. It has a blockchain ledger and is a native cryptocurrency. Additionally, the platform executes smart contracts. In order to understand why Ethereum Classic might be worth investing in, it’s important to know what all this jargon means.
More About Ethereum Classic
The decentralized platform manages digital assets, cutting out intermediaries. Ethereum Classic has no banks or any other entity interference.
It is permissionless, which lets anyone join and execute transactions. Users only need a compatible crypto wallet. This makes it easier for users on Coinbase (NASDAQ:COIN) to embrace ETC. Coinbase describes Ethereum Classic as a cryptocurrency that focuses on immutability. This idea is often explained as “code is the law.”
Ethereum Classic was formed in 2016 after it split within the Ethereum community. Coinbase has a comprehensive explanation of the infamous DAO attack that prompted this split. After Slock.it launched the DAO project on Ethereum, it raised $150 million in crowdfunding. Unfortunately, hackers exploited a loophole in the project’s smart contract, getting away with millions of Ether. Its founders and many Ethereum users backed a hard fork. This is a major change in the blockchain’s base protocol.
Some community members, however decided that the “code is the law” principle must be maintained; they stayed on the old chain and named it Ethereum Classic.
Why Embrace ETC Instead of Ethereum?
Ethereum Classic preserves much of the original Ethereum code, while Ethereum has diverged. Once again, Coinbase thoroughly presents the debate on both sides. Ethereum and Ethereum Classic both have flaws that should be considered. For example, Ethereum Classic is not backward compatible with the Ethereum fork. Since many big players in the Ethereum community use Ethereum, Ethereum Classic loses some innovations that Ethereum enjoys.
One of those big, contentious updates is the move from proof of work to proof of stake.
Ethereum is also not without its flaws. The hard fork introduced the possibility of future changes. Ethereum may have more hard forks down the road. Ethereum users will need to trust those directing the platform to make the best choices moving forward.
Fair Value of Ethereum Classic
The simple answer is that they cannot know if or when that will happen. Its fair value is relative. Bitcoin (CCC:BTC-USD) and ETH prices will influence the value of ETC. Emotions play a big role in the value of Ethereum Classic. Still, ETC’s ecosystem is not as active as that of Bitcoin or Ethereum. Investors should expect greater volatility daily. The patient reader may wait for a slump in prices before speculating on it.
Security and Upgrades
“51% attacks” are an ongoing security concern. Terry Culver, CEO of Ethereum Classic Labs, has discussed the three 51% attacks that occurred in August, 2020. He acknowledged that having that many attacks in a month was a big issue for ETC. He argued, however, that those threats are a shared problem for the entire proof of work blockchain world.
On June 12, ETC announced an upgrade set for July 21. Dubbed Magneto, the network upgrade comes at the right time. The digital asset is up sharply in 2021. It has grown faster than anyone expected. Etherplan’s Donald McIntyre thinks ETC will benefit from ETH and BTC market volatility. Still, his comments suggest that they will need to rise sharply to send Ethereum Classic to the $900 to $1000 level, which he suggests would be tied to a BTC price of over $125,000.
Your Takeaway on Ethereum Classic
Wild swings in ETC gave speculators many trading opportunities in 2021. This will not change. Bulls and bears are battling in the market to set a stable value on Bitcoin and Ethereum. This tug-of-war will continue to influence ETC prices. Swing traders should take advantage of the quick shifts by buying and selling ETC.
On the date of publication, Chris Lau did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Lau is a contributing author for InvestorPlace.com and numerous other financial sites. Chris has over 20 years of investing experience in the stock market and runs the Do-It-Yourself Value Investing Marketplace on Seeking Alpha. He shares his stock picks so readers get original insight that helps improve investment returns.