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A Great Year and DeFi Compatibility Are Reasons to Buy Ethereum Classic

It has been an incredibly volatile month for Ethereum Classic (CCC:ETC-USD).  It was priced at $67.77 on the first day of June and has now dropped 20% of its value. Still, its year-to-date gains stand at a remarkable 842%. Its sibling, Ethereum (CCC:ETH-USD), in comparison, is up 187%. Thus, despite its underperformance, ETC remains an economical way to invest in the Ethereum blockchain.

A concept shot of the Ethereum Classic (ETC) coin

Source: Shutterstock

Crypto markets have been incredibly volatile this year. Digital assets across the board have been on a rollercoaster ride in line with the rest of the market.

Promising altcoins such as ETC are no different. However, those assets providing some long-term value to investors have been more successful in weathering the storm. ETC offers a cheaper alternative to Ethereum and boasts many of the same features. Hence, with significantly less investment, you could own a much larger position in a similar token, making it highly attractive.

What Is Ethereum Classic?

Ethereum Classic is an open-source blockchain platform created from a hard fork in the Ethereum blockchain back in 2016. A hard fork is when the developers of a cryptocurrency split due to any reason. In this case, the fork was due to a hack, which resulted in the theft of $60 million worth of Ether.

The participants at the time were in two minds about how to deal with the hack. They held that the “code is law” and, therefore, it was best to split the blockchain. Ethereum’s blockchain was edited to remove all the transactions made by the attackers. Thus, Ethereum Classic remained as the original version of the platform with ETC as its native token after the hard fork.

Miners have supported both blockchains since, and both have seen massive success in the past few years. However, Ethereum is head and shoulders above its smaller counterpart at this time and is likely to continue to its dominance for the foreseeable future. The Ethereum blockchain has evolved considerably and is now approaching its biggest update yet, called Ethereum 2.0. The new update transitions the platform to a proof of stake system from proof of work. Ethereum Classic is sticking with the conventional proof of work system.

Proof Of Stake Versus Proof Of Work

The Ethereum 2.0 update is expected to improve the network’s scalability, security and robustness. Moreover, it is likely to be a more eco-friendly model. As a result, analysts believe that the latest update will be a gamechanger for decentralized finance and should boost the price of Ethereum to new heights.

However, ETC is also effective in the DeFi world as a smart contract platform. While its proof of work system may be of concern to environmentally conscious people, many crypto experts believe that the proof of stake system could introduce vulnerabilities for ETH. ETC has launched a new token targeting the DeFi market, called Wrapped ETC. The Wrapped ETC can be stored in ERC20-compatible wallets and enable users to stake their tokens and generate returns.

Bottom Line On Ethereum Classic

ETC has had a topsy-turvy run in the past couple of months, in line with the broader crypto market. However, on an overall basis, the altcoin has performed impressively in the past year. Moreover, it has proven to be a great alternate to Ethereum and could prove to have real utility in the DeFi world. Therefore, ETC is an altcoin with real substance and is worth investing in.

On the date of publication, Muslim Farooque 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

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.

Article printed from InvestorPlace Media, https://investorplace.com/2021/07/despite-the-volatility-etc-has-an-impressive-growth-runway/.

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