Ethereum Classic (CCC:ETC-USD) is under investors’ microscopes right now. The ETC crypto is seeing some significant upward swings and, after displaying an ability to post legitimate gains this month, investors are looking at the coin once again. But as Ethereum Classic prices ride the wave of being an alternative Ethereum (CCC:ETH-USD) play, are investors really getting what they think they are?
Crypto arbitrage comes in many shapes and sizes. One can find just as many traders buying deflationary tokens as they find ones buying and holding Bitcoin (CCC:BTC-USD) like their lives depend on it. Those buying the larger cryptos are playing a safer game; there are fewer chances of schemes when you invest in a currency with a storied history and billions of dollars in market capitalization.
A drawback exists, however, in buying these larger cryptocurrencies — they obviously have much higher buy-ins. A single Bitcoin will run an investor the same price as a Mercedes Benz. Even Ethereum costs almost $5,000 a pop at current prices. Thus, less-endowed buyers are hit harder in the wallet by these purchases. The short-term losses can outweigh the benefit of the long-term gains.
This dilemma often sends buyers searching for alternatives to the cream-of-the-crop, wanting some sort of value play. Ethereum Classic is one of those names that crypto investors turn to for exactly that.
Ethereum Classic prices are seeing some big swings over the course of the last week. Since last Thursday, ETC prices boomed over 19% at its highest. Of course, the market-wide correction we’re seeing this morning has undone a lot of the gains; this is true of most other cryptocurrencies. But the charts are there. Investors can see exactly what ETC did. As such, transaction volumes of the coin are hovering at an average of around $2 billion. Many investors are pouring in thanks to the appealing price tag of $50 to $60, compared to ETH’s thousands of dollars.
Ethereum Classic Prices Are Rising, But Is ETC a Suitable Alternative?
Are these two networks providing the same fundamental values to investors? Well, of course not. Ethereum Classic is a fork from Ethereum. A 2016 hack drained 3.6 million ETH from the network and a patch to move funds from a faulty contract caused a divide. As such, the anti-change users forked the Ethereum Classic protocol from the Ethereum network.
The two are cut from the same cloth, but they are far removed from one another. And they are only growing further apart looking forward. Ethereum has upgraded plenty of times since 2016, including the ETH 2.0 overhaul that saw the network entirely revamped. As a network averse to upgrades and changing the original protocol, Ethereum Classic is the same network as it was almost six years ago. All of the changes one reads about the incoming “merge” upgrade — the update which will transition Ethereum to proof-of-stake and introduce shard chains — are relegated to only Ethereum, not Ethereum Classic.
Ethereum Classic may present a suitable alternative to ETH in the eyes of those who simply buy the coins rather than utilize the networks. But for users who see the changes that affect Ethereum, the differences between the two couldn’t be more glaring.
Don’t mistake these differences as Ethereum Classic being better or worse than Ethereum — that’s a matter of preference. Still, as ETH continues to upgrade, the two protocols are drifting further and further apart.
On the date of publication, Brenden Rearick 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.