Response To Forbes Article About Ethereum Classic
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On February 21 2023 Forbes magazine published an article about Ethereum Classic (ETC) written by contributor Dan Ashmore and reviewed by editor Michael Adams titled “What Is Ethereum Classic?”.
In the piece they made an attempt to describe the blockchain, a series of assertions about it, and comparisons to Ethereum (ETH).
Some of the information they presented was correct, but most of the statements were long lasting recycled mistakes about Ethereum Classic.
In this post we will address these issues.
The original article was divided into seven sections which contain three to five paragraphs each. We will write our responses marking the sections and paragraphs in which we found the issues to clarify.
It is our hope that Forbes may read this response and perhaps make corrections to its write-up or reference this post as a bona fide response.
Section: What Is Ethereum Classic?
The fourth paragraph of this section reads:
“Ethereum Classic was produced by a fork of the original Ethereum blockchain. Like many other blockchain forks, ETC was created following an ideological and technical divide within the community.”
Our response:
It is correct to state that a blockchain fork results in a new chain which splits, due to disagreements, from the original one, but the above paragraph seems to imply that Ethereum Classic was the one to be originated at the time of the fork.
As the next section by Forbes states, Ethereum Classic is the original, unaltered Ethereum blockchain. The system that split from the mainnet was Ethereum. Ethereum is today a blockchain with an irregular state change in its history and ETC is the original chain which went live on July 30 2015 that has remained immutable since genesis.
For more information:
- Ethereum Classic Course: 6. Ethereum Classic Is the Original Chain: https://ethereumclassic.org/blog/2023-01-26-ethereum-classic-course-6-ethereum-classic-is-the-original-chain
Section: Ethereum Classic and the DAO
The third and fourth paragraphs of this section read:
“Due to the size of the hack, some in the Ethereum community proposed that the ETH blockchain should be reversed to compensate the exploited users. Others argued that this would set a worrying precedent and that blockchain should be immutable by its very nature.
A vote was held to settle the disagreement, and the pro-fork side received more than 85% of the votes. The ETH blockchain was forked, and the minority side maintained the original, unaltered Ethereum blockchain, christening it Ethereum Classic.”
Our response:
As we wrote above, these two paragraphs are correct and contradict what is implied in the previous section. Ethereum Classic is, indeed, the original, unaltered Ethereum blockchain.
Section: Ethereum vs. Ethereum Classic
The first and second paragraphs of this section read:
“Ethereum and Ethereum Classic are pretty similar when it comes to basic functionality. Most of Ethereum’s major features are also present on Ethereum Classic.
But there are vital differences between ETH and ETC. Most importantly, Ethereum Classic is incompatible with updates to the Ethereum blockchain.”
Our response:
This part is largely correct, but again, seems to imply a misconception. Ethereum Classic is practically the same as Ethereum. Users, who have accounts, balances, and utilize dapps, and developers, who write and deploy smart contracts on ETC, experience practically no difference when using ETH or ETC.
Under the hood, though, the consensus mechanism that keeps all machines participating in the network is, indeed, different as Ethereum has migrated to proof of stake from proof of work.
At the core infrastructure, running ETC or ETH nodes, or being a miner or mining pool in ETC, or validator or staking pool in ETH, are incompatible activities.
However, the EVM design standard and format, which both Ethereum Classic and Ethereum follow, which impacts users and dapp developers, is practically the same for both.
As blockchains are open source projects, any system may adopt the upgrades and changes of any other system within the standard. This maintains operational parity between all blockchains and means that ETC and ETH will always be state of the art technology as both will always be up to date in their functionality and features.
For more information:
Ethereum Virtual Machine Blockchains and Ethereum Classic: https://ethereumclassic.org/blog/2022-12-06-ethereum-virtual-machine-blockchains-and-ethereum-classic
Ethereum Classic Will Always Be State of the Art Technology: https://ethereumclassic.org/blog/2023-04-04-ethereum-classic-will-always-be-state-of-the-art-technology
The fourth paragraph of this section reads:
“In the eyes of the Ethereum Classic community, the blockchain and code will always be immutable. It preserves the pre-merge, proof-of-work system. And that means miners are still required to validate ETC transactions.”
Our response:
That Ethereum Classic preserves the pre-merge, proof of work system, and that miners will continue to mine blocks for ETC is correct.
However, it is important to differentiate what parts of a blockchain are meant to be immutable and which parts are not.
As property and title systems with smart contracts as ETC and ETH are, what is crucial to keep as secure and immutable as possible, to ensure censorship resistance and permissionalessness, are the actual accounts, balances, and decentralized programmes, or dapps, deployed in the networks, not the code as stated above.
These sensitive items are contained in what is called the “blockchain” per se, which is the database of the system. This is what ETH violated by doing The DAO reversal and ETC did not because of its adherence to true blockchain principles.
If the code and protocol of the blockchain network itself were immutable, then neither Ethereum, Ethereum Classic, or even Bitcoin for that matter, would classify as blockchains anymore as all have upgraded their systems from time to time.
Indeed, Ethereum and Ethereum Classic have been upgraded in practical lockstep, replicating all the important features, changing their protocols and software codes, more than five times depending on how you count.
However, in some cases, ETH has made changes by itself that ETC has not adopted (e.g. the migration to proof of stake) and in other cases ETC has made changes that ETH has not adopted (e.g. the deactivation of the difficulty bomb).
For more information:
Ethereum Classic Will Always Be State of the Art Technology: https://ethereumclassic.org/blog/2023-04-04-ethereum-classic-will-always-be-state-of-the-art-technology
The history of Ethereum: https://ethereum.org/en/history/
Ethereum Classic History: https://ethereumclassic.org/knowledge/history
The fifth paragraph of this section reads:
“Proponents of the merge and detractors of Ethereum 2.0 argue that a proof-of-work mechanism is more secure and decentralized than proof of stake.”
Our response:
This is correct. Proof of work is objectively more secure than proof of stake. A demonstration of this was that when Ethereum migrated to proof of stake in September of 2022 it was immediately censored in more than 60% of its blocks.
This is because proof of work, which is the major invention by Satoshi Nakamoto, guarantees four things due to the work and electricity expenditure it demands:
- It enables consensus between all the machines participating in the network.
- It is a focal point for free exit and entry from the system.
- It protects the history of transactions by imposing a cryptographic barrier.
- The cost of creating the money is very high making the cryptocurrency analogous to gold in the real world.
The proof of stake mechanism adopted by Ethereum loses all these guarantees because there is no extremely costly-to-produce cryptographic stamp or hash that serves as a focal point for the system to follow.
In proof of stake, to know which is the correct chain to join, nodes must check with trusted third parties what is the latest state. Because of this, there is no focal point for all machines in the network to follow but whatever the mining pools dictate. There is no cryptographic protection of the history of accounts, balances, transactions, and smart contracts. And, the cost of creating the money is near zero, making the cryptocurrency analogous to fiat money in the real world.
For more information:
Ethereum Classic Is Censorship Resistant, Ethereum Is Not: https://ethereumclassic.org/blog/2023-02-22-ethereum-classic-is-censorship-resistant-ethereum-is-not
Censorship & State Capture with Nic Carter & Lane Rettig: https://www.whatbitcoindid.com/podcast/censorship-state-capture
Why Proof of Stake Is Less Secure Than Proof of Work: https://etherplan.com/2019/10/07/why-proof-of-stake-is-less-secure-than-proof-of-work/9077/
Section: Miners Move to Ethereum Classic after the Merge
The first paragraph of this section reads:
“After the merge, miners moved to Ethereum Classic, helping throw the smaller crypto into the limelight. The ETC hash rate, a measure of the total power being used by mining, jumped 280% in the aftermath of the merge, highlighting the extent miners have migrated to Ethereum Classic.”
Our response:
The above information is correct, but what deserves clarification are the related comments that continue in the next part.
The second and third paragraphs of this section read:
“The main driver of this spike was staking pools run by centralized companies. An Ethereum staking pool is a tool that allows multiple ETH holders to pool their tokens together to access validator status. Ethereum requires 32 ETH, roughly $44,000 at the time of this writing, to obtain a “set of validator keys.
Before the merge, the U.S. Treasury sanctioned Tornado Cash, a virtual currency mixer that helped obfuscate the origin and destination of funds on the Ethereum blockchain. The Treasury accused Tornado Cash of facilitating money laundering. This shed further light on the concern with Ethereum’s proof-of-stake mechanism.”
Our response:
The driving factor behind the spike in ETC mining hashrate has nothing to do with the Ethereum staking pools, that proof of stake is a centralized system, the validator deposit, or the Tornado Cash sanction. The reality was that as ETH migrated to proof of stake leaving a huge stock of mining machines orphaned, the largest compatible blockchain left to mine was Ethereum Classic. This made ETC the largest proof-of-work smart contracts blockchain in the world; an incredibly valuable market position.
That Ethereum is now largely centralized and that it is prone to censorship is true, but not related to the mining spike in ETC.
The fourth paragraph of this section reads:
“This conflict highlights the ideological divergence between Ethereum and Ethereum Classic. Crypto purists favor a libertarian, censorship-resistant, decentralized model, whereas crypto pragmatists point toward the more adaptable and malleable nature of Ethereum as the way to go.”
Our response:
Miners are a clear demonstration of the high level of permissionlessness and censorship resistance of the proof of work consensus mechanism in ETC. These network participants may move from any place in the world to any other in search of the cheapest electricity prices, they may connect and disconnect from the network whenever they wish, and they can do all these things without any real restrictions as long as they have an internet connection and a low cost source of electricity. Even in China, where cryptocurrencies and mining are prohibited, more than 20% of proof of work mining is taking place.
Proof of stake has many restrictions. For example, capital staked must remain locked for long periods of time, staking pools are largely static and identifiable entities who must comply with national constraints wherever they are located, and there are very strong economies of scale that make these players very large and entrenched, thus very vulnerable to capture.
However, this must not be seen as a mere difference of opinion. That blockchains must be immutable and extremely secure is true, and that some flexibility and “pragmatism” are ok is false.
The whole purpose of the blockchain industry is decentralization because trusted third parties are security holes. That ETH is "adaptable and malleable" is not pragmatism. It is, rather, a failure to uphold the original intent of decentralized immutability and a fall for the temptation of centralism.
Migrating to technology that basically goes back to replicating the traditional fiat systems and all their flaws is an oxymoron for any blockchain system, and seeking shallow goals as “scaling” and “innovation” is to totally miss the point of the blockchain industry paradigm.
For more information:
Ethereum Classic's Focus on Trust Minimization: https://ethereumclassic.org/blog/2023-03-08-ethereum-classics-focus-on-trust-minimization
Trusted Third Parties are Security Holes: https://nakamotoinstitute.org/trusted-third-parties/
Satoshi Nakamoto Mentioned Trust Minimization 14 Times in the Bitcoin White Paper: https://etherplan.com/2020/02/29/satoshi-nakamoto-mentioned-trust-minimization-14-times-in-the-bitcoin-white-paper/10210/
Section: Advantages of Ethereum vs. Ethereum Classic
The first to third paragraphs of this section read:
“Most of the Ethereum community backed the proof-of-stake conversion. Proponents cited a few big advantages.
First, the energy impact of the merge significantly reduced Ethereum’s energy consumption by 99.9% from the previous proof-of-work consensus mechanism.
That means Ethereum Classic miners remain huge energy consumers. To put into perspective, Bitcoin mining is said to consume a quantity of electricity every year, slightly greater than Kazakhstan’s annual consumption.”
Our response:
There are no advantages of moving to proof of stake. The Ethereum ecosystem was deceived and Ethereum Classic made the right choice to stay with proof of work. This will be noticed with big market movements when the time comes (which are very near because of the multiple economic and geopolitical crises unfolding in the world today).
That proof of work blockchain networks have a negative impact on Earth's climate is an ongoing fallacy. Actually, it would be more widely known that in many ways ETC and other proof of work networks are very good for the planet if prestigious publications such as Forbes would report correctly after conducting deeper research.
Here are some points which refute the fallacy that proof of work is harmful:
- Wind and solar can be intermittent and unreliable sources of power. Proof of work networks provide stability by using electricity during surplus hours and then switching away from these sources during deficits.
- Proof of work networks help provide the critical mass of cash flow that renewables need to be economically viable actually accelerating migration to green energy.
- Proof of work networks increasingly capture methane as an energy source reducing emissions to carbon-negative eventually.
- That proof of work blockchains use excessive "energy per transaction" is a false argument because one transaction on the blockchain may represent thousands of transactions made off-chain or in layer 2 systems.
- Proof of work networks are not "wasteful" when viewed from a perspective that values humanity's flourishing. They provide security, hard money, and an incredible and unprecedented level of inviolable basic rights to people on a global scale.
- Proof of work networks use electricity that would otherwise be wasted because miners, like ants eating crumbs, don’t use the central sources of energy for humanity, but rather its marginal discards.
- All the reasons listed above demonstrate that the tagline "If you love proof of work, then you must hate the planet" is farcical and its opposite is true!
For more information:
Cypherpunk Beginnings and the Case for Proof Of Work: https://etccooperative.org/posts/2023-03-13-outline-of-bob-summerwills-speech-at-ethdenver-2023-en
Michael Saylor, Jack Dorsey Pen Letter to EPA Refuting Bitcoin Energy Fud: https://bitcoinmagazine.com/markets/michael-saylor-jack-dorsey-pen-letter-to-epa-refuting-bitcoin-energy-fud
Bitcoin Mining Council: https://bitcoinminingcouncil.com
The fourth and fifth paragraphs of this section read:
“Ethereum Classic has disadvantages when it comes to scalability. Thanks to its less malleable code, crypto analyst are not optimistic that ETC can overcome the scalability issues, which are a big stumbling block to mass crypto adoption.
While scalability is also a problem for Ethereum, the community is working to improve the situation. Thanks to the much greater attention on Ethereum from developers—ETC’s resistance to change—it’s easy to see why Ethereum is so much more popular.”
Our response:
These two paragraphs are incorrect with regard to the idea that scalability is a problem for any blockchain. They contradict the notion that Ethereum Classic could even have a problem if scalability or any other part of the technology stack were an issue.
Scalability is not an issue for Ethereum Classic, Ethereum, Bitcoin, nor any other blockchain network because the blockchain industry is layered with higher layers commanding higher volumes of transactions while netting and settling them in the lower, more secure layers (which likely are proof of work systems). This hierarchy, from scalable to secure, is how technology has worked for decades and the blockchain industry is no exception.
With regard to “resistance to change”, ETC has no resistance to change that upgrades its technology, adds new useful features, fixes bugs, or keeps current the EVM standard as described previously.
The contradiction which the Forbes argument above incurs is that if the Ethereum community is working to improve the scaling situation thanks to the much greater attention given it by developers, whatever improvements they may create will be implemented in Ethereum Classic as well.
Again, ETH and ETC, except for the consensus layer, are practically the same technology stack. In fact, ETC core developers are active participants in the larger EVM format ecosystem, constantly working to integrate new EIPs into ETC or participating in the debates and definitions of these protocols.
For more information:
The Format War, Layering, and Systemic Risk Will Define the Future Landscape of the Blockchain Industry: https://etherplan.com/2019/06/15/the-format-war-layering-and-systemic-risk-will-define-the-future-landscape-of-the-blockchain-industry/7820/
The EVM Object Format (EOF) Upgrade Explained: https://ethereumclassic.org/blog/2023-01-17-the-evm-object-format-eof-upgrade-explained
Section: Ethereum Classic Price
The first paragraph of this section reads:
“Ethereum has moved from strength to strength over the years, becoming the second largest crypto by market capitalization after Bitcoin.”
Our response:
On the contrary, Ethereum has moved from strength to weakness and Ethereum Classic has moved from weakness to strength.
Weakness in Ethereum is shown in two dimensions. The first is that it discarded proof of work as the consensus mechanism eliminating the major improvements that this technology brought to the world, namely to reach consensus with a 51% fault tolerance on a global scale, on a peer-to-peer, fully replicated network, with the highest levels of permissionlessness and censorship resistance man has ever seen.
The second one is that to build a proof of stake system, because of its inherent insecurity, developers have to create an incredibly complex protocol, with incredibly complex software clients (indeed, now to run an Ethereum proof of stake node, operators need to run two clients at the same time, not one) with ten times or more lines of code than in proof of work systems.
This complexity and volume in itself is a security hole because, by now, no one in the world may understand the whole Ethereum system and such amounts of information and moving parts only create hazards and risks where hackers and attackers may put their hands to corrupt and tamper with the system.
Ethereum Classic, just by staying with the proof of work mechanism, has advanced in the most secure and simplest way, actually improving its position in the market and its security profile because, by now, it is the largest proof of work smart contracts blockchain in the world, and the only such system that may guarantee the benefits of trust minimization and decentralization on a global scale.
For more information:
Vitalik Buterin: Updated roadmap diagram!: https://twitter.com/VitalikButerin/status/1588669782471368704
Proof-of-Stake and Stablecoins: A Blockchain Centralization Dilemma: https://www.lynalden.com/proof-of-stake/
Why Does Ethereum Classic have value? https://ethereumclassic.org/blog/2023-03-28-why-does-ethereum-classic-have-value
The second and third paragraphs of this section read:
“While ETH’s current market cap is around $200 billion, forked ETC’s current market cap is a mere $3.1 billion. Yet despite being 36 times smaller than Ethereum, ETC still places in the top 25 cryptocurrencies by market cap.
Ethereum Classic has largely traded like smaller cryptocurrencies, and it’s tightly correlated but more volatile than Bitcoin and Ethereum.”
Our response:
ETC will likely climb to be one of the top four blockchains in the world. This is because ETC actually does not occupy Ethereum’s position in the market.
As a proof of stake blockchain, ETH cannot be a secure base layer system. Only proof of work networks as Bitcoin and ETC may position themselves in that segment.
In the near future these things will become more defined in the industry and the great majority of the proof of stake blockchains will diminish while ETC will likely continue to climb in the ranks.
For more information:
- What Is Ethereum Classic’s Contribution to the Blockchain Industry? https://etherplan.com/2021/04/20/what-is-ethereum-classics-contribution-to-the-blockchain-industry/15717/
Section: Should You Invest in Ethereum Classic?
The first paragraph of this section reads:
“Given issues concerning scalability and energy consumption, as well as the continued mainstream adoption of Ethereum, it’s difficult to imagine Ethereum Classic ever gaining a foothold like Ethereum.”
Our response:
As previously described in our responses above, scalability is not an issue in the blockchain industry and energy consumption is a fallacy because proof of work actually helps the planet by accelerating the migration to renewable energy.
ETH and ETC will actually not compete in them market. Ethereum will have a certain position in the market as a layer 2 scalable system and Ethereum Classic will have a different position as a base layer, highly secure blockchain. Both will be very valuable, but arguably, Ethereum Classic more valuable than Ethereum due to its true security guarantees.
The second paragraph of this section reads:
“ETH is working to improve its drawbacks, while Ethereum Classic is staying largely the same.”
Our response:
Again, Ethereum is making its drawbacks worse by constantly adding patches and fixes to its stack that increase complexity which is a major source of risk and attack vectors. On top of this, it is driving its system to centralization which is exactly opposite of what a blockchain should do.
As explained before, Ethereum Classic is not staying largely the same. It is actually on par with Ethereum technologically and will always be state of the art technology.
In fact, Ethereum Classic and Ethereum will both ossify in the near future, precisely because adding components, introducing fixes, and complex design to make them work is actually a huge danger to these systems.
When ETC is regarded as an “immutable” system it is because of its guarantees with regard to accounts, balances, and dapps. This is its true and distinguishing value, only possible with the real decentralization that proof of work provides.
For more information:
- Ethereum Classic Ossification and Social Scalability: https://ethereumclassic.org/blog/2023-03-29-ethereum-classic-ossification-and-social-scalability
The third paragraph of this section reads:
“The virtues of altering the code can be debated, but no matter how virtuous or immutable Ethereum Classic is, if it is not practical enough to be used on a global stage, it won’t ever gain the kind of traction that more suitable cryptocurrencies will.”
Our response:
Given that Ethereum Classic’s security guarantees are its virtues, and this includes immutability, which is one of the most important or the most important feature that the blockchain industry has provided to the world, and that ETC is entirely practical because it is perfectly usable with virtually unlimited scalability through layer 2 systems, and that its technology stack will always be state of the art because it is part of the EVM standard, then the above statement is incorrect, and ETC is perfectly positioned to reap the rewards of its design choices and will increasingly gain traction, as it has been the case for a long time, to become one of the largest blockchains in the world.
The fourth paragraph of this section reads:
“Unless ETC solves more of its problems or there is an unforeseen negative development with Ethereum, the prospects for Ethereum Classic taking over the big stage is remote at best.”
Our response:
For all the reasons we have given in this response, we can’t disagree more with this final statement.
Thank you for reading this article!
To learn more about ETC please go to: https://ethereumclassic.org
