"Why is Ethereum Classic going up?" is the question of the hour as ETC, trading at only $35.11 on April 28, skyrocketed to an all-time high of $110 on May 5. That's a 223% increase. The reason behind Ethereum Classic's price jump is a mix of social media hoopla and the sudden spotlight of its pricier sibling Ethereum (ETH).
Ethereum Classic is not to be confused with Ethereum. ETC is a hard fork of ETH created after the Decentralized Autonomous Organization (opens in new tab) (an Ethereum-based project) was hacked in 2016.
The Ethereum community clashed on how to resolve the breach: one group wanted to reverse the transaction while the other wanted to keep mining the originally hacked blockchain. In the end, the former continued with Ethereum as its namesake while the latter — the group with the hacked Ethereum blockchain — created a fork called Ethereum Classic.
ETH is the cash cow of the two, but as of this writing, ETC is catching up.
Why is Ethereum Classic going up?
One reason for Ethereum Classic's price spike is the sudden spotlight of its higher-priced twin Ethereum. Ethereum is the most popular digital asset behind only Bitcoin. ETH has been climbing steadily over the years, but it experienced a sudden boost at the end of April.
On April 19, Ethereum was trading at around $2,163. As of this writing, Ethereum is now priced at $3,402; that's a 57% increase in just two weeks. Ethereum's price uptick is a result of investors' increased confidence in the blockchain. This, in part, could have something to do with non-fungible tokens (NFTs) and their heightened visibility in mainstream media. NFTs are digital collectibles (e.g. a JPEG of digital artwork) that typically run on the Ethereum blockchain. In order to mine and purchase NFTs, you have to buy ETH first.
Celebrities including The Weekend, Mark Cuban, Lindsay Lohan and Eminem have all dabbled with NFTs, boosting the average joe's interest in the Ethereum blockchain.
Many cryptocurrency pundits tout Ethereum as "the next new internet" because its infrastructure is used for running decentralized apps (dApps). For the uninitiated, dApps is a growing movement of applications that utilize Ethereum to disrupt business models that involve a single entity controlling everything.
Medium writer Diana Chen elucidated dApps in the most easy-to-digest manner, explaining that the internet is largely dominated by big corporations (e.g. Google) that want to monetize your activity and data. "The decentralized web represents a step away from this, and dApps are a crucial part of that movement," she said. The primary advantage of dApps is that they dispel intermediaries and centralized authorities.
Decentralized apps are built from Ethereum "smart contracts" which, according to Coindesk, are codes that auto-execute the terms of agreement so users are not dependent on third parties to enforce the rules.
With Ethereum demonstrating its impressive utility, especially as NFTs become more prevalent, more people are shifting their attention toward Ethereum Classic. It's cheaper and therefore has more room for growth.
When the masses start understanding that one $ETC (Ethereum Classic) is basically the same thing as one $ETH and can be purchased on all major exchanges including #robinhood at a price that’s basically 70 times cheaper, we all know what will happen: $ETC will explode 🚀🚀🚀May 1, 2021
While many are distracted by Dogecoin and its zippy trip to the moon, perhaps the masses shouldn't overlook ETC. With NFTs, smart contracts, and dApps on the scene, Ethereum Classic certainly has a lot of potential.
Note: This is not financial advice. Digital assets are extremely volatile, so buy at your own risk.