Why are there 2 types of Ethereum?
The existence of two types of Ethereum — Ethereum (ETH) & Ethereum Classic (ETC) came after a $60 million hack in 2016.
Ethereum (born 2015) is a blockchain that enables developers to build decentralized applications (dApps).
In 2016, a project called The DAO (Decentralized Autonomous Organization) was created on Ethereum. It was a smart contract functioning as a venture capital fund. The goal was to fund other blockchain projects.
The DAO raised a ton of Ethereum in a public token sale, making it one of the largest crowdfunding events at the time.
A few months after its launch, The DAO was hacked due to vulnerabilities in its smart contract code, and $60 million of Ethereum was stolen. This event created a massive controversy and led to a major decision point for the Ethereum community.
To address the situation, the Ethereum community had to decide whether to reverse the hack to return the stolen funds to the original investors.
The decision was made to execute a hard fork - a change in the blockchain’s protocol that would effectively undo the hack by restoring the network to a state before the theft occurred.
This led to the creation of a new chain with the stolen funds restored to the original owners.
Not everyone in the community agreed with this decision. Those who believed that "code is law" (meaning that the outcome of the smart contract should be irreversible, regardless of its flaws or exploitation) continued on the original blockchain without the hard fork.
This chain is known as Ethereum Classic (ETC).
Those who supported the fork moved to the new version, which continued as Ethereum (ETH).
The two types of Ethereum represent a fundamental disagreement within the community about how blockchains should be governed and whether transactions & smart contract executions are truly immutable, even in the face of hacks & exploits.
What's your opinion?
Should blockchains be 100% immutable even in the event of hacks & exploits?