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How Classic is Ethereum’s Austrian Kin

Last Updated March 4, 2021 4:53 PM
Justin OConnell
Last Updated March 4, 2021 4:53 PM

“Ethereum Classic rejects Keynsean heresy, and returns to Bitcoin’s Austrian roots,” declares arvicco, a pseudonymous Ethereum Classic project coordinator and cross-chain trading programmer.

An event  organized by enthusiasts of Ethereum Classic took place Tuesday in London, featuring renowned cryptocurrency enthusiasts like Jon Matonis, whose words were the first in the mainstream to openly celebrate Bitcoin when he wrote for Forbes.

The event might mark the first time that high-profile thinkers (such as Jon Matonis for example) will come together on a panel to discuss what might be the most optimal monetary policy for cryptocurrencies. One of the discussions revolved around Ethereum Classic monetary policy.

The conference, organized by Ethereum Classic supporters, did not revolve around what some have called a “copycat” platform (referencing its Ethereum basecode) in Ethereum Classic. It did feature Ethereum Classic specific presentations on, for example, Ethereum Classic Improvement Proposals (ECIP) in reference to a new iteration of the blockchain which, if implemented, would differentiate further Ethereum Classic from Ethereum.

At the conference, the discussion concluded dramatically with an Ethereum supporter calling out that Ethereum Classic was nothing more than a “copycat chain.”

As reported first by Bitcoin Magazine’s Aaron van Wirdum , ETC is abandoning Ethereum’s unlimited inflation model and moving to a fixed emission cap schedule, similar to Bitcoin’s. Ethereum Classic is not following the vision set out for the smart contract platform, Ethereum, and won’t adopt proof-of-stake mining like Ethereum’s Vitalik Buterin discusses.

ECIP-1017  (Ethereum Classic Improvement Proposal 1017), proposed by Matthew “snaproll” Mazur, caps the number of classic ethereum tokens that can be mined and issued. It also won’t ‘halve’ like the Bitcoin does, referring to the changes in the code where bitcoin’s mined supply is cut in half in line with its disinflationary model.

Instead, ‘tithings’ will represent more incremental disinflationary programming. The proposal for 1017 caps ETC at 210 million by 2070. Right now, there are 87 million ETC tokens

There’s currently no consensus for this proposal, but arvicco suggests its most popular within the small community. While Ethereum Classic has enjoyed some adoption, such as by China’s BTCC, Ethereum Classic suffered the same ‘bug attack’ as Ethereum and there’s a hard fork planned for January.

“We want to tap the intellectual capital of the whole crypto-community to come up with an optimal model,” says the crypto-decentralist, “ given our circumstances and the lessons learned by crypto community since Bitcoin’s inception.

He adds: “One of the lessons was that Bitcoin’s ‘halving’ events were pretty disruptive, so we would like to cut inflation in smaller increments, but more often.”

Ethereum Classic remains at work putting together a governance framework and tools implementing it, “for a truly decentralized community,” Arvicco notes. Ethereum Classic, similar to changes recently made by the Steemit developers, want to encourage the adoption of the blockchain’s native token.

“Monetized platform token is a critical component of a blockchain system that aligns economic incentives of key stakeholders,” arvicco says, “including miners, investors, developers and users. It is impossible to achieve sustainable monetization without token scarcity.”

Ethereum Classic proponents cite this as a “basic proponent” of Austrian economics, an undercurrent in the Ethereum Classic Community, which sees Ethereum’s choice to hard fork and undo the DAO exploitation as proof that Mr. Buterin’s chain is not immutable or vulnerable to tampering.

“A proper disinflationary monetary policy should support token monetization,” arvicco rationalizes, “thus ensuring alignment of interests and long-term platform success.”

While users say ETC became its own blockchain the minute of the DAO bailout hard fork, the two platforms are diverging still. Despite ETC keeping 100% code-level compatibility with Ethereum, its security model and monetary policy will be different than Ethereum.

“Similar to Bitcoin’s disinflationary model, it will provide incentives for investors to invest, for miners to provide ever higher levels of security to the chain, and for the whole ecosystem to bootstrap on the basis of security and monetized value,” arvicco said.

Ethereum approached public blockchain and smart contracts platform wrong, ETC proponents believe, and want to approach Ethereum Classic in a more measured, conservative manner.

“Ethereum focused  on easy accessibility for JS developers, often at the expense of security,” says arvicco. “DAO hack didn’t appear out of nowhere – there were a lot of red flags about this whole ‘move fast and break things’ attitude when it comes to highly monetized platform where you program literally with your and other’s money. ETC developers are much more concerned about security and code correctness.”

This is underlined by the recent announcement  of new ETC dev team. Developers will focus on developing a well-tested functional paradigm for Ethereum Classic.

“Because when you are programming the money, you better make damn sure that the code you are deploying is doing exactly what it’s supposed to do,” arvicco says.

Trading has fallen since Ethereum Classic caught the hearts and minds of so-called “Crypto-decentralists” earlier in 2016. Currently, the Ethereum Classic price has gravitated around $0.90 per token, the sixth most traded altcoin according to CoinMarketCap, and the fifth most traded altcoin on Poloniex.

Image from Shutterstock.