Ethereum Classic (ETC), a fork of Ethereum (ETH), has been overlooked for a long time since most eyes were focused on the main Ethereum blockchain. However, this might come to an end quite soon as the number of ETH transactions are rising sharply and the network is starting to have difficulties to process them. As a result, the transaction fees are already spiking over $1. If this trend continues, the Ethereum network might reach a critical point before ‘Plasma’, a new technology that should massively increase the network throughput, is implemented.

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Since Ethereum Classic provides the same functionality, it is very easy to switch from ETH to ETC if such an overload happens. This would lead to a huge transfer of capital from Ethereum to Ethereum Classic. Here we can take a look at Bitcoin Cash (BCH) as an analogous example. Since Bitcoin failed to implement the SegWit2x hard fork, hundreds of thousands of unconfirmed transactions started to accumulate in the network and transaction fees jumped to tens of dollars. This made Bitcoin Cash with 8MB blocks to be seen as a viable alternative with the same functionality, but much faster and with lower fees. As a result, its price peaked in November 2017 to more than 0.4 BTC in the BTC/BCH market. At the time of writing, the BCH price is around 0.16 BTC.

Although the analogy between ETC and BCH is clear, Ethereum Classic seems to be somehow forgotten and the exchange rate on the ETC / ETH market is as low as 0.032 ETH / ETC at the time of writing. Compared to BCH vs. BTC, the ratio is about 5 times lower.

Predicting something in the crypto world is always uncertain. But if Ethereum starts having problems with the transaction capacity, which is quite likely to happen in the following weeks, there are high odds that Ethereum Classic will gain big profits out of ETH problems.

39 COMMENTS

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  1. BTC/BCH comparison is dumb. Bitcoin community is divided, took ages to scaling agreement. Ethereum already does 3x more transactions than BTC, increasing over time. Bitcoin fees have risen due to slow adoption of segwit. BCH has more throughput (for now) than BTC. ETC has the exact same transaction throughput as ETH, so your comparison is asinine. So you are saying ETC transactions are cheap simply because it is not popular? Well if it did get popular (unlikely), it would be backed up also.

    • Yep, I think it’s saying exactly that… some projects for which the popularity of the underlaying network is not crucial might start at or move to the ETC network, because thanks to the lower popularity their transaction fees would be much smaller. And even let’s say 5% of ETH users switching to ETC would probably double the ETC price, with not much impact on the fees as the network would still be very far from using its full transaction capacity. Sounds reasonable for me.

      • But the point is ETH throughput = ETC throughput. If masses switched to ETC, even though nothing uses it, it would be the same story. Comparison is BCH rising a lot due to BTC fees. But, BCH has about 7X the throughput, so fees are low for a reason. By their logic, Ubiq, Expanse, and all the other clones are poised for massive gains, and all Bitcoin clones getting ready to go to $1,000 just due to low fees by the fact no one cares about them.

        Also, big difference also, BTC scaling moves at a glacial almost nonexistant pace. Eth scaling is like 3x from last year, efficiency improvements are being made to clients to get more transactions. Parity just released major speedup, and Geth is just around the corner. More scaling is in the works as we speak, so the minor backlog now is only temporary. Fees are like $0.25, hardly unreasonable given its mass adoption already. BTC fees are like $20-50+, easily 100x that of ETH.

        • I agree with your point. My point is that since ETH is much bigger, even if only a very small fraction of its users switches to ETC due to high fees, which is not as unlikely scenario as many may think, it could affect ETC price rapidly because the number of users could let’s say double. At the same time it wouldn’t affect ETC fees much because the number of transactions will still be rather low.

          • There have been backlogs in the past where ETH network was actually rather unusable during some larger ICOs. Result… Most people still use ETH, even if fees are a bit higher due to it being more secure. I would say $0.25 fee is totally reasonable, I don’t think someone would not buy into an ICO just because they need to pay $0.25 fee.

            So while it is possible there could be another resurgence, I am not sure of likelyhood since it hasn’t happened in past even after congestion, and ETC has been slowly losing vs ETH over time. I see ETH tx fees going down soon anyway due to client improvements. If ETH was stale like BTC, and fees were constantly an issue for 2 years, getting as high as like $70. I could see it more, like what happened with BCH. The difference being BCH provided instant 8x throughput over a horrible network and ETH is constantly improving, and ETC is no better.

            It wouldn’t necessarily be a bad coin to hold a few in case it does rise, not much risk. I just see Eth fees going down soon (even though they are only $0.25).

          • You’re right, but as you say, until now the ETH network was unusable only on a few occasions during large ICOs and the outages were very short, like 2-3 hours. That of course doesn’t bother anybody so much that they would want to switch to an alternative network. But now it seems to start being a long term problem, at least until Plasma is implemented, which is a totally different situation. A few more games like CryptoKitties before Plasma, and ETH has a serious problem.

          • Throughput can’t increase right now because uncles are already high. Parity just released major speedup to client, and Geth has one soon to be released. This should have a large impact on propagation speed, and allow gas limit to be increased more. Not major like Raiden, Plasma, or Sharding, but would help a lot. Possibly as much throughput as BCH…

            I just don’t see tx fees of $0.10-$0.50, with spikes a bit higher as an issue. Not ideal, but not necessarily a reason to switch. BTC backlog was a nonstop issue for 2 years before BCH, ETH is only slightly backed up recently Also if you are running a dapp on ETH, you can’t just switch to ETC like you could with BCH.

            I am not saying ETC price won’t go up, it may just solely due to it being cheaper, and cheaper coins more likely to have bigger rises. If ETH was backed up for extended time (which has never happened) it would be more likely. Wouldn’t be bad idea to hold both for diversification, I used to hold some ETC when it was cheaper, haven’t felt like buying any back yet since ratio vs ETH generally down. May have a rise as some coins do after extended slide.

          • Maybe when ETH will run into scalability issues, devs will just decide to roll back once again to a point when it had fewer users 😀

    • That’s quite possible, it really looks like an accumulation period. In that case, we should see a huge spike in the ETC price very soon 🙂

      • I’m very curious about the ETC price. I invested there already last year because I believed in his big potential and I will hold it on.

  2. This is an apples to oranges comparison. All you need to “move” to BCH from BTC is to buy the former and sell the latter. Transferring ownership is the only “transaction” there is, for all intents and purposes. By contrast, Ethereum is a platform for executable code and custom databases — so-called “smart contracts” –, often implementing complex enterprises. There are as many different kinds of transactions possible on the Ethereum blockchain as there are API functions that have been defined and deployed by participants. Apart from the mere ownership and transfer of ETH for its own sake, which is the very least of Ethereum as a public blockchain platform, the hassle and confusion of moving publicly-accessible custom network services (deployed contracts) off the main platform is hardly a no-brainer decision.

    • Well, there are already quite a few ICOs which were supposed to run on Ethereum, but decided to launch on another smart contract platform to make sure they don’t have problems with the network capacity. The author probably wanted to say that ETC can obviously gain a lot of users in this way and I agree with this.

    • I’m sorry but I can’t agree with you here. Although you are right that moving already deployed smart contracts from one chain to another would be a drag, the truth is that most of the money invested in Ethereum is probably not bound to any smart contract… ETH is just being held by people as an investment. In that case, selling ETH and buying ETC is as easy as in the case of BTC/BCH.

    • Ethereum is already seeing increased fees and slower transactions
      as the number of users increases. This is one of the reasons some other
      coins with smart contract support had huge growth – and they are mostly still in development with no working platforms. Ethereum classic is definitely a sleeping giant – it has the same proven technology behing it as Ethereum, it now has dedicated team of developers and due to smaller use also very fast transactions and low fees. It will not surpass ETH in value but growth to 0.1- 0.15 ETH – 400-500% is not only possible but highly probable to happen in 2018.

  3. In one think I totally agree with the article – taking into account the capabilities of the network, ETC is crazily undervalued. IMHO it should really be at least somewhere close to 10% of the ETH price.

  4. Get the facts right. ETH has a giant mining force currently about 23 times larger than ETC. No way could ETC handle the workload. And ETH transactions arnt slow. Safe gas price of 10 Gwei is not that high, like 36 cents. Come on know ehat your talking about.

  5. Grayscale is coming out with it ETC investment fund OTC Stock…mid 2018…to match it’s BTC Platform Investment Fund on the OTC…GBTC….

  6. It’s fact that exchange rate between ETC and ETH is now 1 to 36. It pays off to switch to Ethereum Classic, its price is favourable, transaction fees low and transaction process fast.

  7. The price ETC is still low now and therefore is expectable his growing up. I will invest more money to ETC because I believe in big profit this year.

  8. Good times to buy… it is clear. The price is low with comparison to ETH. When the users of ETH move to ETC again (after ETH price correction) the price of ETC will be huge.

  9. It make sense to compare BTC and ETC because thinking of mass of people is similar. I absolutelly agree with this article….lets buy some more ETC!

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