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Digital Currency: Would ETC Become the Next Investment Trend?

Jan 18, 2017 Ryan_XxOo

ETC, which is also called Ethereum Classic, has been invented for a while. It shows vitality with extremely tenacity after dramatic fluctuation, including once suffering the threat of 51% attacks by Chinese miners. Recently, digital currency has become a flourishing market, especially Bitcoin and Litecoin, which have increased over 30% in these two weeks. Many people ask the writer which digital currency will be the next hotspot and he always recommends ETC with no hesitation. Why? In this article, the writer will discuss the nature of the ETC and the reason why it is far underestimated. 

 

Philosophy view 

 

1. Rule of man or rule of law 

This is the nature distinguish of ETH and ETC, and it is also the difference in main ideas. Because of the doubt of financial institution system and human nature, Bitcoin pioneers ‘Code is Law’concept. In that sense, people can transfer value without mutual trust and its market value, beyond 15 billion US dollars nowadays, has fully proven the expectation of human beings. In contrast, Ethereum Foundation headed by Vitalik drives a fork, making Ethereum split into ETH and ETC after the DAO issue. Vitalik even claimed that the immutability of blockchain makes no sense comparing to its development. His statement illustrates that the attitude of Vitalik was extreme and dangerous. If the blockchain can be altered at random, it would definitely tell no difference with a private database. Although the discuss on the concept of private chain and union chain is raising, only the latter one displays the social value as time goes by. Therefore, if you believe rule of man, please choose ETH; if you believe rule of law, please choose ETC. 

 

2. Monopoly and corruption 

In the field of digital currency, the miners and mining pools are decentralised, the exchange and wallet service are decentralised, the encoding and application of smart contract are decentralised, but the operation and maintenance of core code are centralised. All power tends to corrupt and absolute power corrupts absolutely. The following nature seems horrible and such statement is not verified by the writer. Ethereum Foundation raised over 40 thousand Bitcoin by crowdfunding, most of which are mined themselves. Also, the crowdfunding and publishing of DAO are manipulated by the insiders while most of the ETH stolen by hacker are belong to the foundation, as a result of which, it forces to alter the blockchain regardless of the opposite voice from the whole community. It is sorriness that the whole Ethereum community is played for fools all along by the centralised foundation. I would like to appeal all the miners and digital currency proponents to support ETC and insist decentralisation principle, which is the core value of blockchain. 


3. Value comes from scarcity 

Since the fork of Ethereum, the monetary policy of ETH and ETC take different ways to develop. Currently, ETH is on the stage of continued issue with no upper limit, while EHC has already planned the output cut, setting the volume within 210 million, according to the tradition of Austrian School of Economics. If no scarcity, what is the difference between digital currency and legal tender? That would at most swap the roles of miners and the central bank. Nowadays, central banks all over the world are printing money in an incredible level to dilute wealth of ordinary people. Would digital currency do the same thing? Even scarier is that ETH has no monetary policy at all and the specific policy would be decided after POS. Then, who will be in charge of the policy setting – it is the centralised Ethereum Foundation. In terms of the proponent of the digital currency, they prefer clear prospection so they support ETC for the sake of limited output. 

 

4. The competition between POW and POS 

Consensus mechanism is the inner core of digital currency. POW, which is based on proof-of-work algorithm, has been proven the most distinguished mechanism in the market. Also, on the rank of the total market value of digital currency, eight of ten are based on POW. While the POS which is first raised by PeerCoin, also named as Ppcoin, has almost gone. The design that the more holding the token the more token generated will lead to serious Matthew effect. The rich are getting richer and the poor are getting poorer. Then what is the fair? If we cannot make the result fair, at least we make the mechanism fair. As for the POW, when to mine and mining or not depend on the miners themselves. Refer to the POS, the latter participants would lose the chance to join the market. In addition, hot-storage wallet doing the online mining exists serious security problem, being more easily to be attacked by hacker, which has already happened on PpCoin. On the viewpoint of Economics and Cryptography, POS mechanism is nothing but a castle in the air and would be bound to collapse. Therefore, we recommend ETC, that is to say, we recommend POW mechanism.  

 

Economy view 

 

1. Different prices on the same code 

Currently the code of ETH and ETC are nearly the same, but prices are different. It is strange. No wonder many people in Ethereum community claim that ‘Sell ETH Buy ETC’. Everyone in the community would have ETC and ETH in the same amount simultaneously whenever the fork happened. Then the chip of participants is the same during the development of market. Only on the technical perspective, the code of TEC is the same with that of ETH but with less risk, for the ETH has been altered and split many times, blocking the services of recharge and withdrawals of the online exchange. If the value of ETC reach the ETH level, it will have 7 times increment in the market. For the investors in Ethereum community, there is a possibility to gain huge earnings by low price and such cashing would be realised sooner or later. 

 

2. Deficit in volume 

Nowadays, the total volume of ETC is 210 million while the volume of ETH is unsettled. If POS fails, which the writer believe great potential, the volume of ETH will have no upper limit and the number will exceed 10 times than that of ETC eventually. Here is another interesting thing that the quantity and price of ETH and ETC have double upside down. What does it mean? Suppose the aggregated market capitalisation of ETC equals to that of ETH, then the price of one ETC will be 10 times higher than ETH in theory, which is a reasonable market price. Adding the upside down on price of ETC and ETH, there may be 70 times rising space of ETC, which would be captured by market and respond on the base. 

 

3. The support of trust fund 

The increment of bitcoin is mainly based on the participation of large trust fund. The initial bitcoin trust fund is established by Barry Silbert from DCG and now the fund, code of which is GBTC, has been listed in NASDAQ, holding the position of over 200 thousand bitcoins. And more and more bitcoin trust funds have been built since 2016, forming a continuous cash inflow. Barry Silbert claimed on Twitter that DCG willingly support ETC and would never sell it until the price of ETC overtakes ETH. Further, he said in Slack that DCG would establish an ETC trust fund similar to GBTC after the monetary policy is set. Being the leader of its industry, DCG undoubtedly has significant influence on market. 

 

Human resource view 

 

1. The counteroffensive of foreign community 

After the original wild period, the core code building of ETC is speeding up. The number of developers who possess commit limit of authority in GitHub are now 34, far more than the number at the initial period, which is 1 only. The main clients of ETH are Geth and Parity, while the new-born development team of ETC is Grothendieck, whose team leader is Charlie from Hong Kong, the former CEO of ETH project. Unlike the non-mainstream programming language of ETH, Grothendieck chooses to use Java, which language is accepted by over 80% programmers in the community, leading to a qualitative leap of the labour pool by this path. At the meantime, the indicators of ETC and the followers in Twitter, Reddit, Slack and Telegram are increasing continuously, while the construction of ETH in foreign community has reached a plateau after the DAO issue and the latest theft incident of Bo Shen, the fund manager of distributed capital. 

 

2. The boost in Chinese community 

Unlike ETH which develops mainly in foreign community, the first ICO project of ETC is born in China. The leading miner in Chinese community has initiated a crowdfunding project named ETCWIN and raised over 1 million ETC successfully. Further, the Etcathon, China's first FinTech Connect hacker Marathon, uses ETC blockchain as their development tool. And the warrants of the blockchain motor racing project, the first blockchain gambling project in Beijing, will be traded publicly soon. Also, Shanghai Kuoyue Technology announces the ETC incubator program in Shanghai, Wuhan and Chengdu will generate more intelligent smart contracts application based on ETC in the future. What is more, the Chinese ETC community builds the promotion association accordingly, including almost all enterprises in related industry chain and Chandler Guo, the famous angel investor in digital currency community, is planning to invest at least 100 ICO items of ETC in the future. When considering ETH however, there is no ICO and smart contracts raised after the fork. 

 

3. The support of large miners 

ETC is supported by more and more miners due to its steady code and clear monetary policy. Being the actual maintainer, miners are unwilling to be treated as temporary stepping-stone. I would say that Bitcoin Core would eventually hurt their credibility for their arrogance on miners’ community. In terms of ETH, the public announcement of POS transfer is an insult to miners’ community. According to the writer’s private follow-up, most miners have not planned ETH holding currently, in contrast, they focus on rising the whole network’s computing power to show their persistent preference on ETC and the representative is 91pool Chinese miner. As for ETH, its price and computing power continue to decline after the POS transfer announcement. Losing the support of the miners, this public blockchain would become water without a source. 

 

In summary  

 

This article expresses a lot. The readers could skim the above information if they do not have enough time and only focus on this summary. The passage concludes that the price of ETC will exceed that of ETH and the increment of ETC would be at least 7 times of its current value. Being the value investor, the most important thing is to judge the trend and insist on value realisation. If you miss the Bitcoin when it prices 10 RMB, then you cannot miss ETC when it also prices 10.

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