Can ETH and ETC coexist for a long time?

How big is the Ethereum market? Judging from its recent developments, traders and market observers agree that the question has become increasingly complicated.

After the Ethereum community unexpectedly forked a new blockchain last month, two Ethereum markets have emerged representing two nearly identical platform values.

What started out as a planned technical change (a fork) seemed to be going smoothly, but soon became a bit strange, with the entire ecosystem of exchanges, miners, and traders appearing on the “abandoned” blockchain.

This situation ultimately led to tokens being traded on two different blockchains at the same time. Ethereum (ETH), which represents the blockchain after the hard fork, has a market value of nearly $900 million. Ethereum Classic (ETC) has a market value of $141 million. Ethereum tokens (Ether) are worth around $10, and Classic tokens are worth around $1.7.
For a while, the fork date became the most important day in the minds of traders.

Chris Burniske, blockchain product investment manager at ARK Investments, recalled the situation at the time:

At the beginning, everyone thought that ETC was doomed to fail because it was worthless and most miners supported ETH.

He said that after the hard fork, big investors in the digital currency field began to buy ETC in large quantities. In addition, people who hold ETH also hold the same amount of ETC, so the ETC transaction volume has increased significantly, and speculators have seen the benefits.

The market was not very liquid at the time, so even a small increase in demand would drive up prices, and rising prices would drive up profits.

But now that everything has been settled, market observers can’t help but wonder, can ETC and ETH coexist? How long can the coexistence last? Will the ETH blockchain be abandoned by developers? Will the new chain take the lead?

Judging from the current situation, even experts cannot give a definite answer.

Ideology is fundamental

The two blockchains are largely identical, so market observers believe that the ideological differences between the two have led to different price dynamics.

Petar Zivkovski, head of operations at Bitcoin trading platform Whaleclub, believes that the purity of ETC’s dominant consciousness provides the “fuel” for its continued development.

That is, by refusing to take back funds from the DAO attacker, ETC established itself as a blockchain where transactions are truly irreversible.

The rise of ETC proves the power of decentralized, unregulated blockchain systems, while ETH is considered by some to be a centralized, vulnerable system under the management of a few developers.

Traders and other major blockchain players are attracted to this quality of ETC.

After the hard fork, ETC transaction volume increased, and miners naturally saw the mining value of the old chain.

need

Currently, ETH and ETC can still coexist, so the more important question is whether this situation will last? Is there demand for both markets?

Zivkovski highlighted the volatility of ETH and ETC, considering that Ethereum is only a year old.

Demand is there to maintain that volatility, he said.

The question on every market observer’s mind is whether this demand will continue. ETH (and ETC) are highly speculative currencies, and we all know that speculative demand exists.

Zivkovski said both currencies see themselves as special, like Bitcoin, and as a way to store value.

Arthur Hayes, CEO of bitcoin exchange BitMEX, said the two markets are sustainable because traders can profit from both currencies at the same time.

For ETH holders before the fork, their total assets actually increased.

Technical issues

However, some market observers have noted potential technical limitations of both similar platforms.

After all, the token exists to develop decentralized Ethereum applications (Dapps), so what do two versions of "Ether" mean for developers?

Jacob Eliosoff of Calibrated Markets LLC believes that the existence of two markets at the same time is not practical for end users.

The existence of two chains may be a good thing for theorists and traders, but it is a mess for those who actually run and write smart contracts.

At the same time, he said whether the two blockchains can recruit more talented developers to maintain them is also a big question.

In this respect, Burniske believes that ETC is at a disadvantage.

Although developers are slowly turning to ETC, I don’t yet see ETC having a cohesive all-star team of developers, which ETH already has.

Burniske said he doesn’t think ETC will “die” in the same way that some cryptocurrencies fade out of the market due to being eliminated. After all, to stay “alive,” the network only needs one form of mining.

Hayes remains positive, arguing that the two versions of Ethereum can coexist as long as there are clear ideological differences.

The two currencies can coexist because they exist for different purposes and serve different users.