A Beginner’s Guide to Buying, Selling, Using and Mining Ethereum Classic
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It’s hard to spend any time on the internet and not see an ad or story about Bitcoin or other cryptocurrencies. If you’ve done a little more digging, you might have even heard about Ethereum. But less known, yet equally important as both those cryptocurrencies, is Ethereum Classic.
Ethereum Classic (often seen by its symbol ETC) is a cryptocurrency, meaning it’s a digital token that is built on a blockchain. A blockchain is defined as a database where all of the transactions of buying, selling and sharing tokens are recorded. Put this together and you have the definition of a cryptocurrency - a digital token that has a monetary value based on the activity completed in the blockchain platform.
Ethereum Classic is a cryptocurrency with a complicated history. In order to understand what Ethereum Classic is, we first need to know where it came from. Originally only known as Ethereum, Ethereum Classic and Ethereum split from each other in a “hard fork” in 2016. The fork in 2016 was over an issue tied with the DAO Project, a decentralized autonomous organization who had crowdfunded $150 million to organize smart contracts for Ethereum. Smart contracts are an automated way to perform a coin transaction, and store the info in the blockchain for later implementation.
The project went south in June 2016 when $50 million of ether, the Ethereum digital coin, was hacked and stolen. This event caused quite a stir in the cryptocurrency world and a debate ensued about how to handle the stolen coins. The debate was over if Ethereum should conduct a contentious “hard fork.” The online cryptocurrency crowd intensely debated the issue, with Reddit being a primary platform for voices to be heard. Ethereum eventually forked and Ethereum Classic (ETC) continued the original Ethereum cryptocurrency, while Ethereum (ETH) became the new forked cryptocurrency.
Buying Ethereum Classic is a relatively easy process and it can be bought in a number of different ways. Arguably the best way to buy Ethereum Classic is with other cryptocurrencies. Bitcoin, Litecoin, and even Ethereum can be used to purchase Ethereum Classic on exchange sites like Poloniex, Bittrex or Kraken.
This can be done by buying Bitcoin with either cash or credit card on Coinbase, and then trading for Ethereum Classic on Poloniex. It’s important to note that while Ethereum can be bought directly on Coinbase, Ethereum Classic cannot, and therefore must be traded for.
The buying process is pretty easy to manage, only consisting of some straightforward steps, which are similar to online banking. After setting up an account and depositing money on Coinbase, Ethereum Classic can be traded for via other secure asset exchanges like Poloniex or Bittrex. Cryptocurrencies like Ethereum Classic need to be held in a digital wallet.
Ready to cash out your cryptocurrency? To take Ethereum Classic and turn it back into cash is likewise a simple and straightforward process. Cryptocurrencies are valuable because they can be turned into any fiat currency, like Euros, GBP, or USD. Reverse the steps it took to purchase Ethereum Classic--trade Ethereum Classic for Bitcoin and sell the Bitcoin in the Coinbase account. Once in Coinbase, Bitcoin can be exchanged for almost any currency. Now that Ethereum Classic is converted into the desired currency, it can be withdrawn from an ATM or transferred to a bank account.
Cryptocurrencies like Ethereum Classic need to be held in a digital wallet, which are handled through online exchanges. While hardware wallets do exist like The Ledger Wallet, software versions like Jaxx are the cheaper route, while still being safe.
One of the primary uses for Ethereum Classic is trading and investing. The capital appreciation and exchange rate of Ethereum Classic will rise and fall based on the free market and supply and demand for that coin. The value of the coin being converted into the desired currency is the game investors and traders play with coins like Ethereum Classic. Many have become extremely rich based off this model and only time will tell just how rich more people will become.
Other ways to use Ethereum Classic are the same way you use cash. From giving monetary gifts to friends and family to playing Ethereum Classic Poker, ETC can be used in a variety of ways.
ETC mining is contributing blocks of transactions to the Ethereum Classic chain. Miners work through the blocks, which are the individual pieces that make up the blockchain. They look at each block, examining them to make sure everything is running properly, which keeps the whole system up and running. Once the transactions are verified, they are encoded into the block and the block is generated.
Miners use a protocol called Proof of Work which requires them to solve a complex mathematical equation in order to generate the next block. Because lots of people are all mining at the same time, and only one miner can build each block, block generation takes time.
Miners are paid well, and their payment often comes in the form of more coins for the cryptocurrency they’re operating on. Being able to mine Ethereum Classic takes a great deal of skill, as well as a high-powered computer enabled with a specialized calculator, which is key to making it all happen.
Mining Ethereum Classic boasts decent profitability, if you have the proper hardware and skills. That assumed, to mine ETC one must download an application which connects you to the platform. Mining can only occur after creating an account on the downloaded application. The miners use their powerful computers to seek solutions to the block generation algorithm in order to ‘mine’ the next block on the chain.
Successful mining can earn more ETC coins. Cryptocurrencies are designed to grow and shrink based on the amount of mining activity on that coin's blockchain. The more miners work on Ethereum Classic, the more the market cap for ETC will grow.
The final question that is often asked with a coin is in reference to its scalability. This has to do with how many transactions it will be able to handle per second. As possible use cases come out on popular coins, the more that coin will be bought, sold and traded. All of these transactions need to be mined on the blockchain, and as the number of transactions grows, developers must determine how to handle these new transactions on the platform.
Arguably no coin has seen the scalability debate quite like Ethereum Classic has. It is the issue of scalability that led to the DAO Project, which led to the hard fork. When looking at the growth and price chart for ETC, it’s easy to see how this question goes to the top of the list for future buyers and sellers of Ethereum Classic.
Even if the concept of cryptocurrencies appears complicated, buying, selling and trading them is fairly simple and straightforward. While Ethereum Classic hasn’t taken off the same way as its younger brother Ethereum (ETH) or Bitcoin has, its place in cryptocurrency history has forever been cemented. And its impact is monumental.