Ethereum Classic is dominating the cryptocurrency news cycle. After a slumber of some days following the Ethereum hard fork that refunded investors of the hacked DAO, the unforked and re-named Ethereum blockchain and its native token classic ether (ETC) surged. Exchanges enabled trade in the digital currency, investors bought in, miners pointed their hardware to it, and a new development community began to form.
But Ethereum Classic also has led to chaos and uncertainty. The forked half of the chain — sometimes dubbed “Ethereum One,” and supported by the Ethereum Foundation — is still running as well. Ethereum has, therefore, effectively split into two networks. An unprecedented situation in the cryptocurrency space.
The question on everybody's mind is, therefore: How will this end?
In this three-part series, Bitcoin Magazine provides an overview of some of the scenarios that circulate throughout the different Ethereum communities and the wider blockchain industry.
Part 1 of this series covered how the great Ethereum schism can end relatively well for Ethereum One (but not so much for Ethereum Classic).
In Part 2: How the great Ethereum schism can end relatively well for Ethereum Classic (but not so much for Ethereum One).
Author’s note: Not all scenarios or nuances may be accounted for, nor does inclusion in this list — or order thereof — say anything about likelihood.
Scenario 4: Ethereum Classic Overtakes (or Catches Up With) Ethereum One
Ethereum Classic may continue growing to the point where it catches up with, or overtakes, Ethereum One by market share and hash power. While this was originally a long-term plan at best for the Ethereum Classic community, the recent surge suggests it might happen much sooner than anyone expected.
This scenario could play out in several ways. Here are more sub-scenarios.
Perhaps Ethereum Classic draws in a whole new set of users that were never interested in Ethereum before. This could happen for multiple reasons. With the removal of a (perceived) central point of control — the Ethereum Foundation — Ethereum Classic seems to have attracted a new wave of interest already. Meanwhile, Ethereum Classic is cheaper to use than Ethereum One. And its dedication to censorship-resistance and immutability may attract a certain class of users and use-cases as well - especially since all properties of Ethereum One should be offered as well. And, of course, there may be other reasons.
Or, perhaps more and more Ethereum One users will switch back to Ethereum Classic. This could also happen for several reasons. It's very unclear, for example, how much support the hard fork ever really had; this support may have been severely overstated. And even if the hard fork had much support before it happened, users may reassess their original position now that they are no longer financially invested in The DAO. Perhaps more of them will come to agree that immutability is a vital property of a blockchain, or that the Ethereum Foundation represents a single point of failure. Or maybe the Ethereum Foundation will make more controversial decisions, driving users away. And again, there may be other reasons.
There are also different possible outcomes if Ethereum Classic overtakes Ethereum One.
First of all: Ethereum One software clients will not automatically switch back to the (original) Ethereum Classic chain if it ever becomes the chain with the most proof of work. (This is also referred to as the “longest” chain — though it's not really about length.) There would still be two separate chains, with two distinct currencies.
Regardless, more users may consider Ethereum Classic the “real” Ethereum from that moment on. Before and shortly after the hard fork, many proponents of the hard fork maintained that the “real” Ethereum would be the one with longest chain. If Ethereum Classic overtakes Ethereum One, by their own logic these users would have to switch back. (Or they would have to re-think their position on what determines the “real” Ethereum.)
Either way, Ethereum inventor and project lead Vitalik Buterin — on behalf of the Ethereum Foundation — has committed to work on the Ethereum One project. Assuming he does, the Ethereum Classic project could still copy code from Ethereum One, even if Ethereum One is much smaller. While it may be strange for the most important developers to primarily develop for a minority chain, it does not have to be a fundamental problem.
It is also possible, though, that the Ethereum Classic project develops a more distinct technological vision over time. In that case, Ethereum Classic and Ethereum One could copy code from each other — and reject what they don't like.
Scenario 5: Ethereum One Splinters
As mentioned in Part 1 of this series, now that they appear viable, Ethereum coin-splits may happen more often. And, of course, that’s not only true for Ethereum Classic; Ethereum One may experience further splintering as well.
This scenario would closely resemble the scenario where Ethereum Classic splinters, except that it would be the Ethereum One community that branches out, or both Ethereum Classic and Ethereum One do. Perhaps in such a way that there will be no clear “main chain” at all. Instead, all different Ethereum projects could co-exist much like different altcoins do today (not counting Bitcoin.) They would vary in size and popularity over time, providing for different use-cases, with no clear winner.
Scenario 6: Only Ethereum Classic Lives On, Ethereum One Fails
As a sixth scenario, Ethereum Classic may not only overtake Ethereum One, but essentially “defeat” the fork attempt, and “restore” the pre-fork Ethereum chain as the one and only Ethereum chain.
Ethereum One failure scenarios relating to Ethereum Classic resemble the examples in Scenario 4, except that these scenarios would continue to play out until only the Ethereum Classic chain is left — perhaps as a sort of snowball-effect back to the original chain.
And there’s an additional category of scenario’s that could spell the end for Ethereum One entirely: scenario’s pertaining to the Ethereum Foundation. Since Ethereum One and the Ethereum Foundation are closely linked, the foundation may be cause for an exodus from Ethereum One to Ethereum Classic, which does not have such a (perceived) single point of failure.
For one, the Ethereum Foundation might change course itself. If the Ethereum Foundation ever switched focus back to Ethereum Classic, support for Ethereum One might just disappear entirely. This could happen voluntarily, perhaps for one of the reasons described in Scenario 4. Or maybe the Ethereum Foundation will be forced to focus on Ethereum One by court order; it has been suggested that legal cases are already in the making.
Or maybe key members of the Ethereum Foundation quit altogether. Perhaps voluntarily, because they don’t want to develop for the platform any longer. Or perhaps involuntarily, for instance due to mentioned legal trouble. And there are some darker scenario’s as well, scenario’s where “something bad” happens to these key members.
(Though in most of these scenarios, as pointed out in the first part of this series, Ethereum One could still live on as an irrelevant altcoin.)
In Part 3: How the great Ethereum schism can end badly for both Ethereum Classic and Ethereum One.