Being a digital store of value is one of the important drivers behind the Ethereum Classic project. In this article, the essential elements explained.
Ethereum Classic is one of the mature blockchain projects out there. Also, since 2013, this blockchain is the original chain Ethereum started working on it in the first place. As we all know after the DAO ICO drama in 2016, both blockchain projects decided to split up. Moreover, the Ethereum Classic chain decided to choose for the immutability of code and a limited supply of digital coins.
Additionally, this article will cover one of the main aspects Ethereum Classic differs from its big brother Ethereum which is a digital store of value. Besides, this unique property which also relates to Bitcoin will be one of the main drivers behind the future growth of this promising blockchain project.
What is the definition of a digital store of value?
A digital store of value is the function of a digital asset that can be saved, retrieved and exchanged. Moreover, after acquirring this asset it has immediately value and can be used to trade for other goods. In general, a digital store of value is anything that retains purchasing power into the future.
The most common store of value in modern times has been money, currency, or a commodity like a precious metal or financial capital. The point of any store of value is risk management due to the stable demand for the underlying asset. Money is one of the best stores of value because of its liquidity, that is, it can easily be exchanged for other goods and services. An individual’s wealth is the total of all stores of value including both monetary and nonmonetary assets.
Why Ethereum Classic?
As mentioned above, Ethereum Classic is the original chain upon ‘big brother’ Ethereum started working. Moreover, Ethereum decided to ignore the immutability of code principle by implementing a hard fork back in 2016. Also, this blockchain project has plans to migrate its consensus mechanism for miners from Proof-of-Work(PoW) to Proof-of-Stake(PoS).
Ethereum Classic, however, sticks to the original chain and technology and has no plans to change this in the future. In fact, the community behind ETC favors design principles and limited supply as the main drivers behind digital currencies. Therefore, with the inheritance of Satoshi Nakamoto’s principles and the innovative functionality of smart contracts, ETC has a solid base to grow in the years to come.
Digital store of value with Ethereum Classic
In the first place, Ethereum Classic is designed to be a protocol that can be used as a digital store of value. Moreover, ETC is similar to Bitcoin which is designed on the principle that the value of a digital asset is a function of its utility and scarcity. As such, the total supply ever created for ETC will be hard-capped at 210.000.000 ETC.
Every 15 seconds a new block is being added to the Ethereum Classic blockchain. Back in 2017, the miner reward for every block was 5 ETC which was reduced by 20% after reaching 5.000.000 new blocks being added to the blockchain. Similar to Bitcoin this blockchain project starts with a high inflation model and will de reduced more and more after a certain period of blocks(5.000.000).
To summarize, Ethereum Classic is able to use its scarcity property which is similar to precious metals and Bitcoin. Also, this property can be used as an inflation hedge over long-term horizons.
The unique properties of Ethereum Classic that gives it value
First of all, there are some basic properties for any asset that is essential for being a store of value. Also, it doesn’t matter if this asset is digital or physical. Below is the list of a description of the properties which are more universal when it comes to a store of value.
- Scarcity – ETC is a common cryptocurrency with a limited supply and therefore a scarce asset class.
- Divisibility – ETC, being a digital currency can be split up in many smaller units. The smallest possible unit which is called a ‘wei’ represents 0.000000000000000001 of a single token.
- Portability – Sending ETC across physical borders is one of the main uses cases of ETC being a digital currency. On the other hand, you have precious metals or ‘old-fashioned’ cash that are much more difficult to transport.
- Fungibility – This means that 1 ETC always represents 1 ETC no matter where you go in the world.
- Verifiability – ETC are unique cryptographic tokens that are directly verifiable on the Ethereum Classic blockchain, in real-time, from anywhere in the world.
- Recognizability – The ETC network is growing at a rapid pace with tens of thousands of active wallet addresses. Furthermore, the project is gaining popularity with a growing number of new projects being launched on the chain.
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The properties of ETC being a cryptocurrency
Accordingly, Ethereum Classic can be used as a digital currency and therefore the underlying protocol must be designed to function as a proper store of value. Below is the list, the three main properties for that.
- Decentralization – The Ethereum Classic network is designed in a decentralized way. The major reason for this is that decentralized networks are more secure and stable compared to the centralized variant.
- Immutability – Ethereum Classic maintains an immutable global blockchain. Additionally, it is preventing any possibility of fraud, censorship, or unjust interference by any actor.
- Adaptability – ETC is based upon open-source software and also open for continuous improvement and adaptability. Adaptability is essential to the future viability of any technology
In this article, we have shared with you the main characteristics which gives the Ethereum Classic protocol common ground for being treated as a digital store of value. Also, the entire cryptocurrency industry is growing fast and ETC has a proper foundation to grow and maintain its position within this exciting industry.
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