Updates on Ethereum Classic (ongoing) - Smith + Crown
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Updates on Ethereum Classic (ongoing)

More exchanges allow Ethereum Classic trading. The Ethereum Foundation says they will focus on the hard-forked Ethereum blockchain. Concerns on replay attacks between Ethereum and Ethereum Classic are valid, and users are advised to split their balances.

Ethereum Classic is the original Ethereum blockchain that didn’t fork to recover DAO funds. The issue is contentious within the Ethereum community and has sparked a wave of discussion about how to govern, code, and fork blockchains. Here are some of the latest updates.

More Exchanges Add Ethereum Classic

On August 1, Cryptocoinnews reports that CHBTC, China’s largest Ethereum exchange, would support ETC trading.

On July 27, Kraken has announced they will follow and open markets between ETC and ETH, USD, EUR, and XBT (BTC).

On July 27, Coinbase has announced they and their exchange GDAX will not support it. They are holding all ETC funds in cold storage and advising users to not send ETC to GDAX.

On July 27, BTC-e has also said they will not support ETC, saying “Ethereum Classic in the current circumstances is a scam.”

On July 27, Shapeshift started trading ETC.

On July 26, CoinJournal reports that Bittrex has joined Poloniex in trading Ethereum Classic. Users who had Ethereum balances on Bittrex now have ETH and ETC balances.

ETC Hashrate and Price Rising

As of August 2, 2016, the hashrate for Ethereum Classic was over 1 Tera-hash, almost one third the hashrate of Ethereum. The rising ETC price and falling Ethereum price means it is more profitable to mine ETC.

This site tracks in real-time the ratio of ETC/ETH price and hashrate. Since the fork, ETC has been steadily gaining on ETH in both.

Ethereum Classic gaining on Ethereum in price and hashrate
August 2: Ethereum Classic gaining on Ethereum in price and hashrate

Ethereum Foundation will Support Hard-forked Ethereum Chain

Vitalik Buterin has announced that the Ethereum Foundation will support the hard-forked Ethereum chain. He does not denounce Ethereum Classic, calling it a “community effort,” and notes that the foundation has never been opposed to forks. Given the nature of the fork, many updates to the forked Ethereum will be valid or easily applicable to Ethereum Classic, but the foundation will not actively work on it.

ETH and ETC are Vulnerable to Replay Attacks: Users should split their balances

Holders of both ETH and ETC are vulnerable to certain replay attacks in which transactions on one chain are replayed on the other. More details on replay attacks below.

  • If users had ETH balances on an exchange supporting Ethereum Classic, they should have a corresponding balance of ETC. At this point, exchanges supporting ETC have performed their own split, protecting funds from replay attacks.
  • MyEthereumWallet has added a simple way to send just ETH or ETC through a contract that protects against replay attacks.
  • Other users for whom the above do not apply are are advised split their ETC/ETH. Here is a community-created guide on splitting balances that Vitalik Buterin has recommended.

What is a replay attack?

This hard fork created two nearly identical blockchains: the same underlying protocol, consensus mechanism, addresses and their balances. It would be like copying an entire automated bank that copied everyone’s accounts into a new currency. Someone with 100 ETH now also has 100 ETC in the same address on both blockchains. The implementation of this fork means that transactions that are valid on one chain are valid on the other: they look the same, reference the same addresses, and miners will process them. If you issue an ETH withdrawal from your account, that same transaction can be broadcast to the ETC network and could be processed as valid. “Could be” refers to two conditions: the address has sufficient funds and the transaction identifier (the “nonce,” which progresses in sequential order in Ethereum) matches the current nonce order.

The theory behind a hard fork is that one chain will die off. If no exchanges support them, no supported wallets let people access them, and no miners maintain them, they are essentially worthless – board game money that no one recognizes as money. This didn’t happen in the Ethereum hard fork: Ethereum Classic can be traded, accessed through wallets, and is actively mined.

There are a variety of ways this could be exploited. Emin Gur Sirer of Hacking Distributed explains some here. Peter Vessenes, one of the first people to discuss this, explains some here. A variety of reddit threads contain additional community discussion (examples here and here), though we warn the reader that many comments are vitriolic and accusatory.

The community seems to still be discussing the limits of replay attacks. They cannot result in coins being migrated from one chain to another, changing the supply of either. Neither can they be used against your ETH/ETC once you have separated them into separate addresses, because the transaction depends on referencing the correct addresses. The guide mentioned above covers how to split them.

Overall, either chain can prevent these attacks by changing the nonce number – instead of current transactions having a number like 100, they now have numbers like 10000000 (not actual nonces). It would take a long time for one nonce sequence to catch up to the other. Vitalik Buterin recommends Ethereum Classic hard fork again to do this. But some in the Ethereum Classic development community have said they oppose implementing such a fork, saying Ethereum should have done it themselves.