Core CanonaskETC core context pack

Code Is Law Principle

The code is law principle is the principle that no one has the right to censor
the execution of code on the ETC blockchain.

## Decentralized Governance

There are many problems that fester due to centralization and opaqueness; corruption, unaccountability, nepotism, inefficiency and stagnation. Ultimately, centralization leads to fragility; only decentralized systems can stand the test of time.

These problems can be only solved by adhering to governance systems that do not rely on a central point of failure. Just like distributed networks and the consensus protocol itself, we believe that only truly decentralized projects can survive in the long run.

Ethereum Classic manifests these values by relinquishing control by a formalized central foundation. The only hierarchy is that of transparent meritocracy and mutual reputation. No backroom deals or behind-closed-doors unilateral decision making; just free and open discourse.

Introduction

Ethereum Classic (ETC) is the most exciting technology today. It promises to
upend governments, the financial industry, supply chain management and much
more. The marriage of ETC with the Internet of Things is a game changer. Some
think ETC may replace the World Wide Web!

ETC is composed of the world computer and database. The ETC world computer is
also referred to as the ETC virtual machine. The ETC world database is also
referred to as the ETC blockchain. These two components have several noteworthy
properties:

censorship resistance
 It is virtually impossible to stop the execution of code or
 to deny access to information.

security
 Security is built in with cryptography.

pseudonymity
 Users are anonymous except for pseudonyms.

openness
 All the software is open source, and, all the activity for all time
 is available for inspection.

reliability
 It is always available and virtually impossible to shut down.

trustlessness
 There is no need to rely on any single person or entity.

All of these properties, except trustlessness, are possible without blockchain
technology. For example, consider a web server securely configured with several
identical backup servers geographically distributed. Suppose these web servers
were only accessible using onion routing
https://en.wikipedia.org/wiki/Onionrouting. This setup can provide
significant censorship resistance, security, pseudonymity, openness and
reliability. Note however how much effort is required. With ETC, these
properties are present by default!

Because ETC is trustless, no one has special powers. Therefore, it
is possible to implement extremely sensitive applications on ETC such as
financial and identity services.

Final note, everyone effectively runs their applications on the same single
computer, the ETC world computer. However, this virtual computer is actually
implemented by a worldwide network of computers. All the computers in the
network run all applications in parallel. This extreme redundancy is a main
reason the ETC world computer has its amazing properties.

What is Ethereum Classic?

Ethereum Classic is a secure, censorship resistant, reliable, public, trustless and
decentralized platform for running applications.

How is Ethereum Classic related to Ethereum?

To understand the relationship it is important to know the history. It is
especially important to be familiar with the DAO
attack and how the
Ethereum Foundation responded to it. Also, it is important to be familiar with
the strong objections described in the Ethereum Classic Declaration Of
Independence.

How is Ethereum Classic related to Bitcoin?

Bitcoin was the first blockchain application. Ethereum Classic is a general
blockchain platform to run many more types of applications than Bitcoin can.

What is a blockchain?

A blockchain is a special type of distributed database. The most significant
attribute of blockchains is that no one controls them! There is no one
everybody needs to trust to manage it. That is why they are referred to as
being trustless. Users submit tasks in transactions that are grouped into
blocks that are linked together to form chains.

What is a smart contract?

Smart contracts are computer systems that manage assets such as automatic teller
machines and the Bitcoin system. Ethereum Classic is able to run many types of
smart contracts. If Ethereum Classic smart contracts are not mainly
financial, it makes more sense to emphasize their autonomy by
referring to them as agents.

What is ether?

Ether and ETC denote the native cryptocurrency used to pay for tasks
such as installing new smart contracts.

What is gas?

Gas is a made up unit used to denote the amount of resources required to do
tasks such as installing new smart contracts.

What is a dapp?

A dapp is a decentralized application. They are also referred to as smart
contracts on the Ethereum Classic system. The term is used to distinguish
applications that run on blockchains from centralized applications.

How do I create a dapp?

To create a dapp for Ethereum Classic you must program one in a smart contract
programming language. Then, you must compile that dapp and install it on the
blockchain from a funded account.

How do I purchase ether for an account?

You can purchase ether on several exchanges. You can also mine for ether.

What smart contract programming languages are there?

Solidity is similar to Javascript and the most popular. Serpent is
similar to Python and also available. LLL is yet another choice that is similar
to Lisp. There are other smart contract languages being developed as well.

What is mining?

There are computational tasks involved in adding blocks of transactions to
the blockchain. Computers on the Ethereum Classic network that voluntarily
perform these tasks get a reward of ether. For security reasons, miners
compete to complete these tasks first and win these rewards. This effort is
referred to as mining.

What is proof of work information?

Mining involves doing computational tasks whose sole purpose is to
intentionally make mining difficult! This difficulty is required to secure the
network against certain attacks. These tasks involve finding certain numbers
related to each block. These numbers are referred to as proof of work
information.

What is a coinbase?

A coinbase is a special transaction, in every block, that creates new ether
added to an account selected by the miner of that block. It can also refer
to the primary account of a user.

What is an uncle?

Several miners compete to submit blocks to the blockchain. Inevitably some
miners will lose the competition. The blockchain references the losing blocks
to make the blockchain more secure. These losing blocks that contribute to the
security of the blockchain are referred to as uncles. The term comes from the
fact that blocks have preceding parent blocks. The losing blocks are not
parents but are still related to the parents. Hence they are like uncles.

## Social Channels
### Public Service Announcement
There is NO OFFICIAL ANYTHING.
Ethereum Classic is an open source, decentralized project with a global permissionless ecosystem. Ethereum Classic's history is checkered with attempts at social attacks on the Ethereum Classic network and it's assets or commons (e.g.; code repository, website, brand, network history). We see similar social engineering in the Bitcoin ecosystem. It's a negative externality that comes with a truly decentralized project.

### Chat
- Discord
- Facebook
- Kakao: Korea
- Matrix (Developer Chat): Riot.im
- Slack: Ethereum Classic
- Telegram: Arabic, China, English, English, Español, German, Italia, Russia, Russia, Viet Nam
- Tencent QQ: ETC Asia-769408114
- WeChat: [insert link] Note: source QR images from ETC Coop and Chinese Websites.

### Forum
- BitcoinTalk: ETC Current, ETC Archived,
- Reddit: r/EthereumClassic

### Podcasts
- EVM61
- Explore The Chain
- Let's Talk ETC!

### Repository
- Github
- ETC Awesome List

### Twitter
- Twitter: China, China, English, English, Español, France, Germany, Italia, Japan, Korea, Korea, Netherlands, Philippines, Sri Lanka, Turkey, Viet Nam

### Websites
- EthereumClassic.org
- Region Specific Sites: Asia, China, Korea, Korea

Note: If your social channel is not listed, please reach out to the community via the Ethereum Classic Discord.

The Ethereum Classic Declaration of Independence
-

 A short time ago in a browser very, very close…

ETHEREUM CLASSIC Declaration Of Independence

 WHITEPAPER 1
The Ethereum Classic Declaration of Independence

 Let it be known to the entire world that on July 20th, 2016, at block 1,920,000, we as a community of sovereign
individuals stood united by a common vision to continue the original Ethereum blockchain that is truly free from
censorship, fraud or third party interference. In realizing that the blockchain represents absolute truth, we stand
by it, supporting its immutability and its future. We do not make this declaration lightly, nor without forethought to
the consequences of our actions.

 Looking Back

 It should be stated with great gratitude that we acknowledge the creation of the Ethereum blockchain platform by
the Ethereum Foundation and its founding developers. It certainly can be said without objection, that without
their hard work and dedication that we as a community would not be where we are today.

 From its inception, the Ethereum blockchain was presented as a decentralized platform for “applications that run
exactly as programmed without any chance of fraud, censorship, or third-party interference” 1 . It provided a place
for the free association of ideas and applications from across the globe without fear of discrimination while also
providing pseudonymity. In this decentralized platform, many of us saw great promise.

 List of Grievances

 It is however, with deep regret, that we as a community have had to spontaneously organize 2 to defend the
Ethereum blockchain platform from its founding members and organization due to a long train of abuses,
specifically by the leadership of the Ethereum Foundation. These grievances are as follows.

 - - For rushing the creation of a “soft fork,” which was comprised of a minor change in the Ethereum
blockchain code for the sole purpose of creating a blacklist and censoring transactions that normally
would have been allowed.

 - - For neglecting the full implications of the “soft fork” by the Ethereum blockchain as a warning that they
were violating the principles and values coded therein. 3

 - - For creating an unrepresentative voting mechanism called the “carbon vote”, which they initially stated
was “unofficial” 4 only to contradict these statements a day before determining to hard fork. 5

 - - For rushing the creation of a “hard fork,” which was comprised of an irregular state change in the
Ethereum blockchain code that violated the properties of immutability, fungibility, and the sanctity of the
ledger.

 - - For willfully deciding to not include replay protection in the “hard fork”, an action which has unnecessarily
cost exchanges and thousands of users the rightful ownership of their Ether tokens. 6

 Respecting the Values Essential for Blockchains

 One might ask what harm can be done from changing the code of the Ethereum blockchain and bailing out 7 “The
DAO” token holders, which is not an unreasonable question. Many of us have an innate sense of right and
wrong, so at first glance rescuing "The DAO" felt right. However, it violated two key aspects of what gives
peer-to-peer cash 8 and smart contract-based systems value: fungibility and immutability.

 Immutability means the blockchain is inviolable. That only valid transactions agreed upon via a cryptographic
protocol determined by mathematics are accepted by the network. Without this, the validity of all transactions
could come into question, since if the blockchain is mutable, any transaction could be modified. Not only does
this leave transactions open to fraud, but it might spell disaster for any distributed application running atop the
platform.

 Fungibility is the feature of money where one unit equals another unit. For instance, a Euro equals another Euro
just as a Bitcoin equals another Bitcoin. Unfortunately, an ETH no longer equals another ETH. The alleged
attacker’s ETH was no longer as good as your ETH and was worthy of censorship, deemed necessary by a
so-called majority.

 Ultimately, these breaches in fungibility and immutability were made possible by the subjective morality
judgements of those who felt a burning desire to bring the alleged attacker to justice. However, in doing so they
compromised a core pillar of Ethereum just to do what they felt was in the interests of the “greater good”. In a
global community where each individual has their own laws, customs, and beliefs, who is to say what is right and
wrong?

 Deeply alarmed that these core tenets were disregarded by many of the Foundation’s developers, and a sizable
portion of Ethereum participants, we, as a community, have organized and formed a code of principles to follow
for the Ethereum Classic chain.

 The Ethereum Classic Code of Principles

 We believe in a decentralized, censorship-resistant, permission-less blockchain. We believe in the original vision
of Ethereum as a world computer that cannot be shut down, running irreversible smart contracts. We believe in a
strong separation of concerns, where system forks of the codebase are only possible when fixing protocol level
vulnerabilities, bugs, or providing functionality upgrades. We believe in the original intent of building and
maintaining a censorship-resistant, trustless and immutable development platform.

 Herein are written the declared values by which participants within the Ethereum Classic community agree. We
encourage that these principles not be changed via edict by any individual or faction claiming to wield power,
authority or credibility to do so.

 We, as a community agree that:

 - - The purpose of Ethereum Classic is to provide a decentralized platform that runs decentralized
applications which execute exactly as programmed without any possibility of downtime, censorship, fraud
or third party interference.

 - - Code is law; there shall be no changes to the Ethereum Classic code that violate the properties of
immutability, fungibility, or sanctity of the ledger; transactions or ledger history cannot for any reason be
reversed or modified.

 - - Forks and/or changes to the underlying protocol shall only be permitted for updating or upgrading the
technology on which Ethereum Classic operates.

 - - Internal project development can be funded by anyone, whether via a trusted third party of their choice or
directly, using the currency of their choice on a per project basis and following a transparent, open and
decentralized crowdfunding protocol.

 - - Any individual or group of individuals may propose improvements, enhancements, or upgrades to
existing or proposed Ethereum Classic assets.

 - - Any individual or group of individuals may use the Ethereum Classic decentralized platform to build
decentralized applications, hold crowdsales, create autonomous organisations/corporations, or for any
other purpose they deem suitable.

 Looking Forward

 For the many reasons listed above, we have chosen to rename the original blockchain “Ethereum Classic” with
the ticker symbol “ETC”, so that the community and all other participants can identify the original, unforked, and
immutable blockchain platform.

 Our most sincere gratitude goes to those developers within and outside the Foundation who opposed interfering
with the Ethereum blockchain ledger and enabled the Ethereum Classic chain to survive and live on. We know
there are many of you and we welcome you at anytime to join our decentralized community.

 We will continue the vision of decentralized governance for the Ethereum Classic blockchain and maintain our
opposition to any centralized leadership takeover, especially by the Ethereum Foundation as well as the
developers who have repeatedly stated that they would no longer develop the Ethereum Classic chain.

 We likewise will openly resist the “tyranny of the majority,” and will not allow the values of the system to be
compromised. As a united community, we will continue to organize for the defense and advancement, as
required, for the continuation and assurance of this grand experiment. The Ethereum Classic platform, its code
and technology, are now open to the world as Open Source software 9 . It is now freely available for all who wish
to improve and build upon it: a truly free and trustless world computer that we together as a community have
proven and will continue to prove is anti-fragile 10 .

## Transaction Finality

We believe the core value proposition of any blockchain is immutability; valid transactions can never be erased or forgotten. Individuals interacting on Ethereum Classic are governed by this reality; Code is Law.

This does not necessarily mean that code replaces existing laws, or that only code is law (there are many geographical jurisdictions), but it gives users the opportunity to enter into a new blockchain-based jurisdiction where agreements are governed by code.

By entering into contracts on Ethereum Classic, you can be certain that the network remains neutral. The outcome of transactions will be dictated by code you voluntarily interact with. Unless explicitly defined by the contract code, there are no reversals, no undos, no opt-outs.

Transactions are final; applications are unstoppable.

# Using ETC (Beginner)
ETC is one of the easiest chains to use, and if you're just getting started you can quickly start using ETC with Emerald Wallet.
## Emerald Wallet - Quick Start
Download: https://github.com/ETCDEVTeam/emerald-wallet/releases
Run.
Select "Remote Node" (starts instantly), or "Full Node" (takes a few hours).

That's it!

# Getting ETC
You have two options to get ETC, one is to buy it on an exchange, the other is to mine it with computer hardware.

## Exchanges
To purchase ETC with cash or other Cryptocurrencies you can join one of the many exchanges linked in the Exchange section.

## Mining
To mine ETC you'll need to have the appropriate computer hardware and join one of the many ETC mining pools available. If you've never mined before then make sure to read up on what's required first. You can find more information at the websites of the linked mining pools.

# What is a Contract?
A Contract is a computer program that runs on the ETC network without anyone being able to interfere with it. This is advantageous because you can create a contract that everyone agrees to and then not have to worry about someone backing out.

## A simple example
Say every couple of weeks you and your coworkers go out for beers. Some members of the group start to become concerned that they're buying too many rounds while others are not. To solve this you create a pool of money, everyone throws in 10 ETC, and when the bar tab comes you pay with it.

This works great, but then you have an issue, sometimes some people don't show up and you agree it's not fair to use the pool of funds when some people aren't around. However some people aren't very good at sticking to this rule, and they occassionally forget to not dip into the funds whenever Todd is traveling on business.

So you create a contract on the ETC network that says each member of the group needs to tell the contract that it's okay to spend the funds. Then whenever you want to spend your ETC the contract enforces this rule without needing to rely on everyone following the rules; they're required to by the contract.

The possibilities for such contracts are endless, with applicability across industries. This is but one small, illustrative example.

# ETC History
ETC has a long history relative to most blockchains and came about at the start of the second wave of blockchains.

Ultimately you can break down blockchains and Cryptocurrencies into two waves:

Wave 1 (2009-2013): Bitcoin, and Bitcoin clones (aka. "altcoins").
Wave 2 (2014-Present): Contract coins, Privacy coins, etc.

Ethereum Classic belongs to the second wave of coins.

Ethereum Classic is the Ethereum blockchain, much like Coca Cola Classic is the original and better Coke, we are the original and better Ethereum. Where-as New Coke (or New Ethereum) is a compromise that ruined a lot of what made Ethereum great.

To truly understand ETC and its history our decentralist manifesto, declaration of independence, and early history are required reading.

## A History Lesson
Ethereum launched on July 30th 2015. At this time there was only one Ethereum with the goal of being a decentralized, immutable, blockchain-powered machine.

ETC's very own EtherNinja is permanently recorded in block 4: https://etherscan.io/block/4

The first Bitcoin-proponent made it into block 18, funny that they were mining Ethereum: https://etherscan.io/block/18

For the first year the Ethereum community was one small but happy family.

### The DAO Incident
Then some of the leaders at Slock.It and The Ethereum Foundation decided to create a Decentralized Autonomous Organization ("The DAO"). The goal of The DAO was to create a funding mechanism for various ecosystem projects.

The DAO had a litany of issues from the start, it was quickly written, it had known bugs (one of which the attacker exploited), it had undergone a very poor security audit, and it was heavily promoted.

Ultimately a contract was deployed on the Ethereum chain that created The DAO. Participants could send Ether to it, vote on proposals, and be rewarded with Ether if these proposals created profitable projects.

Shortly after deployment The DAO contained ~15% of all Ether in existence at the time (worth ~$150 million), the attacker took about 40% of this (or $60 million). A group of "whitehats" secured the rest, preventing the attacker from getting the whole bag.

A vote was quickly held on carbonvote.com, over the course of a little over a week Ether holders were able to vote with their wallets on whether or not to undo the attack with a change to the network that went against its principles. 6% of the total economy voted, not even a small majority; less Ether than the amount affected by The DAO. 94% did not vote. 94% were not represented. Ohh, and 1/4th of the pro-fork vote was a single rich voter.

So Ethereum forked, they created an irregular state change that undid the past and moved The DAO funds to a refund contract so people could reclaim their Ether.

### Aftermath
After The DAO incident the original agreement for The DAO (which stated that the code on the network is the final say), the daohub.org website, and carbonvote.com all lost their history. Some were taken down quickly (The DAO agreement), the rest disappeared over time. Daohub.org now links to a website for a children's game. Rather loose handling of information related to a $60 million incident.

Finally, the original Ethereum chain continued on, now under the name Ethereum Classic. While Ethereum Foundation should have renamed their augmented chain to something like "New Ethereum" they refused to, and since they had the domain names, the subreddits, and most of the money, they got to "win" with their 6% vote.

ETC continues moving forward.

When you want to change the blockchain without the permission of account holders: https://github.com/ethereum/go-ethereum/blob/master/consensus/misc/dao.go#L82

# What is a blockchain?
Put simply, blockchains provide a way to keep track of digital assets (money, things) without the need for intermediaries, such as banks and other financial institutions.

# What is Ethereum Classic?
Ethereum Classic (ETC) is a smarter blockchain, a network, a community, and a cryptocurrency that takes digital assets further. In addition to allowing people to send value to each other, ETC allows people to create complex contracts that operate autonomously and cannot be modified or censored. This can be a difficult concept to grasp for those new to the blockchain space. For now, imagine Bitcoin as a landline phone—it does one thing very well. From this perspective ETC is like a smartphone or the Internet; it can do everything Bitcoin can and much more.

## An analogy
Imagine Bitcoin as a landline phone, it was a revolutionary idea that connected people across the world in ways no one could have imagined.

From there those same lines that carried phone signals were adapted to carry digital signals and birthed the Internet that connected people in even more advanced ways.

In this way Bitcoin is the revolutionary idea that connected people in brand new ways.

ETC is the more advanced connection, it takes the blockchain idea into the future, enabling us to do much more than simply send money.

## More than just a blockchain
If the Internet was simply a bunch of interconnected computers, and didn't have any users or people creators making websites, it would be largely useless. In much the same way a blockchain needs users and creators. ETC has both and we're working on solving real world problems of interconnecting people and their devices.

Beyond a blockchain, we are:
- A fair and open community
- A blockchain with a long history of operation
- A blockchain on which all transactions are immutable, or permanent; if someone sends you value on the ETC blockchain, it is yours forever
- The future of the internet of things (IoT)

[NEEDS MORE ABOUT IoT]

# Why ETC?

## Performance
ETC has some of the largest network activity of any blockchain, consistently higher than Bitcoin Cash, and neck-and-neck with Litecoin. We have multiple developer teams, all of whom are committed to the long term ETC vision. We are in the top-10 in programmer activity (measured by code commits). We have numerous sources of funding, and we continue to grow, day-by-day, commit-by-commit, line-by-line of code to create a bullet-proof network that anyone can use without fear of reprisal from a highly influential minority.

## Principles
Immutability. Technology. Community.

The short answer is that blockchains only work as long as everyone agrees to honor them. They are essentially rules to which everyone needs to agree, if they don't then they cannot participate, or they split into other blockchains. Splits are bad for blockchains, they make working and connecting with others difficult.

ETC takes a conservative approach to changes here, and this conservatism avoids splits and protects your money; much like Bitcoin.

ETC is new and reliable technology. It's the longest running smart blockchain in existence.

ETC is a strong and principled community. Many of our members have stuck around since the beginning. We look beyond the hype and keep to the principles that keep blockchains functioning

## Immutability
ETC "accounts" cannot be modified by others. This feature is a philosophy we share with Bitcoin, Litecoin, and other cryptocurrencies.

Some blockchains follow a different philosophy ("governance") which allows participants to use their social and economic power to vote on the account balances of others. Imagine if all the members of your bank believed you had broken a law. Instead of going to the police, those with the biggest balances and notoriety voted to take away your money. Imagine a system where the wealthy and celebrities have the final say over your money. A fundamental aspect of ETC is that this will never be allowed to happen, and historical precedent has demonstrated this to be the case.

## Technology
ETC allows highly efficient value transfers (more so than Bitcoin and its variants), has a focus on IoT applications, and runs a mathematically verified Ethereum Virtual Machine, or EVM. What this means is that ETC is great at what it sets out to do: be a highly efficient means of exchange that connects the world's devices.

IoT features are under active development and will be available later this year.

[NEEDS MORE ABOUT IoT]

## Community
Many blockchain communities have centralized leadership, meaning a few people at the top make the decisions for everyone else. ETC's community is purposely structured to avoid this. Responsibility for development and discussion are distributed between many parties. This prevents the biased form of "governance" that other blockchains are susceptible to.

## Why Classic?

Ethereum Classic is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference.

Ethereum Classic is a continuation of the original Ethereum blockchain - the classic version preserving untampered history; free from external interference and subjective tampering of transactions.

# ECIPs

## Summary

This document is a summary of the Ethereum Classic Improvement Proposal (ECIP) process. To view the full description of the ECIP process please read ECIP-1000 which is the formal document generally acknowledged by the Ethereum Classic (ETC) ecosystem, by rough consensus, as the most suitable system to propose new standard changes to the ETC protocol, informational documents, or ECIP process suggestions.

## Getting Started
After reading ECIP-1000, fork the repository and add your ECIP to it, using the provided ECIP markdown template. Submit by creating a Pull Request to the Ethereum Classic ECIPs repository.

## Types of Participants

As you will see by reading this summary and the other documents suggested above, there are several parties that participate in the life cycle of an ECIP:
- ECIP Author: This is you! The author is the person interested in improving ETC by making a new ECIP. Therefore, responsible for learning how the process works, so he or she can effectively propose protocol changes, informational or procedural improvements. The author is also responsible for following up on the ECIP life cycle throughout all the status steps, from 'draft' to 'active' as described below, so the proposal becomes a reality. If not, it is possible that the ECIP will be eventually rejected.
- Editors: Editors are developers, mainly ETC volunteers, members of the Ethereum Classic Github Organization whose responsibilities include, but are not limited to, assigning numbers to ECIPs, merging them, listing them in the ECIP directory, checking if they are ready, sound and complete, if the status steps are followed, and to check their motivation, accuracy and proper licensing terms.
- Developer Teams: ETC has several developer companies and volunteer developers who work on different node clients. Because these developers are dedicated to maintaining the core protocol of Ethereum Classic, they are categorized as "core developers" or "core developer teams". Core developers are in charge of making new proposals or reviewing and accepting or rejecting proposals from other developers or teams. When they accepts new changes, they merge them into the respective clients they maintain for the ETC network.
- Implementors: Once an ECIP is accepted and merged, the last step is for miners, mining pools, wallet operators, exchanges, and other full node operators to implement the changes by installing or upgrading their nodes to integrate the new changes. These operating network participants are called "implementors".
- Users: Users or end users may be regular consumers, businesses, governments, non-economic node operators, investors, or other kinds of users who see when the implementors upgraded their systems and adopt the new rules for sending transactions and managing smart contracts or using applications on top of ETC.
- Discussion Participants: According the ECIP process, when moving ECIPs forward, authors will open for discussion their proposals. These discussions are located in public forums, Github or developer calls. Discussion participants may be core or volunteer Ethereum Classic client developers, any developers on Github willing to contribute their well reasoned opinions, and other interested stakeholders or participants in the ETC ecosystems.

## Contributing

### Steps
1. Review ECIP-1000.
2. Fork the repository by clicking "Fork" in the top right.
3. Add your ECIP to your fork of the repository. There is a ECIP markdown template.
4. Submit a Pull Request to Ethereum Classic's ECIPs repository.

### Format and Numbering

Your first PR should be a first draft of the final ECIP. It must meet the formatting criteria enforced by the build (largely, correct metadata in the header). An editor will manually review the first PR for a new ECIP and assign it a number before merging it. Make sure you include a discussions-to header with the URL to a discussion forum or open GitHub issue where people can discuss the ECIP as a whole.

### Images

If your ECIP requires images, the image files should be included in a subdirectory of the assets folder for that ECIP as follow: assets/ecip-X. When linking to an image in the ECIP, use the related links such as ./assets/ecip-X/image.png.

### Tips

When you believe your ECIP is mature and ready to progress past the draft phase, you should do one of two things:
- For a Standards Track ECIP of type Core, ask to have your issue added to the agenda of an upcoming core developer team meeting. There, it can be discussed for inclusion in a future hard fork. If developers agree to include it, the ECIP editors will update the state of your ECIP to 'Accepted'.
- For all other ECIPs, open a PR changing the state of your ECIP to 'Final'. An editor will review your draft and ask if anyone objects to its finalization. If the editor decides there is no rough consensus - for instance, because contributors point out significant issues with the ECIP - they may close the PR and request that you fix the issues in the draft before trying again.

# ECIP Status Terms
- Work in progress (WIP) -- An ECIP where the author has asked the Ethereum Classic community whether an idea has any chance of support, he/she will write a draft ECIP as a pull request. However, if the idea is still in a very early stage, and will have a lot of commits and changes by the author, editors or contributors, it may be better to enter it as a WIP. Make sure to add [WIP] in the title (example: [WIP] ECIP-X) of the early stage ECIP so other members can mute it if they are not interested in participating at this stage.
- Draft - An ECIP that is still undergoing iteration and changes, but is ready for general review. Make sure to remove [WIP] from the title so those who have muted the ECIP get the new status and can participate.
- Last Call - An ECIP that is done with its initial iteration and ready for review by a wider audience.
- Accepted - An ECIP that has been in Last Call for at least 2 weeks and any technical changes that were requested have been addressed by the author.
- Final - An ECIP that was accepted, implemented, and no longer can be modified without submitting a new proposal, e.g. it has been released in a hard fork.
- Deferred - An ECIP that is not being considered for immediate adoption. May be reconsidered in the future for a subsequent hard fork.
- Replaced - When a Final ECIP is no longer relevant, its status may be changed to Replaced or Obsolete.
- Rejected - Reasons for rejecting ECIPs include duplication of effort, disregard for formatting rules, unfocused or too broad, being technically unsound, not providing proper motivation, or obvious popular disapproval.
- Withdrawn - ECIP authors may decide to change the status between Draft, Deferred, or Withdrawn. The ECIP editor may also change the status to Deferred if no progress is being made on the ECIP.
- Active -- Some Informational and Process ECIPs may also be moved to a status of “Active” instead of "Final" if they are never meant to be completed, e.g. ECIP-1000.

## ECIP List

See ECIPs website for the complete list of ECIPs.

## Process Overview

Ethereum Classic Improvement Proposals (ECIPs), are technical write-ups that describe suggested changes to the Ethereum Classic Protocol. Finalized proposals agreed by core and volunteer client developers, implementers and other users of the Ethereum Classic mainnet are implemented by the core developer team into their respective clients.

Every pull request will be reviewed and discussed by core and volunteer Ethereum Classic developers and any developers on Github willing to contribute their well reasoned opinions. Regardless whether there is general agreement, you are still able to use the information generated in the discussions to create a second draft. This can be done by either updating the pull request or submitting a new pull request. This process may be repeated (See figure 1) until the ETC developer community agrees to add the pull request.

Figure 1: Status Terms and Process

Having an ECIP within the folder of the repository does not make it a formally accepted standard until its status becomes "Final". For an ECIP to become Final it requires the common consent of the ecosystem. Those proposing changes should consider that, ultimately, consent may rest with the consensus of the Ethereum Classic implementers and users.

## Discourse Archives

The ECIP Process (and thus, ECIP content) is informed by discourse around it.

Listed below are sovereign archives of discourse pertaining to this ECIPs repository. If you'd like to collect your own archives, a basic tool you can use for reference to collect them can be found at this gist. If you have or regularly collect archives, please feel welcome to add to this list.
- https://github.com/meowsbits/ECIPs/tree/gh

## ECIPs Historical Background

ECIPs were born out of the Ethereum (or Ethereum Foundation) EIP repository after TheDAO hard fork). At that time no other differences between Ethereum Classic (the original mainnet) and Ethereum existed besides TheDAO hard-fork. Changes have since been added such as the early defusal of the difficulty bomb and a change of the monetary policy to a fixed supply.

### Avoiding Network Splits

Pushing changes to the protocol without consensus will cause a network split. The ECIP process should not be skipped, as previously done by Ethereum Foundation developers who unilaterally implemented a rushed hard-fork in the most widely used client, therefore creating a network split at block 1920000.

### Decentralized Decision Making

The Ethereum Foundation raised money from the community to work towards the "mission to promote and support research, development and education to bring decentralized protocols", but failed at that goal when, shortly after TheDAO exploit, Vitalik Buterin announced, using the Ethereum Foundation blog, that they had already unilaterally decided to fork. A chat log from an internal chat reveals this decision was made prior to the announcement, and comments like "default behavior of Geth to be pro-fork as per internal discussions" found in DAO hard-fork pull requests, and the unwillingness to use their own proposal system, show that the narrative in which the Ethereum Foundation followed the will of the community was clearly wrong. What the Ethereum foundation did was the opposite of decentralized decision making.

## Conclusion

Decentralized decision making is part of the deep security that protects the integrity of the Ethereum Classic blockchain. It is critical for keeping the promise of "applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference."

In other words, please follow the ECIP process!

### Abstract

This ECIP proposes a solution to the Ethereum Classic Monetary Policy to adjust, with finality, the current emission schedule implementation of 14.0625ETC per block in perpetuity. The solution proposed introduces a theoretical upper bound on the maximum absolute number of ETC and introduces a method of degraded emission over time.

### Motivation

At its core, the purpose of adjusting the current monetary policy of the ETC network, to a policy which places an upper bound on the number of tokens issued and decreases the rate at which ETC is introduced into the system over time, is to "bootstrap" the network’s security. By increasing the security of the network, a proper monetary policy indirectly nurtures the network, providing a secure platform for which smart contract development will be more likely to occur.

If we accept that speculation, a demand function, is the main economic driver of any new system, that the Ethereum Classic Network is a new system, and that speculation will drive the value of the Ethereum Classic token until the utility value of the Ethereum Classic token exceeds its speculative value, it is reasonable to assume that rewarding speculation will help to secure and nurture the network:

Large scale, high risk, and/or high profile applications will be less likely to be developed on a blockchain with weak security ie. a low hashrate. Increasing demand for the Ethereum Classic token will, all else being equal, increase the price of the Ethereum Classic token. An increase in the price of the token incentivizes mining operations to direct their efforts on the Ethereum Classic Network or to begin operations on the Ethereum Classic Network. The additional mining power that is directed towards the network, because of this incentive, further secures the network. An increase in the security of the network assists in building trust between the network and both current and potential users and developers of the network. This increase of trust in the network provides an incentive for large scale, high risk, and/or high profile applications to be developed on the network. Thus, rewarding speculation helps to secure and nurture the Ethereum Classic network.

Especially important to early stage cryptocurrencies, assuming all other variables are equal, a network with a decreasing rate of production and an upper bound on the number of tokens that will be issued will provide more incentive for high risk speculation to occur than one without a known rate of production or an upper bound.

Above all, it is important to recognize that a monetary policy does not directly create value for the network. A stable platform with useful applications and a vibrant community are the variables that drive value. The purpose of a properly structured monetary policy is to create an incentive for people to take a risk on a system that has not yet reached its full potential, providing an additional reason for those who may not otherwise be interested, who cannot or have not developed anything on the platform (yet), or who remain skeptical, to involve themselves in an otherwise nascent platform.

### Specification

#### Current Ethereum Classic Monetary Policy

Source

The current mining rewards on the Ethereum Classic Network are as follows:
- A "static" block reward for the winning block of 5 ETC
- An extra reward to the winning miner for including uncles as part of the block, in the form of an extra 1/32 (0.15625ETC) per uncle included, up to a maximum of two (2) uncles.
- A reward of up to 7/8 (4.375ETC) of the winning block reward for a miner who has mined an uncled block and has that uncle included in the winning block by the winning miner, up to a maximum of two (2) uncles included in a winning block.
- This reward structure is set to continue in perpetuity.

#### Proposed Ethereum Classic Monetary Policy

Source

An "Era" is defined as the number of blocks containing a given production rate.

The proposed mining rewards on the Ethereum Classic Network are as follows:
- Era 1 (blocks 1 - 5,000,000)
- Era 2 (blocks 5,000,001 - 10,000,000)
- Era 3+

### Rationale

Why this 5M20 model:
- Minimizes making the first adjustment too "exceptional." Other than equalizing all uncle rewards at block 5M, the changes/reductions to supply over time are equal.
- The model is easy to understand. Every 5M blocks, total reward is reduced by 20%.
- Uncle inclusion rates through block 5M will likely remain at around the 5%. Because of this, once block 5M is reached, in the worst case scenario (supply wise, which assumes two uncles included every block in perpetuity) the total supply will not exceed 210.7M ETC. Should the network remain as efficient in its ability to propagate found blocks as it has in Era 1 (5.4% uncle rate), the total supply will not be less than 198.5M ETC. This provides for an incentive to miners and client developers to maintain high standards and maintenance of their hardware and software they introduce into the network.
- The 5M model provides a balance between providing an acceptable depreciating distribution rate for rewarding high risk investment into the system and maintaining an active supply production over time. Maintaining this future supply rate keeps the potential price of the ethereum token suppressed enough to ensure transaction prices can remain lower than if the supply were to reduce to zero at an earlier date. This serves as a "blow off valve" for price increases in the case that a dynamic gas model cannot be implemented for the foreseeable future.
- Having the monetary policy begin at 5M provides a balance between delaying the implementation to provide enough time for code development and testing, and accelerating the implementation to provide an incentive to potential early adopters and high risk investors. Based on community discussion, beginning before block 4M is too soon for development, testing, and implementation of the policy, and later than block 6M is too long to interest many potential early adopters/investors.
- Not changing the monetary policy of ETC provides no benefit to risk taking early on in the life of the system, speculation wise. It will be difficult for the network to bootstrap its security. While bitcoin has what is considered to be the generally accepted ideal monetary policy, with its 50% reduction every four years, this model is not likely to yield optimal investment for ETC. If ETC were to adopt the bitcoin halving model, it is arguable that too much of the supply would be produced too soon: 50% of the estimated total ETC supply would be mined 75% sooner than traditional bitcoin because of the pre-mine of 72M ETC that was initially created in the genesis block. While the 5M model does not completely eliminate the effects of the premine, since 50% of total estimated production occurs sooner than would the bitcoin model, it makes up for this, to an extent, with its lengthening of the time until 90%, 99% and 100% of bitcoin are mined. The tail end of ETC production is longer and wider than bitcoin.
- In the current ETC reward schedule, the total reward for uncles is higher than the reward received by the miner who also includes uncles. In this state, a miner is significantly diluting the value of his reward by including these uncled blocks. By equalizing the rewards to uncle block miners with the rewards to miners who include an uncle block, the reward structure is more fairly distributed. In addition, equalizing the uncle rewards reduces the incentive for miners to set up an ETC "uncle farm," and instead drives them to better secure the network by competing for the latest "real block."
- Because the rate at which uncled blocks can vary with extreme, reducing the reward for uncle blocks assists considerably with being able to forecast the true upper bound of the total ETC that will ultimately exist in the system.
- The model is the best attempt at balancing the needs to incentivize high risk investment into the system in order to bootstrap security and create a potential user base, be easy to understand, include a reduction to the rate of production of ETC over time, include an upper bound on supply, provide for a long term production of the ETC token, and allow enough time for development, adoption, and awareness.

Blockchains are going to rule the world, providing a mechanism for scaling social and economic cooperation to an unprecedented level — a truly global scale. Such cooperation will involve not only human beings, groups and associations but also a growing multitude of increasingly independent artificial agents.

Every blockchain creates a social network around its applications, with network value growing exponentially with the number of participants in accordance with Reed’s Law. This value isn’t extracted by intermediaries or controllers, as with previous centralized models. Instead, it’s shared among participants, providing economic incentives for cooperation without coercion.

Not all blockchains are created equal. There are three key characteristics that make scalable blockchain-enabled cooperation possible: openness, neutrality and immutability.

Openness is necessary. It goes without saying that the rules of the game should be open for anyone to see and understand. Anyone should be able to participate in any layer of the system without asking for any permission whatsoever. Anyone should be able to use the network in accordance with its rules. Anyone should be able to create their own client implementing the open protocol. Anyone should be able to contribute to network security, and so on. No registration, identification or other preconditions should limit participation. All such limitations prevent the network from scaling and their enforcement creates centralization risks.

Neutrality is necessary. It’s important for anyone participating in blockchain-enabled cooperation to be on an equal footing with everyone else. It doesn’t matter if you wield huge economic power or only a tiny amount. It doesn’t matter whether you’re a saintly Mother Theresa or a vicious drug dealer. It doesn’t matter whether you’re a human or a refrigerator. It doesn’t matter what you believe in, what political theory you subscribe to, or whether you’re a moral or immoral person. A participant’s ethnicity, age, sex, profession, social standing, friends or affiliations, make or model, goals, purposes or intentions — none of this matters to the blockchain even a bit. The rules of the game are exactly the same for everyone, period. Without neutrality, the system is skewed towards one set of participants at the expense of others. In that case, it’s less likely to gain universal acceptance and maximize network value for everyone.

Immutability is necessary. The blockchain is a truth machine preserving one universally accepted version of history, one immutable sequence of events. What’s true once is always true, regardless of political or business interests, and no amount of lobbying can change that. If it’s simply not possible to change history, then no resources are wasted on the effort. If there are any loopholes at all, then sufficiently motivated and determined interest groups will exploit them at the expense of others, diminishing network value for everyone.

The rules governing the blockchain network are known in advance. They’re exactly the same for everyone and not subject to change other than with 100% consensus. Yes, it must be 100%. Because any change to the system’s rules that not all participants freely agree to creates a network split, diminishing network value for everyone.

It’s impossible to achieve these blockchain characteristics without the system being truly decentralized. If any aspect of the blockchain system becomes subject to centralized control, this introduces an attack vector enabling the violation of one or more of the key blockchain characteristics. It may be possible to limit participation (such as by enforcing AML/KYC rules), thus violating openness. It may be possible to enforce discriminatory policies (such as by filtering “illegal” transactions), thus violating neutrality. It may be possible to rewrite the history of events (such as by confiscating or “redistributing” funds), thus violating immutability. Introducing centralized chokepoints creates a precondition for the introduction of “blockchain intermediaries or controllers” who can siphon value out of the system at other participants’ expense.

So decentralization is the most important feature of blockchain systems, the one everything else depends on. With decentralization, blockchains will come to rule the world. Without it, they’ll be “contained” and railroaded into niche applications.

We decentralists are committed to keeping blockchains open, neutral and immutable. We’re committed to keeping blockchain systems decentralized. This informs all our actions and positions towards any developments in the crypto world and beyond. All attempts to violate any of the key blockchain characteristics should be fought. All changes to a blockchain’s rules that introduce new centralization risks or strengthen existing ones should be fought. Only developments that are clearly beneficial to decentralization or strengthen the three key blockchain characteristics should be supported and encouraged. The blockchain revolution won’t be centralized. Let’s make sure of it.

Onward.

Source: https://medium.com/@bit_novosti/a-crypto-decentralist-manifesto-6ba1fa0b9ede#.2m5ro5rr9

PDF Version:
- English
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## Ideology
We believe in decentralized, censorship-resistant, permissionless blockchains. We believe in the original vision of Ethereum as a world computer you can't shut down, running irreversible smart contracts. We believe in a strong separation of concerns, where system forks are only possible in order to correct actual platform bugs, not to bail out failed contracts and special interests. We believe in censorship-resistant platform that can be actually trusted - by anyone.

More: https://medium.com/@bit_novosti/a-crypto-decentralist-manifesto-6ba1fa0b9ede

## Motivation
Ethereum Foundation responded to DAO debacle in the worst way possible. Special interests controlling the Foundation are ramming through DAO bailout hardfork against principled opposition of a significant economic minority of Ethereum stakeholders. According to (diligently hidden, pro-fork) coin vote on Carbonvote, 19% of ETH holders oppose this hardfork. Also, about 22% of Ethereum miners voted against the previous 'DAO softfork' and would logically oppose hardfork as well. Such a significant minority of stakeholders should not be silenced or intimidated into submission - they should be given a clear choice.

If we want to continue to move forward and guarantee survival of the original Ethereum vision, we must fork Ethereum. This will lay the foundation to build secure decentralized applications that are actually censorship resistant.

More: https://github.com/ethereumclassic/freeworldcomputer-project

## Goals

The main goal of the project is to ensure survival of the original Ethereum blockchain. We will strive to provide alternative for people who strongly disagree with DAO bailout and the direction Ethereum Foundation is taking their project. Anyone opting to remain on the original chain should have such opportunity.

## Plan

### Development
We fork Ethereum and maintain upstream patches similar to the relation between Redhat and CentOS, until a community can form around the project and create a road map. Until this happens we can fork multiple existing clients to help prevent a monoculture of clients. We plan to follow https://github.com/ethereum development except for any features they introduce into existing clients that violate the key principles of openness, neutrality and immutability.

Code: https://github.com/ethereumclassic

### Community
- https://www.ethereumclassic.org
- https://www.reddit.com/r/EthereumClassic/

## What can I do?

Please help us spread the word about this project in Ethereum community!

### Volunteers
If you feel strongly about the cause, please get involved. With just days before the planned hardfork, we need your support to ensure original Ethereum survival. We need more developers, website designers, people who can write and advocate the need for Ethereum Classic. Please let us know what are your skills and how you would like to contribute. Redditors, please reply here. Github users, please open new issue.

### Users

In order to remain on the original Ethereum chain, just don't upgrade to hardfork client version pushed by Ethereum Foundation. We will maintain non-fork versions of all major Ethereum clients (as well as other key software), so going forwards all the improvements will be available to you.

Fun fact. If you keep ETH under your direct control (not in a 3rd party wallet or exchange account), you will have two sets of coins instead of one post-fork. You could then install a forked Ethereum client in addition to Ethereum Classic, copy your private keys there and use your coins on both chains! You won't be so lucky if your ETH are locked with 3rd party going into the fork - some exchanges already announced that they will only return one type of coin post-fork to its users.

### Miners

Miners supporting the original chain should just keep mining with current version of software for now, without upgrading to client version introducing the hardfork code. It will be always possible to download and build latest non-fork version from https://github.com/ethereumclassic.

The difficulty of the original chain will be quite high post-fork, but it will adjust to actual hashrate shortly (just 2048 blocks, a few hours). Since it is expected that most hashrate will move to hardfoked chain, post-adjustment it will be possible to obtain decent mining rewards in classic ethers even with solo mining.

Mining pool supporting the original chain is currently under development, please check here in a couple of days.

### Traders

Most important question for traders is 'will ETC have market price'? There are all reasons to believe that it will. Essentially, ETC is an Ethereum 'spinoff coin' with a wide user base of all current ETH users. Some of them will see the value of transacting on a censorship-resistant chain, some won't. This creates interesting arbitrage opportunities for smart traders. Additional reasoning why ETC is very unlikely to be 'worthless'.

One exchange agreed to carry ETC already. It's Bitsquare which is planning to add ETC trading right after the fork. Other trading venues will follow. We are in talks with several exchanges to add ETC to their platforms (or re-introduce trading for the exchanges that previously traded ethers).

#### Let's make sure original Ethereum vision doesn't just "go gentle into that good night"!

Attribution: https://blog.ethereum.org/2016/07/20/hard-fork-completed/

We would like to congratulate the Ethereum community on a successfully completed hard fork. Block 1920000 contained the execution of an irregular state change which transferred ~12 million ETH from the “Dark DAO” and “Whitehat DAO” contracts into the WithdrawDAO recovery contract. The fork itself took place smoothly, with roughly 85% of miners mining on the fork:

You can see ongoing fork progress here. EthStats shows Go, Java and Parity (Rust) nodes successfully synchronized to the fork chain.

The recovery contract is already returning DAO token holders’ ether; about 4.5 million ETH has been sent to DAO token holders, and about 463000 ETH is in the control of the curator; a contract to facilitate extrabalance payments is currently undergoing security review.

Users who are interested only in participating in the fork chain should upgrade their clients to a fork-compatible version if they have not already done so; the upgraded Go client (version 1.4.10) is available here. If any users continue to be interested in following the non-fork chain, they should still update, but run with the --oppose-dao-fork flag enabled, though they should beware of transaction replay attacks and take appropriate steps to guard against them; users with no interest in the non-fork chain do not need to worry about transaction replay attack concerns.

We thank our developers and the community for working together to make the transition as smooth as it has been, and look forward to working together to continue to make the Ethereum ecosystem and protocol a success.

So, you understand the value proposition of open, neutral and immutable blockchains and share Ethereum Classic principles. You would like to join the community and help original Ethereum vision to succeed. What can you do? Here are some ideas:
- - -
Get a Classic wallet

Create new Ethereum Classic wallet in few easy steps.
Running a web-based Classic wallet is also possible: http://classicetherwallet.com/
- - -
Run a Classic node

We need better network bootstrapping. Run a dedicated Classic node. If your node maintains good uptime and network connectivity, please notify the developers so they can add them to bootstrap list.
Also, please consider adding your node to network status monitor (Netstat): http://etcstats.net/
- - -
Help with community tools

There is a community-driven effort to create ethereumclassic.com website. If you are interested to participate, please join the discussion.

Another initiative is to create Ethereum Classic Guide and improve overall quality of documentation. ETC should be accessible to anyone, and easy to start with!

Ethereum Classic wiki needs some love as well. Please share your knowledge and help others get going with Classic.
- - -
Contribute to development

If you have skills, please consider joining our dev team. We are working actively on geth/mist/etherwallet, but we need developers to begin migrating/restoring other clients and key supporting software.

Alternatively, you can help improve community tools. Block explorer improvement is our top priority right now. Beta support for exploring addresses and transactions appeared, but more is needed. Block explorers are essential, and before Classic there were no open source ones in Ethereum ecosystem.
- - -
Mine the original chain

Start mining to support network and earn classic ethers (ETC). Difficulty is relatively low, so even solo miners have a decent chance to find a classic block or two. Here is some info on solo mining, ETC mining guides and tips. Join in on the fun!

There are many Classic pools now, some of them listed on our website. New pools, please list yourself on ETC Wiki.

The pools are run independently of Ethereum Classic project, so do your own due diligence. BTW, why don't you start running your own Classic pool? Here is some opensource code, if you are interested.
- - -
Trade ETC for fun and profit

Trading classic ethers (ETC) is important as it gives our chain tokens value, attracting more miners.

ETC trading is now live on all the major crypto-exchanges. Bitfinex, Poloniex, Kraken offer trading pairs such as ETC/BTC, ETC/USD and ETC/ETH. Updated exchange list can be found on the front page of our website. Please trade ETC if you are interested in active market forming or want to increase your stake in the success of Ethereum Classic.
- - -
Spread the word

Please help us spread the word about Ethereum Classic around Ethereum community and beyond! You can use this logo set, or create something better still. Start websites. Write blog posts. Tweet. Let people know about Ethereum Classic and its value proposition.
- - -
Donate

ETC: 0xe9a7e26bf5c05fe3bae272d4c940bd7158611ce9

ETH: 0xda99c6385e7ec0a7b4031c393dac01b600341fc3

BTC: 1953UK8Y849SZqfDEnn3Zu4AM98hwWk3Kw
- - -
Feeling like something needs to be done, and no one is doing it? Take the initiative! Ask around our Slack channel if there is something urgent to be done.
- - -
Thanks for your support, and let's move our chain along! Stay classy, everyone! ;)

"He that breaks a thing to find out what it is has left the path of wisdom."
Gandalf - J.R.R Tolkien

Ethereum foundation when hardforked its blockchain broke vital values that could ultimately compromise forked Ethereum credibility.

#Immutability and #Fungibility

As a consequence of that decision we (Ethereum Classic), as a community, organized a movement to protect what is important for the future of society.

This movement gained incredible traction due to the philosophic alignment of many people with our values proposition.

The community formed around these core values is so vibrating and captivating that investors were attracted as light to a nearby black hole resulting in one of the most prominent blockchains in market capitalization and daily trade volume.

History will tell why these values are so important for an organization.

Methodology for reaching improved governance of decentralized anarchist organizations

Figure 1 - Source Inside Bitcoins

## Introduction

One of the main problems to be addressed by a decentralized anarchist organization of individuals is the intelligent allocation of resources. As each individual is motivated to propose organizational improvements, for each opportunity the organization has, several proposals might be sent for evaluation of the decision taking board. It's probable that not all the proposals made are going to be funded because resources (matter, time, space, intelligent agents) are limited. So methods for selecting most fit proposals are often utilized. Here I present a method analogous to the genetic algorithm for selecting most fit proposals to be funded within an anarchist organization.

Figure 2 - Source Mile Track GPS

## Proposed Algorithm

A population of proposals to a problem is evolved toward better proposals. The evolution starts from a population of community generated proposals, and is an iterative process, with the population in each iteration called a generation of proposals. In each generation, the fitness of every proposal in the population is evaluated; The more fit proposals are selected from the current population, and each proposal details are modified to form a new generation. The new generation of candidate proposals is then used in the next iteration of the proposals algorithm. Commonly, the algorithm terminates when either a maximum number of generations has been produced, or a satisfactory fitness level has been reached for the population.

## Measuring Fitness Of Each Proposal

One way to effectively measure the fitness of proposals is by a simple democracy voting process. The problem with this method is that receiving bad votes can lead to the tiranny of the majority.

Figure 3 - Source FTCDN

If somehow a method for measuring the quality of the votes was available, the tiranny of the majority could be avoided.

## Measuring Quality of Votes

The quality of the votes can be estimated with the conscience level each voter has.

Figure 4 - Source My Tech Analyst

To better illustrate the conscience level parameter I'll give a classical example called tragedy of the commons.

## Tragedy of the Commons
The tragedy of the commons is an economic theory of a situation within a shared-resource system where individual users acting independently according to their own self-interest behave contrary to the common good of all users by depleting that resource through their collective action.

Figure 5 - Source Jborden

People with less conscience would vote based on their own interest resulting in the depleting of the common resource whereas people with more conscience would actually vote for the collective handling of the common resource for added overall productivity.

If each individual has one vote, and 80% of the individuals are not conscious, full democracy would probably lead to depleting that resource. Let's then imagine a system that will give 5 votes for each individual that passes the courses called Tragedy Of The Commons and Correct Handling Of The Common Resource.

## Star Wars Analogy

In Star Wars the consciousness level would be something like the Midichlorian count. The highest Midichlorian count is attributed in the series to Anakin Skywalker, above 20,000.

He became Darth Vader and started acting evilly, in the same way highly conscious individuals often do. This indicates that consciousness cannot be the only factor for and individual to receive voting power. Instead evilness has also to be considered.Recently BBC published a psychological test called "How dark is your personality" to measure evilness.

Figure 6 - Source Tumblr

Evilness can be modeled as a factor ranging from -1 to 1.
 To be fair with the community evolution:

Voting power of an individual = - Evilness * Consciousness Level.

Instead of a general consciousness level, people are often very conscious in one subject and unconscious in another. That means the consciousness level in the equation above, that gives an individual voting power, has to be about the subject being voted, i.e. the proposals population and the problem to be addressed.

Let's then imagine a system that will give 5 votes for each individual that passes the courses called Tragedy Of The Commons and Correct Handling Of The Common Resource.

These courses are in fact relevant competences to the subject being voted, so an increase of these competences is positively related with a better vote.

### Measuring evilness of an individual

Figure 6 - Source the author

The advent of the blockchain allowed the recording of information in a safe, decentralized and possibly immutable way. Taking into advantage this technology, the evil deeds of an individual can be recorded in a blockchain powered immutable ledger.

If that was done in the forked Ethereum, Darth Vader would have the possibility to attack his evilness ledger to make it not evil with the purpose of receiving voting power.

## Drawbacks

This system might look overly complicated for a project selection process. Although with the advent of the smart contracts and computerized selection processes, the burden part of the process can be computer aided. After a few rounds people should get used to it.

## Insights

This topic was motivated from my participation in the Ethereum Classic community and first posted at Github - issue 39. Thank you Avtar Sehra for your contribution.

Let it be known to the entire world that on July 20th, 2016, at block 1,920,000, we as a community of sovereign individuals stood united by a common vision to continue the original Ethereum blockchain that is truly free from censorship, fraud or third party interference. In realizing, that the blockchain represents absolute truth, we stand by it, supporting its immutability and its future. We do not make this declaration lightly, or without forethought to the consequences of our actions.

## Looking Back

It should be stated with great gratitude, that we acknowledge the creation of the Ethereum blockchain platform by the Ethereum Foundation and its founding developers. It certainly can be said without objection, that without their hard work and dedication that we as a community would not be, where we are today.

From its inception, the Ethereum blockchain was presented as a decentralized platform for “applications that run exactly as programmed without any chance of fraud, censorship, or third-party interference” [1]. It provided a place for the free association of ideas and applications from across the globe without fear of discrimination, while also providing pseudonymity. In this decentralized platform, many of us saw great promise.

## List of Grievances

It is however, with deep regret, that we as a community have had to spontaneously organize [2] to defend the Ethereum blockchain platform from its founding members and organization due to a long train of abuses, specifically by the leadership of the Ethereum Foundation.
These grievances are as follows:
- For rushing the creation of a “soft fork,” which was comprised of a minor change in the Ethereum blockchain code for the sole purpose of creating a blacklist and censoring transactions, that normally would have been allowed
- For neglecting the full implications of the “soft fork” by the Ethereum blockchain as a warning, that they were violating the principles and values coded therein [3]
- For creating an unrepresentative voting mechanism called the “carbon vote”, which they initially stated was “unofficial” [4] only to contradict these statements a day before determining to hard fork [5]
- For rushing the creation of a “hard fork,” which was comprised of an irregular state change in the Ethereum blockchain code that violated the properties of immutability, fungibility, and the sanctity of the ledger
- For willfully deciding to not include replay protection in the “hard fork”, an action which has unnecessarily cost exchanges and thousands of users the rightful ownership of their Ether tokens [6]

## Respecting the Values Essential for Blockchains

One might ask, what harm can be done from changing the code of the Ethereum blockchain and bailing out [7] “The DAO” token holders, which is not an unreasonable question. Many of us have an innate sense of right and wrong, so at first glance rescuing "The DAO" felt right. However, it violated two key aspects of what gives peer-to-peer cash [8] and smart contract-based systems value: fungibility and immutability.

Immutability means, the blockchain is inviolable. That only valid transactions agreed upon via a cryptographic protocol determined by mathematics are accepted by the network. Without this, the validity of all transactions could come into question, since if the blockchain is mutable, any transaction could be modified. Not only does this leave transactions open to fraud, but it might spell disaster for any distributed application (Dapps) running atop the platform.

Fungibility is the feature of money, where one unit equals another unit. For instance, a Euro equals another Euro just as a Bitcoin equals another Bitcoin. Unfortunately, an ETH no longer equals another ETH. The alleged attacker’s ETH was no longer as good as your ETH and was worthy of censorship, deemed necessary by a so-called majority.

Ultimately, these breaches in fungibility and immutability were made possible by the subjective morality judgements of those, who felt a burning desire to bring the alleged attacker to justice.

However, in doing so, they compromised a core pillar of Ethereum just to do what they felt was in the interests of the “greater good”. In a global community, where each individual has their own laws, customs, and beliefs, who is to say what is right and wrong?
Deeply alarmed, that these core tenets were disregarded by many of the Foundation’s developers, and a sizable portion of Ethereum participants, we, as a community, have organized and formed a code of principles to follow for the Ethereum Classic chain.

## The Ethereum Classic Code of Principles

We believe in a decentralized, censorship-resistant, permissionless blockchain. We believe in the original vision of Ethereum as a world computer that cannot be shut down, running irreversible smart contracts. We believe in a strong separation of concerns, where system forks of the codebase are only possible, when fixing protocol level vulnerabilities, bugs, or providing functionality upgrades. We believe in the original intent of building and maintaining a censorship-resistant, trustless and immutable development platform.

Herein are written the declared values by which participants within the Ethereum Classic community agree. We encourage that these principles not be changed via edict by any individual or faction claiming to wield power, authority or credibility to do so.

We, as a community agree that:
- the purpose of Ethereum Classic is to provide a decentralized platform, that runs decentralized applications, which execute exactly as programmed without any possibility of downtime, censorship, fraud or third party interference
- code is law; there shall be no changes to the Ethereum Classic code that violate the properties of immutability, fungibility, or sanctity of the ledger; transactions or ledger history cannot for any reason be reversed or modified
- forks and/or changes to the underlying protocol shall only be permitted for updating or upgrading the technology on which Ethereum Classic operates
- internal project development can be funded by anyone, whether via a trusted third party of their choice or directly, using the currency of their choice on a per project basis and following a transparent, open and decentralized crowdfunding protocol
- any individual or group of individuals may propose improvements, enhancements, or upgrades to existing or proposed Ethereum Classic assets
- any individual or group of individuals may use the Ethereum Classic decentralized platform to build decentralized applications, hold crowdsales, create autonomous organisations / corporations or for any other purpose they deem suitable

## Looking Forward

For the many reasons listed above, we have chosen to rename the original blockchain “Ethereum Classic” with the ticker symbol “ETC”, so that the community and all other participants can identify the original, unforked, and immutable blockchain platform.

Our most sincere gratitude goes to those developers within and outside the Foundation, who opposed interfering with the Ethereum blockchain ledger and enabled the Ethereum Classic chain to survive and live on.

We know, there are many of you and we welcome you at anytime to join our decentralized community.

We will continue the vision of decentralized governance for the Ethereum Classic blockchain and maintain our opposition to any centralized leadership takeover, especially by the Ethereum Foundation as well as the developers, who have repeatedly stated, that they would no longer develop the Ethereum Classic chain.

We likewise will openly resist the “tyranny of the majority,” and will not allow the values of the system to be compromised. As a united community, we will continue to organize for the defense and advancement, as required, for the continuation and assurance of this grand experiment. The Ethereum Classic platform, its code and technology, are now open to the world as Open Source software [9]. It is now freely available for all who wish to improve and build upon it: a truly free and trustless world computer that we together as a community have proven and will continue to prove is anti-fragile [10].

~ The Ethereum Classic Community

### References
1. https://ethereum.org/
2. https://www.reddit.com/r/EthereumClassic/comments/4u4o61/callforactionwhatcanidotohelpethereum/
3. https://blog.ethereum.org/2016/06/28/security-alert-dos-vulnerability-in-the-soft-fork/
4. https://www.reddit.com/r/ethereum/comments/4s0rz6/avotethatnobodyknowsaboutisnotavote/d55nye3/
5. https://blog.ethereum.org/2016/07/15/-to-fork-or-not-to-fork/
6. https://pbs.twimg.com/media/CopwJVHXEAABEKd.jpg
7. https://dictionary.cambridge.org/us/dictionary/english/bailout
8. https://bitcoin.org/bitcoin.pdf
9. https://github.com/ethereumclassic
10. Anti-fragile: “Things, That Gain from Disorder” by Nassim Nicholas Taleb

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People keep repeating the phrase "Code is Law" without clear understanding of what it's supposed to mean. Some deliberately misinterpret it to mean that "ETC supports thieves and crooks" and similar nonsense. Let's get some things straight. Code is law on the blockchain. In the sense, all executions and transactions are final and immutable. So, from our (Ethereum Classic supporters) standpoint by pushing the DAO hard fork EF broke the "law" in the sense that they imposed an invalid transaction state on the blockchain.

This has nothing to do with contractual or criminal law, or other legal considerations. Stating that "code is law" is similar to acknowledging the laws of physics. The law of gravity says that when I push a piano out of a window, the piano will fall downwards. It does not mean that it's necessarily "legal" for me to push that piano out of that window. And if I do so and the falling piano kills some passer-by, it would be insane for me to argue before the judge that I shouldn't go to jail because I broke no laws of physics.

On Ethereum blockchain, a Turing complete code operates with a very real and tangible value. Because of this, there is always a potential for mistakes and unintended outcomes. There will always be transactions and code execution results that someone is not happy about. There will be conflicts and disagreements, there will be code vulnerabilities and exploits, there will be scams and thefts, there will be all kinds of ugly things.

Who should deal with all these conflicts? Let's imagine for a moment that we decided 'the blockchain community' will take it upon itself to deal with it all.

Who is going to make a call which on-chain code execution is “theft,” and which is not? Is this ponzi contract scammy enough to shut it down? Do we tolerate this dark market while it sells fake ids and marijuana, but draw the line once it starts to dabble in child porn and cocaine?

Should there be a democratic voting system (moot court) to decide on these cases, changing the blockchain state based on such decisions? Should there be a committee that decides what smart contract behavior is 'unacceptable' and what transactions are 'illegal' enough to justify a hard fork?

What may serve as a basis for such decisions? Where is the applicable body of law? Who is going to be the police, the judge and the jury? What is a due process? What is the appeal procedure? A lot of questions, and no good answers to these questions, when it comes to "blockchain justice".

But it's even worse if there is no system at all. If 'the blockchain community' just makes a special exception in regards to a 'special case', choosing to administer justice 'just this one time'. What is so special about this case, one may ask? Why does this theft get a special treatment, and the other thefts don't? Who do you need to know, whose buddy do you need to be to get such exceptional treatment? How are you going to defend such preferential treatment against legal cases citing a precedent and subpoenas demanding reversal of specific transactions?

It's this whole snake's nest that could be avoided by refusing to be dragged into conflict resolution and quest for justice as related to smart contract execution. And it only requires sticking to principles of blockchain neutrality and immutability.

So, code is law on the blockchain. All executions are final, all transactions are immutable. For everything else, there is a time-tested way to adjudicate legal disputes and carry out the administration of justice. It's called legal system.

Since the beginning of the formation of the Ethereum Classic community, users, developers, miners, and traders have been pondering about a change in monetary policy for ETC. Though many users in ETC look forward to a future of decentralized applications and smart contracts running on the blockchain but are dissatisfied with the current supply schedule of 5 ETC awarded per block which is created on average every 14 seconds.

As of the time of this writing, the available supply of ETC stands at 85.4 Million coins in circulation and users can’t help but compare that to Bitcoin’s 15.96 Million. For every 1 BTC there are 5 ETC and Bitcoin is 7 years older! Ethereum started with a Pre-Mine of 72 Million and by 2055, if nothing is changed, there will be about 500 Million ETC.

## A Network Upgrade

The current supply schedule for ETC is a bug, not a feature. A tightening of supply similar to Bitcoin’s would constitute as a network upgrade. The upward pressure on price due to the increased scarcity would encourage more mining, savings, and investment into ETC dApps and smart contracts.

The want and need for change in the money supply even had 77% support in one poll conducted by the Ethereum Classic Twitter Account.

Granted, it was not a scientific poll, but it seems to be an indicator of where the general ETC community stands on wanting to change policy.

## The Tithing Event

Below are two proposals by user “Snaproll” for changing the block reward of ETC. They are similar in nature to the supply schedule of Bitcoin which has proven to be a successful model were created with the goal of a CAP close to 210 million ETC. So that for every 1 BTC, there are roughly 10 ETC.

### Option A: “Tithing” at 10% Block Reward
- 10% Decrease in block reward every 3 million blocks.
- 3 million blocks is roughly 1.4 Years
- Theoretical Max CAP at 222 million, CAP in reality closer to 210 million.
- 99% of ETC mined by 2071, CAP hit after 2164

### Option B: “Tithing” at 20% Block Reward.
- 20% Decrease in block reward every 6 million blocks.
- 6 million blocks is roughly 2.8 Years
- Theoretical Max CAP at 222 million, CAP in reality closer to 210 million.
- 99% of ETC mined by 2066, CAP hit after 2157

Out of the two proposals, I prefer “Option A.” The tithing at 10%, for the reason that a change in supply schedule is done on the same day as the “Freeze of the Difficulty Bomb” network upgrade at block 3 million. It sends a clear signal to the market that ETC has taken steps towards it’s long term future and place in the crypto-currency market.

Follow Ethereum Classic Twitter and Reddit for more updates on monetary policy:
- https://twitter.com/eth_classic
- https://www.reddit.com/r/EthereumClassic

I will discuss money and monetary policy as well as give details regarding cryptocurrencies.

## What Is Money?

No one can create all the products and services they desire. Therefore, people exchange products and services. Money is an object that facilitates this exchange. Examples of money include convenient products such as rice and salt. More abstract examples of money include promissory notes like gold notes:

Another abstract example is a tally stick. It can record economic transactions much like a blockchain:

The most abstract examples of money are not associated with any product or service, and, they have little or no intrinsic value. An example is a dollar bill. The only intrinsic value is the value of the paper and ink. Another such example is a cryptocurrency key. It is a set of random numbers with no intrinsic value!

Money facilitates storage. It is more convenient to store dollar bills than say horses or eggs. Money also facilitates distribution. It is more convenient to send Bitcoin than say houses. Money also facilitates pricing. It is convenient to relate the values of all products and services to some single type of money.

## What Is Monetary Policy?

A monetary policy is a plan to manage a money supply. Some advocate fixed money supplies. Some advocate adjustable money supplies. In response to the Great Recession, many governments greatly increased their money supplies:

Satoshi Nakamoto set up Bitcoin to have a fixed long term money supply. He was likely concerned about the possibility of corruption otherwise. He placed the following Easter egg in the first (genesis) Bitcoin block: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks". This refers to the following newspaper cover:

## What Sets Cryptocurrency Prices?

Cryptocurrency prices in general are not static. Satoshi Nakamoto avoided a central bank and accepted potentially fluctuating Bitcoin prices:
Satoshi Nakamoto 2009-02-18 20:50:00 UTC:
"You could say coins are issued by the majority. They are issued in a limited, predetermined amount... there is nobody to act as central bank... In this sense, it's more typical of a precious metal. Instead of the supply changing to keep the value the same, the supply is predetermined and the value changes."

Arguments can be made that cryptocurrency prices vary as the mining difficulty, and, therefore the mining cost. Satoshi Nakamoto believed this was true for Bitcoin. More people will presumably mine if that is cheaper than purchasing Bitcoin. That will increase the mining difficulty thereby bringing the mining cost closer to the price. Conversely, less people will presumably mine if that is more expensive than purchasing Bitcoin. That will decrease the mining difficulty thereby also bringing the mining cost closer to the price:
Satoshi Nakamoto 2010-02-21 05:44:24 UTC:
"The price... tends to gravitate toward[s] the production cost. If the price is below cost, then production slows down. If the price is above cost, profit can be made by generating and selling more. At the same time, the increased production would increase the difficulty, pushing the cost of generating towards the price. In later years, when new coin generation is a small percentage of the existing supply, market price will dictate the cost of production more than the other way around."

In addition to mining difficulty, fluctuations in cryptocurrency demand can affect prices. Satoshi Nakamoto believed that Bitcoin economy growth could offset the inflationary effects of the (temporarily) growing money supply:
Satoshi Nakamoto 2008-11-08 16:38:26 UTC:
"The fact that new coins are produced means the money supply increases by a planned amount, but this does not necessarily result in inflation. If the supply of money increases at the same rate that the number of people using it increases, prices remain stable. If it does not increase as fast as demand, there will be deflation and early holders of money will see its value increase."

Furthermore, the rate of Bitcoin money supply growth is decreasing. The money supply will never exceed 21 million BTC. These attributes should help control inflation. Satoshi Nakamoto believed lost Bitcoin would also help manage inflation due to the decrease of money in circulation:
Satoshi Nakamoto 2009-12-13 16:51:25 UTC:
"[T]here will be natural deflation due to payment mistakes and lost data. Coin creation will eventually get slow enough that... we'll have net deflation."

Unlike Bitcoin, Ethereum and Ethereum Classic currently do not have fixed long term money supplies. There are ongoing discussions in both communities about potential changes to their monetary policies. Any modifications will also likely affect prices.

## Conclusion

Cryptocurrencies are innovative types of money with monetary policies that in general have strong protections against abuse. Cryptocurrency prices can vary due to many factors. As more people understand these technologies, hopefully they will gain the confidence to benefit from them. In the words of the inventor of blockchains:
Satoshi Nakamoto 2008-11-14 17:29:22 UTC:
"It's very attractive to the libertarian viewpoint if we can explain it properly."

## Feedback

You can contact me by clicking any of these icons:

## Acknowledgements

I would like to thank IOHK (Input Output Hong Kong) for funding this effort.

## License

This work is licensed under the Creative Commons Attribution ShareAlike 4.0 International License.

## Please join us!

ETC End of Year and Monetary Policy Event The Event is hosted by one of the leading financial services law firms, Eversheds LLP, at their London St. Pauls Head Quarters. Attendance is free, but you need to register for the event. More information at the Event web site.

## Key Event Focus Points
1. Update on what has happened so far in the ETC Ecosystem and future roadmap
2. Overview of the planned ETC monetary policy Hard Fork and why it matters
3. Panel Discussion on Monetary Policy, Economics and the Future of Cryptocurrencies

## Panel: "Monetary Policy in Cryptocurrencies"

Jon Matonis:

Founding Director of the Bitcoin Foundation and his career has included senior influential posts at VISA International, VeriSign, Sumitomo Bank, and Hushmail. An economist and e-Money researcher focused on expanding the circulation of nonpolitical digital currencies, Jon also serves as an independent board director to companies in the Bitcoin, the Blockchain, mobile payments, and gaming sectors. A prominent fintech columnist with Forbes Magazine, American Banker, and CoinDesk, he recently joined the editorial board for the cryptocurrency journal Ledger. His early work on digital cash systems and financial cryptography has been published by Dow Jones and the London School of Economics.

Alistair Milne:

Founded and sold several companies over the past 15 years, including one IPO. Most of Alistair’s work has been in technology and web businesses. Over the last five years he has focused his efforts on the world of cryptocurrencies as both an Angel investor as well as manager of one of the few actively traded cryptocurrency funds. He is also an evangelist, writing and speaking about the new wave of innovation emerging from the convergence of digital technologies, cryptography and finance.

Edan Yago:

Experienced entrepreneur and seasoned veteran of the digital currency world. He is currently CEO & Founder of Epiphyte, a Bitcoin/Fiat Currency remittance company; which is one of the leading companies helping banks integrate with distributed ledgers for next generation payment services. Yago has led digital currency initiatives at Zynga and is a founding member of DATA, the leading digital asset industry regulatory body. Yago is an angel investor and advisor to several Bitcoin companies and is a thought leader in the space.

Matt Herbert:

Director at the British Bankers Association, where he is heading up the BBA’s digital policy and blockchain programme. Matthew works closely with member banks and other financial sector organisations to engage on key policy reforms, in order to support the sustainable digital transformation of the banking industry. His core focus is on the development and advocacy of industry policy, legislative, and regulatory reforms required in the UK, pan-EU, and Globally, to enable digital innovation in banking and FinTech. He is also an advocate of the core premise of immutable blockchains that have a native digital store of value. His other areas of focus are cognitive computing, big data analytics, homomorphic encryption and security. He is a former lawyer, with deep experience in the capital markets.

## Event Agenda
- Opening by Eversheds (5 min)
- ETC Event Introduction and Overview of Developing a Sustainable Open Ecosystem: Dr. Avtar Sehra (15 min)
- ETC Twitter Sentiment: Carlos Graterol, Manager of @eth_classic (5 min)
- Technology Progress to Date and Next Steps: Igor Artamonov, CTO Classic Development Labs (15 min)
- Overview of ETC Monetary Policy Proposal: Matthew Mazur, Architect of ECIP1017 (15 min)
- Panel Discussion: Monetary Policy in Cryptocurrencies (60 min)

## Please join us!

Attendance is free, but you need to register for the event. More information at the Event web site.

## Introduction

In the years since the DAO fork and the unexpected
birth of Ethereum Classic, strong social
consensus has emerged in support of ETC remaining
POW mined into the indefinite future.

In order for Ethereum Classic to remain
self-sovereign, merge-mining ETC would not be
acceptable either.

There is very little appetite for proposals of
POS at the ETC base protocol layer, though POS
sidechains or L2 solutions on top of POW are
generally well received within the ETC ecosystem.

This consensus was evident at the recent ETC Summit
2019 conference in Vancouver, Canada, and this
proposal seems to make that consensus explicit.

## Proposal

There is a broad perception that ETC has an implicit
social contract in favor of POW mining. This ECIP
seeks to transform that implicit assumption into
an explicitly written social contract, as an
ECBP which is adopted using the ECIP process.

This adoption could occur as part of the next
hard-fork (just to "batch" discussions), or it could
happen independently of that timeline. This
proposal is a formalization of an aspect of the
ETC social layer, not a technical protocol consensus
concern. Because of that, it does not need to be
synchronized with a hard fork.

## How would this be adopted?

This proposal would be adopted by means of the ECIP
editors moving it to Final state, if they are
convinced of broad ecosystem consensus in its
favor.

The Editors should use all signalling
mechanisms at their disposal to assure themselves
of broad support. That could include polls on social
media platforms, miner votes, coinvotes, public debates at meetups and events, testing the water
with "opinion pieces", repeated discussion during
the ECIP community calls, and anything else which seems prudent to them.

They should not rush this decision.

## Potential downsides of adopting this proposal?

Unlike a protocol-level consensus change,
dissent against this proposal being adopted would
not result in a chain-split - just in dissenting
voices grumbling about its adoption. That is not
problematic. The ETC ecosystem generally welcomes
dissent, and the people who would oppose this
proposal's acceptance already likely oppose
sticking with POW mining. They will be dissenters
irrespective of the result of this process.

If they choose to exit the ecosystem as a result
of this proposal being adopted then that is probably
a good thing.

## Intended benefit of adopting this proposal?

This proposal would give stakeholders in the Ethereum
Classic mining ecosystem (miners, pools, ASIC manufacturers, GPU manufacturers, etc) certainty
that any investments they make are not going to be
negated by rash future decisions by the Ethereum
Classic ecosystem to change course on the current
implicit social contract.

Making the implicit explicit, as Kirk Dameron
would often say, is a simple but immensely
powerful means for coordination.
Ambiguity is often as bad or worse than any decision,
even if that decision is not the one you would have
wanted. Like the ECIP for Monetary Policy, adoption
of this proposal will attract entities with long-term
aligned incentives to Ethereum Classic.

Bitcoin is likely the single project which has
a strong enough implicit social contract around
SHA256 that businesses can assume that it will not
be changing course - barring a situation where the
Bitcoing hashing algorithm had reached end of life,
with collisions signalling that it was time to
upgrade.

Ethereum Classic would have a uniquely strong social
signal with such an explicit statement.

## What if we "change our mind"?

If some future unforeseen event or change of
participants in the ETC ecosystem leads to broad
consensus that it is necessary for the good of the
network to break this explicit social contract then
that decision would have to go through the exact
same ECIP process as this proposal. That will
not be an easy process.

Even if it that new proposal did get approved,
the chances are that such a reversal of an
explicit social contract would be seen as so
divisive that a chain split would likely result.
This guarantee would still be respected on one of those chains (likely the majority chain).

Whatever the case, adoption of this ECIP would be
an unmistakeable sign that the Ethereum Classic
community is a very strong ally of the POW mining
ecosystem, in a way which likely on Bitcoin can
match at the moment.

## Isn't this proposal running counter to "The Manifesto"?

Some people may feel that adoption of a proposal
which seeks to make explicit social layer matters
goes against elements of the "openness"
and "neutrality" points of Arvicco's "A
Crypto-Decentralist Manifesto". This document
is broadly seen as a "Founding document" for
Ethereum Classic. There may indeed be such a perception about the manifesto, but in truth
the document is inspiration, not gospel truth,
and certainly not law.

## The need for a written Constitution and Bill of Rights for Ethereum Classic.

There is no written "Constitution" or "Bill of
Rights" for Ethereum Classic. No proposal for
such documents has ever been submitted to
the ECIP process. We have never explicitly
defined our social and ethical baseline
assumptions - only the hardness of
the protocol itself.

We depend on implicit social conformance and
watchdogs to reject proposals which breach those
baselines (ie. ProgPOW), but social conformance
to unwritten baseline assumptions is not a
safe approach.

We pride ourselves on our conservatism
and our focus on security, but we have nothing
but subjective humans standing in defence of Ethereum
Classic's unique value. We depend on particular
individuals and their "toxicity" to defend
Ethereum Classic. This approach is not socially
scalable. Those individuals may not be around
in the future. Social trends may shift.
Social attacks may grow.

This kind of loose arrangement is how British
government works. They refer to the unwritten
"Constitution" which it is expected that governments
will conform to. Essentially just precedent and
an expectation that people will "play fair".
This is an incredibly weak basis for governance.
Do we want that for Ethereum Classic?
That is what we currently have.

The author would advocate that Ethereum Classic
needs to be a Republic, not a mob Democracy, and
that we need a written Constitution and Bill of
Rights to ensure our mutual future freedom.

We need such rules to avoid the "Permissionless
Fallacy" which Donald McIntyre has explained.
There are certain proposals which would undermine
the very shared assumptions which make Ethereum
Classic "Decentralized, Unstoppable, Immutable".

The Monetary Policy ECIP was somewhat akin to
proposals which could be adopted into a
Constitution, because that policy also provided
long-term certainty for all ecosystem partipants.
The difference for the Monetary Policy is that
it was also a protocol-level consensus change,
not purely a social contract.

In actually broke immutability by changing the
future emissions schedule, but that exception
to our unwritten guiding principles was made
with broad social consensus. It had the
explicit goal of locking that economic policy
in stone forever.

## So is this proposal a Constitution?

Not really. It would just consist of a single
sentence. Something like:

"Adoption of this proposal by the ECIP authors
is an explicit social contact between the
Ethereum Classic ecosystem and the POW mining
ecosystem that ETC intends to stay with POW
mining (not merged mining) into the
indefinite future."

Such a contract could easily be adopted into
a future Constition for Ethereum Classic though.

If there is consensus that ETC needs a written
Constitution then the author will partner with
suitable co-authors and will propose one.

## IP Protections for Ethereum Classic

This work is licensed under the Apache 2.0 license.
The author,
Bob Summerwill,
attests to his sole authorship of this work,
and that
he is able to contribute this work
to the ECIP process under the Apache 2.0 licence.

He further attests that he neither holds nor is aware of any patents, trademarks, copyright issues or other IP hinderances associated with this work.

You can listen to or watch this video here:

## Main Image on ethereumclassic.org and Its Symbolism

When you go to the Ethereum Classic website you find the image below which has a lot of symbolism and meaning for the ETC blockchain.

As may be seen above we marked the sections of the image with the meaning of each section. The three pillars are:
- smart contracts or programmability,
- fixed supply which gives ETC its property of digital gold,
- Proof of Work which is the heart of the network as it provides the security of the whole system.

In the image, the three pillars hold up and support the main principle of the Ethereum Classic network, represented as justice scales in between software code, which means Code Is Law.

In abstraction, the image symbolism on the home page may be represented as in the diagram below.

## Explanatory Text Beside the Image

Beside the image on the website, there is a text that explains to newcomers what is Ethereum Classic and implicitly lists five benefits of the pillars of ETC as well as the principle of Code Is Law.

From the text above I underlined the keywords that represent the benefits of the Code Is Law principle, which is upheld by the three pillars of ETC, and below I list them with their meaning:
- Survivability: Because of ETC's security, accounts, balances, and smart contracts will survive in the long term.
- Censorship Resistance: ETC is censorship resistant and unrestricted, therefore permissionless.
- Unstoppability: Currency transfers and decentralized applications are unstoppable.
- Uncompromisable: Accounts, balances, and decentralized applications cannot be compromised as in traditional systems.
- Uncapturable: ETC cannot be captured by corporations or special interests.

So, the three pillars uphold the principle of Code Is Law, and the principle of Code Is Law guarantees the benefits of survivability, censorship resistance, unstoppability, and make ETC uncompromisable and uncapturable.

Then, the question is: How do the three pillars of Ethereum Classic guarantee the principle of Code Is Law and its main benefits?

This is what we will explain in the rest of this article.

## Pillar 1: Smart Contracts

When we use the traditional web and apps on our phones or computers they interact with the central servers of tech companies and banks. This presents the risks of censorship, confiscation, restricted access, and manipulation of our activities by corporations and governments.

What good is a decentralized cryptocurrency as Bitcoin if to use it through applications, the applications themselves may be captured? What good would it be to supposedly make that cryptocurrency “programmable” if the programmers are hosted in centralized data centers and cloud services?

As smart contracts inside Ethereum Classic are decentralized software programs, they can power applications, making them decentralized applications (dapps). This means dapps on the ETC blockchain truly provide the benefits decentralization.

This is, that the Code Is Law principle is true in ETC and this enables applications to have the same security as the currency inside the blockchain.

By “security” we mean survivability in the long term of the code on the network, resistance against censorship, unstoppability of dapps, and hence that they will be uncompromisable and uncapturable as in traditional systems.

## Pillar 2: Fixed Supply

As the security model of a proof of work blockchain depends in a great measure on demand for its services (a secure and programmable cryptocurrency in the case of Ethereum Classic) then the properties of sound money must be a key component of the system to provide the economic incentives to increase its demand.

Sound money means that the native token must be scarce, durable, costly to create, portable, divisible, fungible, and transferable. However, the more important innovation that blockchains brought to the world with regards to sound money was that the currency is also trust minimized.

Trust minimization means that the ability for any centralized entity or special interest to change the supply of the currency is significantly reduced, or practically eliminated.

This gives a much higher assurance that the monetary policy will not be arbitrarily modified and increased, diluting the wealth and property of holders, as it happens systematically with fiat money.

Because ETC’s cryptocurrency is programmed in the protocol and it has a decreasing supply that tends to zero, with a supply cap of 210,700,000 coins, then it has these desirable features and properties that we seek, therefore it is sound money and secures property rights on a global scale.

If sound money increases demand, and growing demand increases security, then sound money means survivability in the long term, censorship resistance, unstoppability of dapps, and that the system is uncompromisable and uncapturable.

## Pillar 3: Proof of Work

The Proof of Work Based Nakamoto Consensus mechanism guarantees decentralization because it:
1. Enables consensus: All participants in the network can have the knowledge of which is the correct and honest chain because it is very easy to discard any attackers or imposters proposing alternative chains as the only way to build legitimate blocks is by doing a lot of work, consuming enormous amounts of energy.
2. Enables chain selection for free exit and entry: The same method of discarding the imposters who did not do the work and only including the blocks that did the work make proof of work blockchains absolutely free to enter and exit at any time with no permission nor direction from anyone.
3. Protects transactions: Because to build the blocks requires so much work by machines and expenditure of enormous amounts of electricity, if any attacker wanted to reverse the chain of blocks to the past to introduce fake transactions, censor, or eliminate accounts or balances, they would have to do all the work again.
4. Imposes a cost to create the money: The reward per block, which issues new native tokens, only happens if the work to build a block is done. This feature is what is analogous to gold in the real world and makes ETC digital gold.

The decentralization provided by the above features is the heart of the security of Ethereum Classic, thus survivability in the long term, censorship resistance, unstoppability of dapps, and that the system is uncompromisable and uncapturable.

## In Summary

Smart contracts provide programmability inside the blockchain and this enables applications to have the same security as the currency.

Fixed supply provides economic incentives in the form of sound money for the network to grow and become more secure.

Proof of Work makes the network truly decentralized, censorship resistant, immutable, and enables anyone in the world to participate permissionlessly.

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

In January of 2009 Satoshi Nakamoto launched the Bitcoin network. Previously, in October of 2008, he had already published the Bitcoin white paper where he mentioned trust minimization 14 times.

However, Bitcoin as a technology provides a very simple task: It is a ledger that only holds accounts and balances and people can send transactions to move money from one account to another. That's it. Nothing more.

Nevertheless, the fact that it provides a simple service must not undermine the incredible innovation and philosophical objectives that it accomplished. The proof of work mechanism that Satoshi Nakamoto invented is a giant leap forward for humanity, comparable to the printing press in the 1450s or the internet in the 1990s. It is a historic change of paradigm in the way money works.

The philosophy and accomplishment of trust minimization in Bitcoin means that now individuals and businesses may control and hold their money in their own custody without any intermediaries. They can also send transactions to make transfers in a permissionless and censorship resistant manner.

In banking, providers have custody of wealth and grant permissioned access to owners. In Bitcoin, owners have custody of their wealth and may do whatever they want with no permission.

This stemmed from a strong Cypherpunk philosophical basis. Their objective was sound and decentralized money in a peer-to-peer system, and the only way to accomplish this was to eliminate trusted third parties. It is no coincidence that Satoshi made this statement in the first paragraph of his paper:

"...but the main benefits are lost if a trusted third party is still required..."

To accomplish the goal of trust minimization, the technology of proof of work is fundamental. The main benefit of this consensus mechanism, called Nakamoto consensus, is that it provides a means for all participants in the network to arrive at the same exact state of the ledger every 10 minutes just by verifying the proof of work hash created by miners when sending a block of new transactions.

Additionally, this same feature enables any participant to exit and enter the network whenever they want, without asking permission or without the supervision from anyone.

These benefits, plus the fact that the work in proof of work protects the integrity of transactions by creating a security wall, and imposes a cost to create the currency, making it sound money, made it possible to run the system without trusted third parties.

Bitcoin's core innovation is this level of security, not innovation in the form of the latest gimmicks or bells and whistles.

Ethereum Classic has this exact same philosophy. ETC stayed with the proof of work consensus mechanism despite all major smart contracts networks using proof of stake, and even when Ethereum migrated from proof of work to proof of stake in September of 2022.

In ETC, as in Bitcoin, the innovation is security through trust minimization.

But Ethereum Classic does not operate like Bitcoin. ETC has the same exact design as Ethereum. In other words, it is an EVM blockchain.

What is an EVM blockchain?

Another of the Cypherpunks' goals was to integrate smart contracts, or decentralized software programs, inside the digital currency network. What use is a decentralized currency as Bitcoin if to use it and program the money you need to use apps that are hosted in centralized servers, data centers, or cloud services?

This was the solution that Vitalik Buterin invented in 2013: Ethereum.

Like Bitcoin, Ethereum holds accounts and balances in its ledger, but unlike Bitcoin, Ethereum also supports the addition of smart contracts, which are decentralized software programs that may be used to program the money. This made Ethereum a programmable blockchain.

The Ethereum Virtual Machine (EVM) model consists of the following components:
1. A ledger with accounts and balances, and a cryptocurrency.
2. A virtual machine that is replicated in all participating nodes of the network, making it a virtual decentralized computer.
3. More than one hundred and twenty operation codes (opcodes) that the virtual machine may execute, making near Turing complete.
4. A programming language, called Solidity, that can produce code in the form of software programs that are executable by the virtual machine.
5. The ability to store these programs inside the network's database which is replicated in all participating nodes, making the programs decentralized, also known as "smart contracts".
6. A gas system, that designates a number of computation units, called gas, that each opcode in the virtual machine consumes, and that must be paid for by users, so that all the nodes running the virtual machine may get paid for their work and know when to stop executing a program, solving the halting problem in a decentralized manner.
7. Blocks of new transactions are created every 15 seconds.

With all the above features combined, the Ethereum network accomplished the task of adding smart contracts to the basic accounts and balances network that was Bitcoin.

Ethereum Classic has exactly the same design as Ethereum, and shares the same features. This is because Ethereum Classic is actually the original Ethereum!

Ethereum and Ethereum Classic were one chain since inception in 2015, but due to a controversy called TheDAO) in 2016, Ethereum split from the mainnet and departed with a completely different philosophy than ETC.

The controversy was that the Ethereum side wanted to manually confiscate the funds of a hacker to return them to the original owners, and the Ethereum Classic side wanted to uphold the philosophy of immutability of the chain and not confiscate the funds, but to have people solve those things outside of the network. This principle in ETC became known as Code Is Law and is its most fundamental tenet.

Since that split, Ethereum has decided to follow a philosophy called weak subjectivity. This was the moral basis for migrating to the less secure proof of stake consensus mechanism, which is basically to run the network very much like the banking system. Weak subjectivity has a security of last resort that they call "social consensus" which means that, ultimately, anything that goes on inside the network may be modified, rectified, or manually managed by the participants in the network. This is absolutely antithetical to Bitcoin's and thus Ethereum Classic's philosophy of trust minimization and immutability.

This is why in Ethereum Classic we say "ETC is BTC philosophy, with ETH technology".

Due to its design choices, ETC has a system where both the currency and the decentralized applications are inside the same security environment of the proof of work blockchain. With this technology it is possible to design decentralized applications (dapps) where, even if the founders or the company of a dapp disappear, the smart contracts, accounts, and balances may still be perfectly safe inside the blockchain.

ETC is a fusion of the best of both worlds: The marvel of proof of work as a consensus mechanism with its true censorship resistance, permissionlessness, and immutability, and the computability, programmability, and versatility of smart contracts.

In ETC the money and the dapps are decentralized, immutable, permissionless, and censorship resistant. This is the essence of the principle of Code Is Law, which is largely upheld by the combination of Bitcoin's invention of the proof of work consensus mechanism and Ethereum's innovation of smart contracts.

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

Ethereum Classic (ETC) is a cryptocurrency, a blockchain, and a world computer.

It is a cryptocurrency because it has a coin called Ether or ETC, which trades under the symbol $ETC, that has a fixed monetary policy and a capped supply of 210,700,000 coins, making it not only suitable for global permissionless payments, but also for use as a store of value.

ETC is a blockchain because it is a network of machines around the world which follow a censorship resistant protocol to manage a database that contains accounts and balances, and accepts blocks of new transactions every 15 seconds to move money from one account to another.

It is a world computer because it also stores decentralized programs, called smart contracts, that can be used to power unstoppable applications or dapps.

## Structure

To accomplish the features mentioned above, ETC has a virtual machine called the Ethereum Virtual Machine, or EVM for short, that has more than 120 opcodes, which is replicated in all the network nodes, making it a decentralized virtual machine. This component enables the participating computers to execute the decentralized software programs stored in the blockchain's ledger.

The decentralized software programs, or smart contracts, are programmed in a software language called Solidity that encodes them using the opcodes of the EVM so they can be executed inside the system.

One of the great inventions of Ethereum Classic was the gas system, which is a model that designates a number of units, called gas, per opcode so users may pay for these units for the participating machines to execute them. This method solved several problems such as spam, the halting problem, and the compensation for miners, to enable smart contracts in a decentralized peer-to-peer network.

## Difference With Bitcoin

Bitcoin is a cryptocurrency and a blockchain only and its sole function is to maintain accounts and balances. This makes it like a pocket calculator compared to Ethereum Classic.

However, what makes Ethereum Classic and Bitcoin similar is that both use the key invention of Satoshi Nakamoto, which is proof of work.

The full name of the system is "Proof of Work Based Nakamoto Consensus" and it consists of making a subset of the machines of the network, called miners, perform a function called mining, which requires lots of computational work and expenditure of electricity. The result of this work is a cryptographic stamp that is added to blocks of transactions, hence the term "blockchain", which are produced in specific time intervals and then sent to the rest of the network to include them as the latest state of the system.

Nakamoto Consensus achieves something that was not possible before, which is that computers in the network, no matter where they are in the world or who they belong to, can agree, without permission or supervision, in a decentralized manner, what is the latest state of the network.

## Difference With Ethereum

There are four things that define the differences between Ethereum Classic and Ethereum (ETH).

1. ETC is the original chain and ETH is a fork: When Ethereum was launched in 2015, both Ethereum Classic and Ethereum were one chain, but in 2016 there was a controversy called TheDAO that provoked Ethereum to split from the mainnet. Ever since, they have been two separated networks and ETC has followed a very conservative philosophy of high security called Code Is Law and Ethereum has followed a more risky philosophy called Weak Subjectivity with the aim of making it more scalable.
2. ETC is proof of work and ETH is proof of stake: Ethereum migrated from proof of work to proof of stake, which is less secure, but more scalable so this was more in line with their philosophy. ETC stayed and will stick to proof of work forever, so this means that it is truly decentralized, permissionless, and immutable.
3. ETC has a fixed monetary policy and ETH does not: ETC has a fixed monetary policy very similar to that of Bitcoin, with a cap of 210,700,000 coins, making it programmable digital gold. Ethereum does not have a fixed monetary policy, they have changed it six times since inception and it is uncertain what the supply will be in any given year.
4. ETC is censorship resistant and ETH is not: As miners who produce blocks to include new transactions in proof of work blockchains as ETC do not have to comply with financial regulations or international sanctions because they are not financial providers, and because they may move from place to place and mine anonymously, they can include all transactions sent to the network from anywhere inside the blocks. Ethereum proof of stake stakers are in a large measure regulated financial institutions based in western nations who have to comply with local and international restrictions and sanctions and this has made Ethereum a predominantly censored network because they are obligated to exclude transactions from certain sanctioned accounts.

## The Security vs Scalability Tradeoff

As mentioned above, Ethereum Classic is highly secure because it uses proof of work and full replication of the database as its consensus model. Indeed, ETC is the largest and most secure smart contracts blockchain in the world. This makes it optimal as a base layer blockchain system as it may be used for settlements and high value, low volume use cases.

As proof of work does not enable scalability in the form of high transaction volumes, then ETC may have other systems in higher layers that may process larger transaction volumes, but settle inside ETC. This design is the most popular in the industry to achieve scalability, examples of which are the Lightning Network as a layer 2 of Bitcoin and rollups as a layer 2 of Ethereum.

## Dapps Are Inside the Secure Environment of the Blockchain

As the largest and most secure smart contracts network in the world, ETC has one thing that differentiates it and makes it unique. Unlike Bitcoin, Dogecoin, and Litecoin (the other large proof of work blockchains in the world) ETC is programmable with smart contracts. This means that dapps may exist inside its highly secure environment.

What use are Bitcoin, Dogecoin, and Litecoin if to program their coins or use applications on them the software programs have to be hosted in centralized servers, corporate data centers, or cloud services?

In ETC, the backbone of dapps can be as trust minimized as the money, which makes ETC an incredibly unique and valuable system for truly secure applications and use cases.

## Known for Its Principle of Code Is Law

As mentioned in this article, the three pillars of Ethereum Classic are that it uses proof of work as its consensus mechanism, it has a fixed supply, and it supports smart contracts.

The three pillars in its design and structure make true the principle of Code Is Law because ETC is concretely and tangibly decentralized, immutable, and permissionless.

Because of these features, then ETC has the benefits of survivability, censorship resistance, unstoppability, and therefore is uncompromisable and uncapturable.

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

Before the existence of Ethereum Classic, applications were stoppable. After the existence of Ethereum Classic, applications hosted inside it became unstoppable.

The reason for this is that the invention brought by Bitcoin, Nakamoto Consensus, solved the problem of peer-to-peer networks. The problem was that they could be disrupted with just one third of the participating nodes colluding to attack it.

Nakamoto Consensus raised this threshold to one half.

Not only that, but the proof of work in Nakamoto Consensus added even more barriers to just collusion. Proof of work meant that the colluding participants needed have the necessary computing power to create blocks faster than the rest of the computing base in the system.

Another barrier to attacking the network imposed by proof of work based Nakamoto Consensus was that the colluding attackers would have to consume enormous amounts electricity.

Before Nakamoto Consensus attackers only needed 33% of participating nodes to disrupt a network, and there was no need to have powerful computers nor to use any significant amount of electricity.

After Nakamoto Consensus, not only did they need to convince 51% of participants, but also needed to have an enormous computing base and burn enormous amounts of electricity to do it.

However, because of technical difficulties, Bitcoin does not host applications inside its highly secure environment. But, Ethereum Classic does.

This is what makes ETC so different and powerful.

Ethereum Classic has the technologies and systems that existed before; full transmission of the data and full replication of the database in all nodes of the peer-to-peer network; and it uses the first key innovation of Bitcoin; proof of work based Nakamoto Consensus; to keep the system coordinated and secure.

On top of this, ETC adds the second and only other major innovation that existed in the industry: Smart contracts.

In other words, Nakamoto Consensus and smart contracts are the only two innovations of the industry and Ethereum Classic has both.

The key to making applications in Ethereum Classic unstoppable is precisely that they are hosted inside its highly secure environment.

Smart contracts are software programs that power applications, and when they are sent to ETC they are retransmitted and replicated in all the nodes of the system. This makes these applications decentralized, hence their name “decentralized applications” or “dapps”.

The unstoppability of dapps is accomplished by this decentralization, because it produces resistance to censorship, permissionlessness, and immutability.

Decentralization is accomplished by the proof of work component of the system. Proof of work makes it very easy for all nodes in the network to know which is the correct chain of blocks just by checking whether the work was done.

This is because if imposters were to send alternative blocks without such work done, then it would be very easy to discard them. And, to build such large computing base to compete with the existing one is extremely difficult.

The same information of the proof of work that serves to reach consensus on the correct chain is also used to exit and re enter the chain, or to join the network for the first time. When any nodes want to join or re enter they only have to check which chain has the most work done to know, in their complete isolation, without checking with any other source in the universe, that that is the correct blockchain to join.

This ability to run Ethereum Classic nodes or miners, and to send transactions without any need to check with others, without any supervision, is what makes it censorship resistant and permissionless.

Immutability is accomplished by the sheer amounts of work and electricity needed to change or alter the blockchain.

Proof of work not only protects the data of the current block being processed, but also the whole history of the database.

In fact, the older a transaction or a dapp gets, the more difficult it is to alter it.

This is because any attacker would not only need to change the current block but the whole history of blocks, re doing all the work again and burning all the needed electricity again, to be able to make any changes to past transactions or dapps.

The only new inventions of the blockchain industry are Nakamoto Consensus and smart contracts, and both combined in Ethereum Classic produce unstoppable applications.

This is the revolutionary paradigm change in the world. Nothing more.

All the other gimmicks such as proof of stake, scalability, sharding of the database, and channels, which are hot buzzwords in the industry that only serve to suck the money of gullible investors and traders, already existed before and are widely used in centralized traditional industries.

The banking industry, for example, is a proof of stake system: There is a central authority that creates a protocol which says that to participate, banks need to make a deposit in the form of minimum capital.

Computational scalability already exists in the world with cloud services and large data centers that enable companies like Visa to process billions of transactions per day.

All this scalability in traditional systems is only accomplished with centralization: They all use sharding to break up the database so they can produce inputs and outputs faster and in parallel. They all use channels as all systems are layered, where the top layers handle large numbers of transactions and then accumulate and net out the results to send them to the lower layers.

This was all invented before and are hallmarks of centralized systems as they depend on trusted third parties to run them.

The only true innovation is the unstoppability of applications, and the only system that possesses that is Ethereum Classic.

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

Design philosophies and principles are a big influence of how blockchains work. After the Ethereum (ETH) migration to proof of stake, which completely changed its security model, it seems appropriate to make a comparison of that system's and Ethereum Classic's (ETC) core philosophies.

Ethereum's philosophical model may be called "Social Consensus" and Ethereum Classic's "Code Is Law". In this post, we will explain and compare both.

We will write "Social Consensus" and "Code Is Law" with capital case when used as the names for the philosophies.

## Ethereum's Social Consensus

The terminology used by the Ethereum Foundation, ETH ecosystem, and community has varied with time. On different occasions, their set of principles has been referred to as "weak subjectivity", "social slashing", "social information", or "people: the last line of defense". However, the latest name used with more frequency to describe their views has been "Social Consensus", so we are going to use this term to explain their general philosophical position.

It is worth noting, though, that the term "weak subjectivity" is a sort of acknowledgement that using people's subjective opinions and voting to run a cryptocurrency network is a sort of misdeed, since they called it "weak" to try to give some reassurance.

Social Consensus advocates claim that proof of stake and subjective agreement between network node operators is more secure than Code Is Law blockchains which use proof of work. This is false as Social Consensus doesn't even provide a focal point for participants to join, leave, and rejoin the network. This focal point provided by the "most work done" rule in proof of work is the only way to make a blockchain permissionless, decentralized, and censorship resistant.

The best chain selection mode that Social Consensus philosophy can provide is "ask a friend" or check with block explorers or some other website on the internet.

This truly weak decision making process of Social Consensus and proof of stake stems from two beliefs they hold:
- That blockchain consensus is a human process, not a mechanical physical process.
- That humans are pretty good at achieving consensus in the long run.

As Social Consensus has these principles as its core beliefs, blockchains are built and used only for automation and scalability. Just as computers and software programs in traditional centralized systems, for them, blockchains are just mere practical tools.

This focus on humans as sources of safety makes Social Consensus proponents believe that proof of stake and proof of work can each ultimately be overpowered by state actors indifferently. For them, both systems are equally vulnerable, therefore whether they have human intervention as an embedded design feature is irrelevant.

Again, Social Consensus emphasizes that communities are good at consensus.

Because Social Consensus believes in human agency, then it also believes in very human methods. This leads to the erroneous conclusion that proof of work is actually weaker because it incentivizes block producers only with rewards; that proof of stake does this with rewards and penalties, therefore, it must be more complete as an economic mechanism.

Social Consensus proponents focus a lot on what they call efficiency, but their definition of efficiency is whether block producers and validators have to be paid more or less to participate in the network. The measurement of efficiency they use is to calculate the total amount of capital locked for producing blocks, multiplied by the total rewards needed to pay for this capital, multiplied by how much time such capital is locked. The claim is that because proof of stake demands less of these metrics, then it must be more efficient.

The above is not only based upon a bad definition of efficiency, but it also shows a lack of understanding of the economic implications of the different models. If proof of stake validators require a lower reward, thus a lower return on investment (ROI), it is because their role in the system has significantly less risk for them as they do not actually sink capital to recover it in the distant future with uncertainty. Proof of work miners make enormous commitments of capital that they sink into hardware, data centers, human resources, and electricity with the expectation that they will recover their investment with a reasonable ROI in the long term.

Social Consensus has nearly zero marginal cost and risk. Proof of work requires risk taking, competitive merit, and sunk capital.

And this is where they are confused. Proof of work is purposely costly and unscalable computationally precisely to guarantee the benefits of decentralization, which is correctly measured by its social scalability: Anyone in the world may use a Code Is Law blockchain. Only a subset of the world may use Social Consensus networks.

Another deep misunderstanding held by Social Consensus supporters is that they believe that proof of work is centralized through mining pools and ASIC computing. This kind of thinking is incomprehensible at this point because after 14 years of operation of Bitcoin, and 7 years of Ethereum as a proof of work chain until the migration to proof of stake, neither chain has ever been centralized or captured by mining pools, mining firms, ASIC producers, or any other kind of agent.

To the contrary, proof of stake, with its Social Consensus philosophy, was captured from the start when Ethereum migrated to that system as more than 70% of its blocks are censored on behalf of government agencies due to international sanctions policies.

One of the strongest (and most erroneous) arguments in Social Consensus philosophy is that blockchains are technological and social designs where their safety is sourced from cryptography, economics, and social agreement. This leaves out the most important invention of Bitcoin, and the only reason why the whole industry actually exists: Nakamoto Consensus.

Nakamoto Consensus is based on proof of work and can only be based on proof of work because it is the only way to assure the consensus of machines owned by strangers, spread across the world, who don't talk to each other, have no reason to trust each other, and who, in their complete isolation and without consulting anyone, reach absolute consensus on the state of the system every 10 minutes in the case of Bitcoin and every 15 seconds in the case of Ethereum Classic.

Cryptography, economics, and social agreement are just marginal tools and methods used to implement the system, they are not the keys to the design and its security.

It was the enormous amount of electricity needed, the enormous amount of computational power required, the difficulty adjustment, and the importation of this information from the real physical world into the system that was the revolutionary solution to the problem of consensus and safety in the network.

Social Consensus' lack of acknowledgment of this truth and its naive refocusing on human virtue as a security measure is the major flaw of that philosophy.

This flaw fosters a belief in several falsehoods, one of which is that a blockchain is a sort of "crypto-economic organism" or some sort of righteous organization of people who will always be good for the world.

Social Consensus focuses on economics and virtue rather than physics and energy.

Social Consensus glorifies "the community", considers it the security of last resort, and believes that human voluntary agreement is what ultimately protects the accounts, property, dapps, and contracts inside a blockchain.

We would argue that a Social Consensus network is not even a blockchain. Blocks are defined as batches of data that have to be sealed with a proof of work hash that must cost block producers enormous amounts of capital and energy.

The ultimate purpose of Social Consensus is to protect the planet, to do no harm to the environment, and to heal the climate. The whole reason for the existence of Bitcoin, Ethereum Classic and other true blockchains is human flourishing through trust minimization.

Indeed, proof of work actually helps the environment as an externality much more than proof of stake because renewable energy is cheaper than fossil fuel electricity, and miners are constantly seeking to lower their costs so they naturally move to renewable energy sources, providing cash flow to that segment of the industry and promoting its growth.

As Social Consensus believes in human agency, but human agency is prone to cheating, then penalties through slashing are required. Also, forks to reverse the chain, confiscate funds, slash bad actors, and change the history of the chain by majority voting are perfectly fine in that philosophy. If trust in intermediaries and human intervention were never the problem, then why was "trust minimization" even a concern?

Of course, Social Consensus has very little awareness of the perils that such actions and interventions will bring. It is unlikely that any actor in the network that is slashed by social consensus will passively accept a significant loss of their capital without a fight. Lawsuits and legal bureaucracy will be the name of the game in the Social Consensus world.

In Social Consensus philosophy, "finality" is defined as a 66% vote of validators. This seems to be strong to the naive eye, but it is just a mirage. It really means that with only 33% of bad actors, the network may be disrupted. This has been the vulnerability that has existed in computing networks since they were invented.

To describe finality as a vote, is like saying that finality can be decreed by law or by a government. It is precisely because this is not true that Satoshi Nakamoto invented Bitcoin, Ethereum Classic exists, and Cypherpunks had been working on these technologies for decades.

However, people are the last defense for Social Consensus advocates, governance is paramount as an emergency response, and TheDAO hard fork is regarded as an accomplishment.

## Ethereum Classic's Code Is Law

In Ethereum Classic the term "Code Is Law" has been unequivocal, unambiguous, determined, and clear since the day that Ethereum split from the original blockchain on July 20th of 2016 on block 1,920,000.

Code Is Law is as inextricably linked to proof of work as Social Consensus must escape it. Proof of work is the most secure consensus mechanism known to humankind for reaching consensus on the state of a peer to peer network.

Code Is Law is a principles first philosophy, all the rest comes after.

Code Is law means unstoppability, no downtime, censorship resistance, and the thorough minimization of the influence of third parties. These features are the only ones that can guarantee that the network will not be captured or influenced by special interests.

Code Is Law advocates believe in freedom from censorship, immutability, and that decentralized applications must run exactly as programmed.

Immutability, decentralization, and complete neutrality, which means no intervention by supposedly virtuous humans, is the only way to guarantee zero discrimination against anyone. Code Is Law beliefs include pseudo-anonymity, decentralization, a rejection of decisions by voting, and a rejection of irregular state changes to the network.

Code Is Law philosophy has the knowledge at its root that superficial things like funds recoveries, returns to legitimate owners, and other on-chain manual interventions are wrong, not right. And they are wrong because nothing guarantees that such human interventions will not be used against the capital, applications, and transactions of users.

For Code Is Law to be true, and it is true in ETC, the ledger must be inviolable and immutable. "The greater good" in Social Consensus is a false promise, it is actually completely opposite to the safety of the property, agreements, and transactions of individuals.

Proof of work is the only mechanism known to man that guarantees permissionlessness, decentralization, censorship resistance, and immutability. And, these features guarantee no discrimination against any nationality, culture, creed, politics, race, or human condition.

Where Social Consensus believes "people are good" Code Is Law believes "people are the problem we were trying to solve in the first place!"

Code Is Law means trust minimization and that Ethereum Classic cannot be shut down or intervened. This has been proven multiple times in its history. Forks are only to fix bugs or make necessary upgrades. Nothing more.

If Social Consensus were used for any kind of "good" change, then what prevents it to be used for any change. The only solution is no social consensus. Thus, Code Is Law.

Code Is Law means no change and the sanctity of the ledger. Anyone, anywhere in the world, even refrigerators, can use ETC. This is only possible with complete neutrality, and neutrality is only possible with true immutability. "Governance" doesn't even exist in Code Is Law. This is why neither ETC nor Bitcoin have foundations or leaders.

Code Is law is about rough consensus, which is free adoption, free and unlimited participation, and no tyranny of the elites or voting majorities. This makes the blockchain antifragile.

Code Is Law does not mean it supports crooks and thieves. Indeed, the worst crooks and thieves are actually kept out of it! And, the petty ones can be dealt with through the normal and time tested channels of legal systems and law enforcement.

Code Is Law is on the blockchain. Executions and transactions are final and immutable. It has nothing to do with human law. It is like the laws of physics.

The communities of Ethereum, Bitcoin, or Ethereum Classic cannot have the knowledge or capability for dealing with the disputes of billions of people worldwide. There is no such thing as blockchain justice. The resolution of these things must be carried out outside of the blockchain.

The only answer is neutrality, therefore the Code Is Law philosophy.

### Sources:

### Ethereum Social Consensus ideas and writings:
- Proof of Stake: How I Learned to Love Weak Subjectivity: https://blog.ethereum.org/2014/11/25/proof-stake-learned-love-weak-subjectivity
- Proof of Stake Design Philosophy: https://medium.com/@VitalikButerin/a-proof-of-stake-design-philosophy-506585978d51
- What Is Social Coordination and Why It Is Needed: https://ethereum.org/en/developers/docs/consensus-mechanisms/pos/faqs/#what-is-social-coordination
- People: The Last Line of Defense: https://ethereum.org/en/developers/docs/consensus-mechanisms/pos/attack-and-defense/#people-the-last-line-of-defense

### Ethereum Classic foundational documents:
- The Ethereum Classic Declaration of Independence: https://ethereumclassic.org/ETCDeclarationof_Independence.pdf
- Code is Law and the Quest for Justice: https://ethereumclassic.org/blog/2016-09-09-code-is-law
- A Crypto-Decentralist Manifesto: https://ethereumclassic.org/blog/2016-07-11-crypto-decentralist-manifesto
- Code is Law - Ethereum Classic community website: https://ethereumclassic.org/why-classic/code-is-law

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

Immutability in Ethereum Classic (ETC) means that accounts, balances and smart contracts cannot be modified except by holders of corresponding private keys by entering transactions according to protocol rules.

Immutability and backward compatibility are like two sides of the same coin: Immutability is a feature in space and time, but looking forward, as it promises that things that are done today should not be modified by third parties in the future. Backward compatibility is also a feature in space and time, but looking backward, as it promises that third parties should not break today what users have done in the past.

Space relates to place and geography. It means that anyone, anywhere in the world, should be able to have access permissionlessly and without censorship to their money, smart contracts, and dapps. Time means that accounts, balances, transactions, and dapps entered in the present or the past should be immutable and no changes of the protocol in the future should break them or stop them from working.

Both immutability and backward compatibility are related to the principle of Code Is Law in ETC in that decentralized applications (dapps) should always work as intended and designed, forever.

Thus, immutability and backward compatibility have the same underlying goal: No change.

No change means reduced chances of manipulation and also guarantees that the flow of economic transactions between people and businesses will continue uninterrupted. All this contributes to the reliability of the system on a global scale for a long time.

The problem that the principle of backward compatibility addresses specifically is that when making changes through hard forks, implementing upgrades and fixing things as time passes by, sometimes existing smart contracts break rendering them unusable.

This is a very serious problem.

Imagine applications, agreements, benefactors and beneficiaries depending on continuous streams of cash flows on a highly secure and decentralized system as Ethereum Classic, but when an upgrade is made, then the code powering such affairs breaks and stops working.

From a safety perspective, future upgrades that break backward compatibility are security holes as they may be used as stealth attack vectors, disguised as upgrades and bug fixes, but that really break things. This vulnerability reduces the finality of accounts, balances, transactions, and decentralized applications as the upgrades themselves may be leveraged by bad actors to change or stop things from working.

The use cases that need backward compatibility are decentralized applications, contracts, and agreements that should work for a long time. And "long time" here means decades or even centuries.

Examples of these use cases may be long term publicly traded bonds and debt obligations; long term business contracts and cash flows; legal persons and partnerships represented as DAOs on the blockchain; property registries; bilateral agreements between nations; university, hospital, and other types of endowments; church funds; national treasuries with complex administrative rules; long standing charities; family trusts; inheritance contracts and wills; and even plain and simple multisignature wallets.

Fortunately, there are several efforts in the Ethereum Virtual Machine (EVM) segment of the blockchain industry, where Ethereum Classic is a major player, that have as an objective ensuring long term and reliable backward compatibility.

All these ideas usually revolve around creating versions of the blockchain components to be upgraded and then making smart contracts, accounts, and dapps work with their corresponding versions, regardless of when they were deployed.

Some of the ideas being debated are:

EVM versioning: Setting and identifying a version of the EVM every time there is a change or upgrade so that accounts and smart contracts can use that version. Then, all the future versions of the EVM will be included in the protocol and node software clients so they can be perpetuated in time.

Account versioning: Creating account versions and formats for regular and smart contract accounts that are related to specific EVM versions so they can call that EVM version each time they need to be executed. As all future EVM versions will be hosted on the blockchain, then no accounts or smart contracts would break if these features were added.

EVM Object Format (EOF) upgrade: Similar ideas as the above, and others related to them, are being worked on and tested, and will likely be included in an upgrade, called EOF, that will greatly improve backward compatibility in EVM standard blockchains such as ETC.

Backward compatibility is a very high priority in ETC so any innovation or upgrades that enhance this guarantee will very likely be adopted by the ecosystem.

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

The first problem with the concept of security is that it is the absence of something. This makes it difficult for the great majority of people to feel or reason about, especially those living in advanced nations.

If we want a detailed explanation of security, we could say that it is "the absence of hazards which increase the risk of perils that could cause loss". This may be simplified to the phrase "the absence of danger".

The second problem with the concept of security is that for many things; especially matters of money, wealth, information, and contracts; the key to achieving it is to actually eliminate human agency. The great majority of people believe that the more "good people" are in charge the more secure things are. We are conditioned to think that people create security when in reality people are the most common source of insecurity.

The third problem with the concept of security is that it is viewed differently in different cultures and regions. As mentioned above, the lack of true danger in advanced societies means that the great majority of individuals and organizations using blockchains do so for superficial purposes which normally range between trading and making money to the excitement of technological innovation.

The above leads people to do stupid things such as creating more and more proof of stake and proof of authority blockchains that are worth hundreds of billions of dollars but are useless in terms of the true promise of the blockchain: the absence of danger.

Only a fraction of users in the world are using blockchains and Ethereum Classic for their true value of security.

However, everything will change because the world will be a dark place very soon.

The forces of centralism are strong and will get stronger in an accelerating technologically driven world:
- Censorship is already spreading and will become rampant. Even our thoughts will be produced and controlled by the state, if not by a global government.
- Social credit scores and id's will eliminate our privacy and render us naked in front of the global empire.
- Control of behavior through biased AI agents will be more prevalent than individual sovereignty and representative governance. Indeed, the guise of representation will continue to exist, but for what use if our vote will be decided by the central controller?
- Disinformation will be only produced by official sources (supposed conspiracy theories and subversive information sources will become the new truth).
- In essence, there will be straight central manipulation of entire societies.
- The name of the game will be the stripping of wealth through direct means such as taxes and indirect means such as inflation (i.e. Modern Monetary Theory).

Then, the current traders and investment opportunists will see that they are truly naked and will change their focus to security. And, those playing with their little proof of stake and proof of authority toys of innovation, in their pompous university labs, will fail miserably and re-focus their projects to the presently abstract concept of security.

Because security will not be abstract anymore, it will be very tangible and real.

So, the meaning of security in Ethereum Classic will be this: It will be a refuge for those escaping centralization on a global scale, arbitrary confiscation, persecution, and tyranny.

ETC will be a real life instrument of Life, Liberty, and Property. Not just a written text on an old piece of parchment with fancy signatures.

This is when Ethereum Classic will shine as a shield for the world; a shield against the beast of globalization. Suddenly, everybody will want to escape the overlord.

ETC is a haven of basic rights. Basic rights are represented in it by means of a fully replicated ledger with accounts, balances, assets, programs, and smart contracts which crosses all borders and reaches everyone in the world regardless of their country, culture, ideology, beliefs, gender, race, or any other human condition.

People who believe in human agency think of finality and immutability as the result of human decision-making. For example, in proof of stake systems, they believe that a two-thirds vote by the block validators produces finality as if people were the guarantors of last resort. This makes proof of stake only suitable to protect people's wealth and applications from what may be called unauthorized theft.

However, when it comes to authorized theft, the arbitrary over-taxation, confiscation, censorship, limitation, or elimination of people's Life, Liberty, and Property by tyrannical law, then proof of stake advocates are either absolutely compliant or totally in favor of such situations.

Ethereum Classic security is true because it is a sanctuary against any kind of theft.

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

Bitcoin (BTC) was launched in January of 2009 and has been working uncensored ever since.

Ethereum Classic (ETC) has been working since July of 2015 and it has never been censored to this day.

When Ethereum (ETH) migrated to proof of stake (PoS) in September of 2022, it was censored immediately.

Why is this?

The reason is that Ethereum Classic uses proof of work (PoW) based Nakamoto Consensus and Ethereum uses proof of stake as its consensus mechanism.

To be fair, if all block producers (miners or stakers/validators) in any of these systems were to be captured by governments or agreed on a censorship strategy, then both proof of work and proof of stake consensus systems would be censored.

But, what makes ETC's proof of work more resistant to these problems?

The answer is a series of features that differentiate PoW from PoS. In essence, it is much easier to group and capture stakers in a proof of stake system than miners in a proof of work system.

To begin with, the economics of proof of stake consensus in Ethereum have made it practically impossible for small stakers to produce and validate blocks independently. To run your own validator node, you need to deposit 32 ETH in an account (more than $52,000 at the time of this writing) and install complex infrastructure that requires two Ethereum nodes: an execution layer (EL) client and a consensus layer (CL) client.

In addition to this, proof of stake in Ethereum imposes penalties for as trivial things as being offline to more serious offenses as proposing invalid blocks. This makes it a financially dangerous endeavor to run nodes, risking your capital if you don't have a large and professional operation managing a sophisticated data center that is available and correct all the time.

For the above reasons, Ethereum block production and validation is largely performed through staking pools.

This by itself wouldn't be such a bad problem. After all, ETC mining is also largely channeled through mining pools. The problem is that, because of proof of stake's design, pools are organized in ways that foster much more centralization and capture than in proof of work networks.

In proof of stake pools, the staking capital is actually separated from the validators, also called node operators (NOs).

This means that there may be hundreds of thousands of individuals who stake their ETH in small amounts through pools, but they don't actually run any machine or software to validate or produce blocks. They just receive stake tokens representing the ETH that they deposited. Aside from that, they delegate 100% of the responsibility and operation to the staking pools.

Then, the staking pools usually do one of two things, they either run their own node operation in professional data centers, or they hire in the open market a set of controlled node operators.

These two models are well represented by centralized crypto exchanges, such as Coinbase, Kraken, and Binance; who take staking deposits from their clients and then run their own validator nodes; and Liquid Staking Derivatives (LSD) pools, such as Lido and RocketPool; who take deposits from their users through smart contracts on Ethereum and then hire a set of NOs who run the machines with the EL and CL clients and receive the staking deposits from the pools, sharing the earnings.

Note: Kraken has actually closed its staking services due to regulatory [controls and capture]() as we write this post, confirming our hypothesis in real time! Further down we comment on the effects of these events.

In both cases (the centralized crypto exchanges and the LSD pools) there is already some sort of filtering and censorship just to participate.

In the case of the centralized crypto exchanges, they filter who may stake or not by using the traditional know your customer (KYC) and anti-money laundering (AML) rules from the countries where they operate. In other words, staking through these services is not permissionless nor censorship resistant. Stakers need to actually show them their passports and prove they are a good citizens to be able to stake through them.

In the case of the LSD pools, they don't filter who may stake, as that is done through smart contracts on Ethereum, so anyone may make a deposit, but they filter and censor who can run validator nodes and be their NOs.

This is done through a selection process through a "sub-governance group" and then by voting the final candidates through a DAO, in the case of Lido, or through an algorithm, where they constantly filter who are the most profitable NOs to allocate the staked ETH and reject all the others, in the case of RocketPool.

The fact that regulated and centralized exchanges have a large share of pooled stake deposits is already a source of capture and censorship in Ethereum's proof of stake consensus system, but that the pools that are supposed to be "decentralized" actually control who may be the NOs is an additional source of centralization and thus of eventual censorship and cartelization as expressed even by the Ethereum Foundation.

Once we understand the huge flaw that is the risk of centralization described above in proof of stake networks, then we can list a host of additional centralization vectors and drivers that are already causing the current high rate of block censorship in Ethereum, and will likely bring all sorts of additional capture problems in the future that will never be present in proof of work blockchains as ETC.

Staking pools and node operators/validators are static and easy to find: Staking in Ethereum PoS requires static accounts on the network, therefore it is easy to track and find NOs and to which pools they work for. If to this we add that they are dependent hired contractors by the pools, or that the pools are themselves the NOs in the case of centralized exchanges, then we can see that they are easy to capture and control by special interests and abusive government regulation. In ETC, mining is a process of deploying capital in large data centers, purchasing enormous amounts electricity, working hard to win blocks by merit, and miners and pools may use different accounts on a block by block basis. This is done all over the world as cheap electricity generation resources are naturally distributed around the globe, creating diseconomies of scale. Mining pools are consequently also distributed around the world, there has been historically and empirically a significant rotation of players in the industry, and neither mining nor mining pools have ever held dominant or controlling positions in the market.

Staking pools take deposits that are securities: As we mentioned above, the Securities and Exchange Commission in the United States has decided that staking deposits in exchanges are securities, therefore completely subject to government regulation. It is a matter of time until the LSDs are also included in this definition. Therefore, all staking will be subject to regulation, thus additional capture and censorship. In ETC's proof of work, mining is not done by depositing money that may be interpreted as a security, nor are mining pools or mining operations considered financial services, but just plain computing warehouses and data centers.

Staking pools and node operators are inside the ledger: Many idealist Ethereum insiders and developers say that they will appeal to Social Consensus if staking pools behave badly by increasing censorship and imposing restrictions to permissionlessness. This is a very difficult task to achieve because when a set of exchanges and LSD pools capture the network with their cartelized stakers and NOs they will be planted inside the blockchain itself in the form of the staking validator accounts and the smart contracts that fund those deposits. This means that the action of last resort that proof of work blockchains have, to make a protocol change and fork away from the attackers, is impossible because the whole block producing industry is inside the ledger. In ETC's proof of work, miners import energy into the blockchain in the form of block hashes, this is done externally and they have no say and may be easily replaced if the ecosystem forks away from them with a different mining algorithm. Because of this possible action of last resort, in proof of work, miners are humbly submitted to the rest of the ecosystem, not the other way around.

Staking pools will all be regulated financial institutions: As seen with the growth and market share of centralized exchanges in the staking pool business, and now that the SEC has defined such business as a security, we can now more clearly observe that financial institutions are going to be the main stakers, node operators, and pool operators in Ethereum proof of stake. There will be no other kind of business or institution that will be allowed to manage staking pools and validation operations. It will be very difficult for Lido, RocketPool, and the other "decentralized" pools to not be either forced to shut down, taken over by regulated financial institutions, or just lose market share because of the strong competition in capital and distribution. This will turn Ethereum, and any proof of stake system for that matter, into a hyper-regulated traditional financial system.

Staking pools suffer unrestricted economies of scale: Just as the banking system, the staking industry will be dominated by 3 or 4 cartelized entities. This is because capital inside Ethereum may flow with no local or real world restrictions. These economies of scale will favor a few large centralized pools, managed by financial institutions, who will be able to negotiate lower fees with NOs, always have more capital for marketing and distribution, and present the best solvency guarantees to their stake depositors, all this reinforcing their cartelization. This makes it much easier than in proof of work to concentrate capital and thus control of the network. Once pools achieve large scales, they will be even more capturable in any jurisdiction. As mentioned before, to the contrary, proof of work has diseconomies of scale because it will always have local political constraints for the size of its physical operations and energy use, cheap electricity generation is naturally distributed around the globe, pools actually do not control block production, eand the industry has been constantly rotating its players since 2009.

Staking pools and validators must be online all the time: The fact that the design of proof of stake has many restrictions that ETC's proof of work does not, such as locked deposits, liveness penalties, and slashing, makes it very difficult to exit the system to relocate or hide in case of legal changes or geopolitical problems. When China suddenly prohibited Bitcoin mining in 2021, the majority of the hashrate moved to new locations, such as Kazakhstan, Paraguay, and Canada, in a matter of weeks. Not only that, but currently, even with the sanctions still in place, China has re-emerged as a leading BTC hashrate player with nearly 20% share, proving that miners can fly under the radar. This is the case with ETC as well. But, once proof of stake validator infrastructure is in place, it is very difficult and costly to exit, move, hide, and re-enter the network whenever needed. This locks down pools and validators forcing them to comply with whatever jurisdictions they are dealing with.

In proof of stake, there is no alternative to centralized and captured pools: Once the staking pool industry is centralized, there is no recourse by Ethereum users to enter transactions that could eventually be processed by some staker outside of the dominating cartels. For the reasons stated above, the pooling cartel in proof of stake will necessarily have nearly 100% control of the system. In ETC's proof of work, because entry and exit is truly permissionless, there are no penalties, and the mining base may be anywhere in the world, then there will always be a set of miners with sufficient share that will gladly earn the fees for transactions that may not be processed by cartelized and censoring pools. Indeed, these pools and miners will actually always have a significant market share because they will consistently earn more than the censored ones, enabling them to invest in ever growing infrastructure and electricity, thus outcompeting their captured peers. In proof of stake, special interest capture is a benefit, in proof of work it is a serious disadvantage.

Proof of stake does not have the decentralization guarantees that proof of work has: Proof of work guarantees that miners and mining pools may change all the time, migrate from place to place, and exit and enter the network whenever they please because it has the two guarantees that proof of stake does not have: It enables consensus without having to check with anyone in the world except by just verifying the proof of work in the latest block, and it enables free entry and exit without having to check with anyone in the world except by just checking the most work done on the network. Proof of stake is a system where stakers, pools, and validators are locked in their places and easy to capture and censor due it its design restrictions as described above, and it doesn't provide the permissionless chain selection focal point that proof of work does. This shows how different both systems are and that proof of work was the real invention of the blockchain industry. Proof of stake is just the traditional centralized banking system but reframed to make it look decentralized.

Nick Szabo's essay "Trusted Third Parties are Security Holes" explained why trusted third parties were hazards that increased the risk to networks and computing systems. This created incentives so that people like Satoshi Nakamoto and Hal Finney) could build decentralized peer-to-peer systems, and POW has been the best invention to solve this problem.

However, the reverse incentives will likely occur with Ethereum's proof of stake: As they continue building the system by adding fixes and patches to close the myriad of security holes that it has, they will end up with a set of centralized validators, just like banking, and the only difference will be that the database will be completely replicated among these validators.

Then, when these cartelized pools and node operators realize that they may trust each other because they know each other, have the same special interests, and are all buddies in the same state sponsored regulatory framework, then one day they will say to themselves "why do we replicate the data in public nodes, locking so much capital in staking, if we can reduce costs and be more efficient just by using our own data centers and cloud services?".

This is when the world will realize that proof of stake was just a slow, tedious, and complexity-obfuscated way of re-building a new centralized banking system, bit by bit, without anyone noticing.

Thus, in the end, their glorified "cryptoeconomic" pseudoscience will drive the system to total centralization.

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

## The Howey Test

To determine whether a unit of value, contract, or transaction is a security the U.S. Securities and Exchange Commission (SEC) uses what is called the Howey test, which was the basis for a ruling by the Supreme Court in 1946 that defined what is a security.

Under the test, a unit of value, contract, or transaction qualifies as a security if it has the following elements:
1. An investment of money
2. In a common enterprise
3. A reasonable expectation of profit
4. Derived from the efforts of others

Bitcoin (BTC) and Ethereum (ETH), and thus Ethereum Classic (ETC) after Ethereum split from it in 2016, were determined to be commodities by the Commodity Futures Trading Commission (CFTC) in 2015 because they were decentralized, therefore had no common enterprise directing them and their returns were not derived from the efforts of others.

The question is whether Ethereum, now under its proof of stake (PoS) consensus mechanism, still qualifies as a commodity.

## Comparing ETC and ETH Using the Howey Test

The table above serves to compare ETH and ETC as to how they fare with regards to the Howey test.

As seen in the table, in our opinion Ethereum now passes the test, therefore should be categorized as a security, because it involves all four elements while ETC is still a decentralized project so it should remain a commodity.

In the following sections we explain our comparison and rationale.

### 1. An Investment of Money:

In the first element of the Howey test, it is clear that both ETH and ETC are an investment of money in a unit of value. Many people use both cryptocurrencies just as way to pay for things, thus as units of exchange rather than as investments, but for many others they are stores of value and ways of trading in the market for profit.

### 2. In a common enterprise:

Since its migration to proof of stake in September of 2022, ETH is a common enterprise because proof of stake is centralized. The model uses capital instead of proof of work based mining to determine who produces blocks. This makes the staking business have strong economies of scale which inexorably concentrate the industry into very few and entrenched staking pools.

These pools may filter who may stake and/or who may be part of their validator set, or may be the node operators themselves who validate blocks and transactions.

These few entities will remain mostly static. Seldom will any rotate away from the industry because of the moat inherent to their business models. They will act in conjunction with the Ethereum Foundation and, coordinating together, will clearly form a common enterprise directing the future of the system.

This level of centralization in Ethereum combined with the lack of cryptographic stamps when producing blocks without proof of work completely eliminates the chain selection point, thus nullifying the attributes of free exit and entry, permissionlessness, censorship resistance, and immutability without which Ethereum becomes a common enterprise with traditional centralized features and controls.

Ethereum Classic, however, remains a commodity because it uses and will continue to use the decentralized proof of work method of consensus for the foreseeable future.

Therefore, there are not and can never be enterprises or groups that control ETC. Mining the coin and owning the coin will always be totally separate activities.

ETC has no foundation directing the roadmap of the system. Producing or verifying blocks are free, decentralized, and merit-based activities.

### 3. A reasonable expectation of profit:

As said before, although both ETH and ETC may be used purely as units of exchange, they may also be used as a store of value for price appreciation, therefore both qualify as having a reasonable expectation of profit.

### 4. Derived from the efforts of others:

For the same reasons that Ethereum is now a common enterprise, it is also a system where the expectation of the success of the system, and thus its future profits, are derived from the efforts of others.

These “others” are easily identifiable as they will be the four or five large staking pools and the Ethereum Foundation who, all together, will act as a single enterprise.

The proof of stake system used by ETH is not a free merit system like that found in systems using proof of work. It is, rather, a collaborative relationship wherein the validators are not equal, independent free actors because they are essentially contractors subordinate to the pools.

In the ETH system, validators divide their tasks on a per-block basis where one produces a block, then sends it to the other validators who vote on the block, then send it to the rest of the network who must accept it without objection.

Because ETC uses proof of work and is, therefore, decentralized, miners may pop up or leave whenever they want from anywhere in the world, compete to build blocks in complete isolation, send blocks produced to the rest of the network for verification, and get paid based on their sole merit. No other filters or conditions exist.

For ETC, the same reasons why it was deemed a commodity in 2015 remain valid today: There is no common enterprise, therefore the future value of the token is solely dependent upon future general adoption by the market, not by the activities of a defined collaborative group of centralized operators or managers as is now the case with Ethereum.

## A Historical Perspective of ETC’s and ETH’s Legal Status

From 2014 to 2016 both Ethereum and Ethereum Classic were one project, so we refer to them in this period as ETH/ETC.

The project was financed with a crowdsale. Based on the Howey test, it may be inferred that the ETH/ETC crowdsale was, indeed, a security.

It was founded by Vitalik Buterin; then he partnered with several individuals to form a group of co-founders; they promised the expectation of profits out of the investment; created a foundation with the name of the network, even registering its trademarks; sold a unit of value previous to the creation of the cryptocurrency to gather funds for development; and promoted the crowdsale and Ethereum’s features, benefits, and appreciation potential just like any initial public offering of a stock would have been promoted.

However, this status as a security was likely limited to the period between the crowdsale and the launch of the network on July 30th of 2015.

On July 30th of 2015, the initial securities of the project were transformed into the ETH cryptocurrency, which was subsequently categorized as a commodity by the CFTC.

This step may be interpreted to be an exchange and exit of the initial common enterprise between investors, Vitalik Buterin, his partners, and the Ethereum Foundation as the director of the project.

From there, the project became a truly decentralized, proof of work based, public blockchain.

Even after Ethereum split from the ETC mainnet in 2016 due to the TheDAO hard fork, ETH kept its decentralization because it remained a proof of work blockchain.

This period lasted until September 15th of 2022.

Beginning September 15th of 2022, Ethereum cannot be described as a decentralized project because it migrated to Proof of Stake. Indeed, the moment it migrated, 51% of the blocks were censored by mega-staking pools to comply with international sanctions imposed by the U.S. Office of Foreign Assets Control (OFAC). A few months later, up to 70% of its blocks were censored.

As said before, PoS depends on large and entrenched pool operators that control the network. This, together with the control and influence that the Ethereum Foundation had from before, and the fact that the developers have incredible clout in the decisions about the protocol (for example, changing the supply of the token 6 times in its history) make it a centralized project dependent on others from the units’ of value perspective.

In the meantime, Bitcoin has always maintained its status as a commodity as determined by the CFTC in 2015. ETC is functionally a commodity, just like BTC, because it has exactly the same consensus design with its decentralist guarantees.

## Conclusion

It is worth noting that anything built on top of Ethereum Classic may be a commodity or a security. As a generalized and decentralized computing system, whatever the designs of dapps, layer 2 systems, and tokens may be will determine their status.

DAOs inside ETC structured as corporate stock, bonds, or derivatives will be securities. ERC-20 tokens that create coins, meme coins, or other tokens that don’t fall under the Howey test may be classified as commodities.

However, ETC as the base layer of these technologies is still a generic commodity.

The proof of stake algorithm in Ethereum implies a constant collaboration between validators, who are contractors of the pool operators. They produce blocks, vote on these blocks, and then send them to the rest of the network who have to accept them without question.

Additionally, participation by stakers from the public or node operators to run validating clients is filtered and restricted by pool operators. There is no decentralized free entry and exit from the system, therefore it is clearly a common enterprise.

ETH/ETC went through a centralized sale process when it was promoted during the crowdfunding, but then it became a decentralized blockchain when it was launched and was a proof of work system.

When ETH split from the ETC mainnet in 2016, ETC was separated from the main community of developers and leaders of the Ethereum Foundation and became even more decentralized at the social layer. This is when its Code Is Law principle was established.

ETC never had a defined group of promoters. In fact, all the different groups of constituents in ETC rotate and migrate constantly.

For all the reasons stated above, we conclude that Ethereum Classic remains a commodity while Ethereum has reverted to being a security.

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

## What Is Trust Minimization?

A common misconception in the blockchain industry is that these systems are “trustless”, but this is not the correct term nor definition.

The truth is that blockchains such as Ethereum Classic (ETC) are “trust minimized” because there is still some dependency on third parties, and this is precisely why the focus should be on keeping it this way.

This dependency we are talking about may be illustrated by giving 6 examples:

1. Dependency on miners: Miners receive transactions from the network, hash them using enormous amounts of computational power and electricity, and then send the blocks to the rest of the network to include them in the blockchain. This means the network depends on the miner base to guarantee its security.

2. Dependency on verification nodes: When blocks are sent by miners to the rest of the network, then verification nodes get the new blocks and verify them. Once verified, blocks are included in the blockchain and the reward is deposited in the miner’s account. This establishes a dependency by regular users and miners on verifiers to keep the integrity of the data, to not include false information or transactions, and to get paid in the case of miners.

3. Storage of the replicated database: The blockchain itself is a giant database. Verification nodes not only verify, but also store the blockchain to keep the history for daily use, security, and for posterity. This is a huge dependency that the world has on node operators because the fully replicated database in all machines in the network is one of the keys to its security, which is maximized redundancy of the data.

4. Transaction and block distribution: For full replication of the database to exist, there has to be a distribution process of the transactions and blocks across all nodes globally. This is achieved by having all participating machines receive all transactions and all blocks and then re-send them to all other nodes. This is a dependency for participants and external users as this function would not be possible if it were not for the collaborative effort of all nodes.

5. Bootstrapping nodes: To be able to join the network for the first time or to connect again after being offline, each network software client has a list of bootstrapping nodes who are there to receive new entrants and to send them all the blocks of the database so they may synchronize and be part of it. This is a dependency on others to be able to join, and re-enter, and to be able to synch the history of the blockchain.

6. Core developers: Core developers are computer scientists and engineers who do research and development for upgrades and fix bugs that the system may have from time to time. They also act immediately on emergencies in case there is a split of the network or an attack that must be prevented. This is seldom the case, but it has happened even on the best and largest blockchains. This is a dependency on developers for these tasks.

So, if these dependencies exist, then why are blockchains considered trust minimized and secure?

The key to trust minimization is to distribute these dependencies amongst many third parties who may perform them indistinctly and interchangeably.

From miners, to node operators, to developers, the way Ethereum Classic is designed is that none of these constituents are individually indispensable nor irreplaceable.

Any miner in the world may join and leave the network whenever they want, any node operator may do the same, and core developers are several professionals from different regions, and anyone in the world may check and learn the code of ETC and work on it because it is an open source project.

At the operating network layer, the way of achieving this level of global distribution among many miners and verifying nodes is by using the proof of work based consensus mechanism because it is the only system that provides a permissionless point of entry and exit, which is the cryptographic stamp in each block.

## Satoshi Nakamoto’s Focus on Trust Minimization

As an example of how important trust minimization is, and how it had been the central goal of Cypherpunks when building systems, Satoshi Nakamoto mentioned trust minimization directly or indirectly 14 times in the Bitcoin white paper.

Mention of trust minimization in the abstract:

- A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending.

In the introduction:

- Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments.

- While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model.

- With the possibility of reversal, the need for trust spreads.

- These costs and payment uncertainties can be avoided in person by using physical currency, but no mechanism exists to make payments over a communications channel without a trusted party.

- What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.

In the Transactions section:

- A common solution is to introduce a trusted central authority, or mint, that checks every transaction for double spending.

- After each transaction, the coin must be returned to the mint to issue a new coin, and only coins issued directly from the mint are trusted not to be double-spent.

- To accomplish this without a trusted party, transactions must be publicly announced, and we need a system for participants to agree on a single history of the order in which they were received.

In the Privacy section:

- The traditional banking model achieves a level of privacy by limiting access to information to the parties involved and the trusted third party.

In the Privacy section diagram:

A trusted third party is shown in the top part of the diagram to illustrate the traditional banking system. No trusted third party is shown in the bottom part as an indication of a more secure model.

In the Conclusion:

- We have proposed a system for electronic transactions without relying on trust.

In the References section:

- [2] H. Massias, X.S. Avila, and J.-J. Quisquater, “Design of a secure timestamping service with minimal trust requirements,” In 20th Symposium on Information Theory in the Benelux, May 1999.

## Why Should ETC Focus on Trust Minimization?

There are two reasons why Ethereum Classic should continuously focus on trust minimization.

The first is that once we understand that these systems are trust minimized and not trustless, then we are aware that there is some marginal risk that we are still depositing in trusted third parties. This risk may be augmented if there is no focus on trust minimization as any new changes or upgrades could increase it.

The second reason is that we are going to a world of globalization and centralization where trusted third parties will control every aspect of our lives if we don’t use systems as Ethereum Classic. ETC is a refuge against the inexorable arbitrary behavior of trusted third parties and a beacon of freedom for the world. And it must be kept this way.

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

The fact that Ethereum Classic (ETC) is a proof of work blockchain, with fixed monetary policy, and smart contracts gives it features that make it very valuable.

The main benefits of these features are true decentralization, soundness of the money, and programmability.

Decentralization means trust minimization, which makes it secure. And, by secure we mean that it is immutable, permissionless, and censorship resistant on a global scale.

All these benefits combined make ETC valuable to many types of participants around the world for various reasons that we will explain in this post.

## ETC Is Sound Money

ETC is sound money because its coin is scarce, durable, costly to create, portable, divisible, fungible, and transferable. These features are basic physical attributes we evolved to demand so we could have a unit of value to exchange for goods and services and to use as a store of value for future spending.

A basic need of humans is to work to provide value to others so we can be rewarded for that value to sustain ourselves, our families, and our communities.

With sound money we reduced transactional costs and we introduced a unit of value that could be distributed between ourselves to divide labour, thus foster the explosion of innovation that resulted in our current modern age.

ETC is sound money that provides all these benefits because its currency is very costly to create due to proof of work, it has a fixed monetary policy that guarantees that the stock of the coin will not exceed 210,700,000 units, and it will be distributed fairly, at a decreasing rate, over the next 120 years.

## ETC Is Programmable

In addition to being sound money, the native cryptocurrency of ETC is programmable through smart contracts.

Smart contracts are software programs that application developers write that, when sent to the network, become decentralized as they are replicated across all nodes in the system thus making them decentralized applications, or d'apps for short.

This programmability, combined with its decentralization and the soundness of its money, gives ETC incredible value and versatility for users and developers alike.

Smart contracts are a key for further trust minimization, making ETC even more valuable than simple ledger systems as Bitcoin and Litecoin, because decentralized applications are like autonomous agents that replace the need for service providers hosted in proprietary data centers or cloud services.

## ETC Is Good Business For Miners

As ETC is the largest proof-of-work smart contracts blockchain in the world and has a market capitalization in the billions, it is a very good business for proof-of-work miners.

Because ETC still has a long way to rise on its run to become one of the top two blockchains in the world, miners are flocking to the network for the opportunity to put their GPUs and ASIC machines to work, many of whom are accumulating ETC for the long term rather than liquidating to pay bills or exchanging for other assets.

ETC currently ranks fourth largest mining computing base following Bitcoin, DogeCoin, and Litecoin but in the near future will likely surpass DOGE and LTC to become the second-largest mining base in the world.

## ETC Is Good Business for Economic Nodes

Economic nodes are those nodes in the ETC network that are operated by businesses that use ETC to generate revenues. Examples of these are exchanges, wallet providers, block explorers, node-as-a-service (NaaS) providers, data services, crypto custody services, and many others.

Historically, the trading volume of ETC against fiat and other cryptocurrencies has ranked very high at exchanges. This makes ETC a very good business for these players as well as for software and hardware wallet providers.

ETC is listed in most top exchanges and featured in most top wallet brands. As it is widely used by the public globally, it is featured in many data services and various blockchain access and custody providers.

Because running an ETC node is simple and straightforward, many of these businesses are node operators who value the ability to verify the data, transactions, and blocks by themselves. This is the basis of the saying “run your own node!” in the industry.

## ETC Is Good for Global Users

ETC is incredibly valuable for users globally.

Because it is a proof-of-work blockchain with a fixed monetary policy and smart contracts, ETC provides something that the world will increasingly demand as time passes: unstoppability.

The fact that ETC is truly decentralized, trust minimized, and thus censorship resistant, permissionless, and immutable is of an incalculable value for millions across the planet.

As governments and corporations cooperate more and more to centralize and control money, speech, and property through technology; even imagining a central world government reducing the basic rights of people everywhere; the demand for real decentralized computing and money will rise proportionately. People will be able to escape the tyranny of this dystopian world by using ETC as their refuge.

For all of these reasons, Ethereum Classic has enormous value.

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

The whole purpose of blockchains is decentralization.

Decentralization means to reduce the dependency on any particular trusted third party to act as intermediary in economic transactions between individuals and businesses.

Trust minimization is important in order to reduce the possible restrictions that trusted third parties can and usually do impose on users of their system.

Restrictions that trusted third parties usually impose may range from transactional costs, lock-in costs, to even blocking access to services altogether.

The more centralized a system is, the greater risk it has for a trusted third party to restrict it. Therefore, being careful in how a blockchain is designed, where the risks of centralization are reduced as much as possible, is a crucial task of the industry.

Striking a balance between trust minimization, change, complexity, and protocol politics is the topic of this post.

## What Is Social Scalability?

The term “social scalability” was coined by Nick Szabo in his seminal post “Money, blockchains, and social scalability”.

Social scalability, as defined by Szabo, is the ability of a system to be used by increasing numbers of users without encountering restrictions that reduces or blocks new entrants from using it.

A good example of a system that is not socially scalable is the banking system. In an advanced economy such as the United States, there are nearly six million households that are unbanked. Outside of the US, the great majority of countries have unbanked population shares that range from 7% to upwards of 50%.

The reason for these exclusion levels is twofold. The first is that governments, in their ambition to control people while touting “security reasons”, impose strict regulations on financial institutions to filter out potential customers who may not be able to prove that they are not criminals. The second is that due to these regulations, it becomes very costly for financial institutions to acquire and service customers, therefore they concentrate their marketing and distribution efforts only on the middle and higher-income segments of their markets.

In the proof of work based Nakamoto Consensus sector of the blockchain industry, networks such as Ethereum Classic (ETC), Bitcoin (BTC), and Litecoin (LTC) focus on high social scalability at the expense of computational scalability.

This means that the process of full replication of the data, hashing it, and then fully replicating the blocks again, producing an exact replica of exactly the same ledger with the same accounts, balances, and smart contracts, in the case of ETC, is extremely computationally inefficient, but it is the only way of producing a level of decentralization that enables everyone in the world to access the systems with no restrictions.

This is the tradeoff of computational scalability for social scalability.

Because of the physics of peer-to-peer networks, whichever system focuses on computational scalability must sacrifice decentralization, thus social scalability.

This is more or less the reason why governments seeking total and pure security sacrifice considerable numbers of their populations to remain excluded from basic services such as banking.

## What Is ETC Ossification?

As we said before, being careful in how a blockchain is designed, where the risks of centralization are reduced as much as possible, is a crucial task of the industry.

On the other hand, these systems need to be updated with new features every now and then, and, whenever they appear, bugs must be fixed.

However, the more frequently a blockchain is upgraded, the more risk there is for bad or faulty modifications to be introduced into the system.

This problem is usually called “attack surface”, which means that the larger the surface of the system is, the easier it will be to poke holes in it. In other words, the more code and rules it has, the easier it will be to find ways to attack it.

This is why the term “ossification” is usually used and is a goal in the industry. Ossification means to reach a point where the network is sufficiently functional to warrant a complete halt in its upgrades and bug fixes. Then, all new features and functionality may continue to be built on top in higher layers.

In the case of networks as Ethereum Classic, the attack surface problem has three angles: Complexity, politics, and change.

## Complexity

The complexity attack surface: The more complex rules and code needed to build the system, the more hidden ways hackers will find to attack it.

Complexity also raises the risk of hidden bugs or unforeseen failures.

The way of reducing this surface is by reducing complexity or reaching a point of ossification where the system is functional enough to support all new features and innovation in external complementary protocols.

Examples of this may be rollups, channels, and other scaling systems built on top of ETC, instead of sharding it internally or integrating them into the network.

## Protocol Politics

The argument attack surface: The more decisions to argue over, the more the opportunity to convince the ecosystem to accept bad upgrades that reduce decentralization.

In blockchain networks there are several constituents that participate in the debates when there are new proposals for change. These debates may become very passionate and even toxic at times. Sometimes, parties with enough budgets, charisma, or influence may actually convince participants to make horrible changes. The most famous of these examples is the migration of Ethereum from proof-of-work to proof-of-stake, a system prone to total centralization.

These processes turn developers, economic node operators, and miners into political animals fighting for their self interest.

Ossification would avoid this problem entirely as there would be no possibility of tricking the ecosystem with fancy arguments and gimmicks anymore.

## Change

The change attack surface: The more changes and upgrades there are, the more opportunities to introduce faulty rules or bugs.

Similar to protocol politics, the frequency of changes made, even if necessary and benevolent, is a risk to the system.

As an example, Bitcoin once had a critical bug introduced as part of an update. When it was discovered, deployment of an urgent hot-fix was required to patch the error.

Except for those hidden and already present in the code, ossification eliminates the introduction of new bugs or errors because there would be no new code or rules deployed to the protocol.

## Striking a Balance

The best way to strike a balance between trust minimization, change, complexity, and protocol politics is to reduce change by reaching protocol ossification and letting all new features and design goals to be built on higher layers.

In this way, the highest level of social scalability is achieved.

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

## What Is Trust Minimization?

Trust is the belief that someone or something will be true, benevolent, and have our best interests at heart. However, it is good wisdom to understand that usually the best persons to have our best interests are ourselves. This applies to individuals, families, friends, communities, and nations.

One of the premises of Cypherpunks, the group who worked for decades on the technologies that eventually led to the creation of Bitcoin, is that wherever trust is deposited, that trust will always be abused.

This is why the whole point of blockchain technology is to minimize trust in third parties. Third parties may be banks, governments, corporations, or tech companies. Because, in the course of human action, nearly every interaction is mediated by these trusted third parties, and they have systematically abused their trusted positions, then it has become imperative to reduce their role and influence.

Trust minimization is the dilution of trust in these third parties by transferring and distributing their roles to decentralized technologies such as blockchains.

## Why Is Trust Minimization Necessary?

Trusted third parties, such as banks, governments, corporations, or tech companies, are security holes because they hold our money, wealth, property records, and personal data, manage everything on centralized servers, and they can be hacked or they can commit outright fraud.

Trust minimization technologies have existed for millennia. Ever since humans started to divide government, establishing voting systems, courts, and legislatures, they have been attempting to separate responsibilities in different persons or entities to minimize the possibility of arbitrary abuse.

Trust minimization is necessary because the more uncertainty and cost, both monetary and bureaucratic, of the role of trusted third parties, the less human activity may flourish.

## What Are Autonomous Agents?

Autonomous agents are software programs that may autonomously executed their code when individuals and businesses send them transactions.

A famous example given by Nick Szabo, the father of smart contracts, the technology that enables autonomous agents, was the vending machine. When someone goes to a vending machine, they have to put a specific amount of money into it, and when the machine confirms that it received the payment then it gives a soda or a snack to the purchaser.

The vending machine is not operated by humans and responds only to strictly objectives rules. It is also protected by a hard box that would be very costly to break relative to the value that any burglar would get from it. This is why they may be installed in many places and they may act autonomously and objectively to provide a service.

Software autonomous agents have the promise that they may be much more complex than vending machines and may replace the need of trusted third parties in many of our interactions in the course of business, social relationships, and human action in general.

## How Can Autonomous Agents Be in Ethereum Classic?

The solution to the problem of trust that blockchains such as Ethereum Classic (ETC) bring to the world is an extreme form of distributed computing that is practically impossible to manipulate by third parties.

Autonomous agents could not be fully trusted before ETC, even if they were software programs that contained objective rules, because they would run on government or corporate servers so trusted third parties would still have total control over them.

Ethereum Classic solves this because it is a decentralized blockchain system were developers may deploy smart contracts and these programs get immediately replicated among all participating machines in the network.

This means that there is no trusted third party controlling these autonomous agents anymore.

## Why Are Autonomous Agents in ETC Truly Trust Minimized?

The level of general computing decentralization that ETC has achieved had never been possible in computer science, but now is possible in Ethereum Classic because it is a fully replicated, proof of work blockchain, has a fixed and algorithmic monetary policy, and is programmable.

Fully replicated, proof of work blockchain: Full replication is the distribution of the database of the system in all participating nodes. This means that all accounts, balances, and decentralized programs inside ETC are copied everywhere making it extremely difficult to tamper with them. Proof of work allows this replication by providing a reliable signaling system that all nodes in the network may follow to be in lockstep with each other in the same exact state of the database every 13 seconds.

Fixed and algorithmic monetary policy: As the miners that perform the proof of work get paid in the currency of the system, and the money in itself is sound, then they are incentivized to participante to earn ETC. The soundness of ETC is rooted in that it has a capped supply, a limited issuance rate, and that these rules are nearly impossible to manipulate by any third party.

Programmable: The programmability of ETC is what enables it to host software programs that may perfectly act as autonomous agents, thus replacing trusted third parties in the mediation of human action.

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

In part I of this two part series we explained why Ethereum Classic (ETC) can host truly trust minimized autonomous agents inside its secure environment.

The reasons we gave were three:

ETC is a fully replicated, proof of work blockchain: Full replication is the distribution of the database of the system in all participating nodes. This means that all accounts, balances, and decentralized programs inside ETC are copied everywhere making it extremely difficult to tamper with them. Proof of work allows this replication by providing a reliable signaling system that all nodes in the network may follow to be in lockstep with each other in the same exact state of the database every 13 seconds.

ETC has a fixed and algorithmic monetary policy: As the miners that perform the proof of work get paid in the currency of the system, and the money in itself is sound, then they are incentivized to participante to earn ETC. The soundness of ETC is rooted in that it has a capped supply, a limited issuance rate, and that these rules are nearly impossible to manipulate by any third party.

Smart contracts on ETC make it programmable: The programmability of ETC is what enables it to host software programs that may perfectly act as autonomous agents, thus replacing trusted third parties in the mediation of human action inside the secure environment of the blockchain.

In this post we will describe the different quadrants in the diagram above and explain why the combination of proof of work plus programmability is the most trust minimized model for a blockchain.

## Proof of Stake, Non-Programmable Networks

Note that I called the systems in this quadrant “networks” and not “blockchains”. This is because a blockchain is a system where miners group transactions into blocks of data, stamp them with a hash that cost them enormous amounts of work, energy, and money, and then send them to the rest of the network for verification and inclusion in the chain of blocks, or blockchain. Any system that doesn’t do this is not a blockchain, it is just a traditional system with very low security disguised as a blockchain.

For the same reason, that they do not use proof of work as their consensus mechanism, proof of stake or proof of authority networks, are wholly inadequate and insecure for holding accounts with balances of money, let alone running software agents that purport to disintermediate banks and other trusted third parties.

Indeed, networks like Ripple and Stellar, both proof of authority networks which is very similar to proof of stake, are controlled and managed by corporations or foundations and the node operators are financial institutions themselves, thus they comply with all national and banking regulations wherever they operate. This makes them fully trusted and vulnerable technologies, just like traditional systems.

Dash, is a combined proof of work and proof of stake network, but as any other thing, its security is as good as its weakest link. Therefore, it is as insecure as any proof of stake system. On top of that, as a sign of how manipulable these systems may be, Dash has a built-in treasury where developers suck money from the system, a source of potential corruption and centralization, and a voting system called “governance” that enables “rule by the majority” which is totally contrary to blockchain security design.

## Proof of Stake and Programmable Networks

Note that I refer to these systems as “networks” and not “blockchains” like in the previous section. They have the same problems, proof of stake is a traditional centralized system disguised as a blockchain.

They are extremely complex technologies that even their creators find it difficult to understand because they have so many parts and tens of thousands of lines of code.

The fact that proof of stake networks may be programmable does not make them any better. These systems have the same flaw as traditional technologies: It doesn’t matter how well designed the autonomous agents (dapps) may be in them, and how objective and fair their protocols may be, they are still controlled by few participants that dominate the networks in which they are hosted, usually a foundation or corporation that sponsors the system, a few developers, and the large staking pools.

The above means that in networks such as Ethereum, Binance Smart Chain, and Cardano, you may have what they call “decentralized exchanges”, “NFT markets”, “Decentralized Autonomous Organizations”, property registries, lending dapps, insurance dapps, or whatever “DeFi” more, but they are all still under the constant threat of intervention and control by special interests.

## Proof of Work, Non-Programmable Blockchains

Proof of work is indeed the truly secure consensus mechanism that enables any computer in the world join and leave the system without the possibility of censorship or prohibitions of any kind. This is proved by China that at the time of this writing still prohibits cryptocurrencies and mining in the mainland, but 22% of Bitcoin mining is still performed in that country! This is how secure and permissionless this paradigm is.

The problem is that if a blockchain is proof of work but not programmable, then it is extremely secure with regards to the accounts and balances that it holds inside its secure environment, but anything that is outside must necessarily be less secure.

For example, on Bitcoin, DogeCoin, and Litecoin we may have our accounts and balances, but if we want to use them with autonomous agents and dapps, then those must exist outside the highly secure environments of the blockchains.

This is the case with Wrapped BTC. It is used with dapps inside Ethereum, an insecure proof of stake system, and on top of that if anyone wishes to redeem their BTC, the actual coins are in another network, Bitcoin, held in trust by traditional trusted third parties!

Any connections between networks must be insecure. The only secure system that guarantees decentralization is proof of work, and that only works inside the peer-to-peer connections within a system.

An even worse situation would be if the “autonomous agents” are hosted in corporate cloud services.

## Proof of Work and Programmable Blockchains

So, all that was explained above leaves us with the last option, and indeed this option is the sweet spot of security and autonomy of software agents.

Proof of work and programmable blockchains are the most trust minimized systems in the whole blockchain industry because not only the accounts and balances are inside the secure environment of the blockchain but also the autonomous agents are hosted in it.

This combination avoids the need to jump from the blockchain to corporate cloud services and back to get the services of apps, avoids the need to do complex and insecure cross-chain connections, and avoids the use of dapps in external insecure networks such as Ethereum, Binance Smart Chain, Cardano, and others.

In Ethereum Classic, not only the digital gold is hosted, but also the fully trust minimized autonomous agents, therefore the maximum level of trust minimization is achieved for users and businesses on a global scale.

ETC has the incredibly valuable position of being the largest proof of work, fixed monetary policy, programmable blockchain in the world, therefore it is poised for a large and dominant market share in the future.

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

Proof of work (POW) coins are digital gold because they are built on top of an objective proof of work base.

Proof of stake and proof of authority coins are pure fiat community money because they have no objective base, so they depend exclusively on their communities for their hardness, which is weak or weaker than trusting governments for the monetary policy.

In this post, we will focus on why proof of work coins are digital gold, why Ethereum Classic (ETC) in particular is programmable digital gold, and why this makes ETC the most trust minimized blockchain in the world.

## What Is Bit Gold?

It is very likely that Satoshi Nakamoto actually wanted to build Bit Gold when he created Bitcoin. The prefix “Bit” is a big hint, I would say!

In proof of work blockchains such as Bitcoin (BTC) and ETC there is actually Bit Gold hidden in their databases. This Bit Gold are the cryptographic stamps or hashes that seal each block.

This is what was envisioned was going to be the money on the internet originally.

However, because of problems in its design that couldn’t be solved at the time, Satoshi used the model proposed by Wei Dai to build the first proof of work blockchain.

## What Is a Fiat Community Token?

Wei Dai’s model was to use Bit Gold as a backup and then create a fiat currency to pay for the work done by the computers in the network.

It is very important to understand that BTC and ETC are fiat community tokens that are issued after a lot of work was done by miners in a proof of work network. But they are not the Bit Gold themselves.

These tokens are fiat community tokens because they are just a parameter in the software of the networks, they are not the direct product of computational work as the cryptographic hashes are.

## Why Is Bitcoin Digital Gold?

Nevertheless, to create the coins in Bitcoin, miners have to do a lot of computational work and invest a lot of capital in operations and electricity. This means that the BTC tokens are not issued unless this enormous cost has been incurred. This is what makes BTC valuable and scarce, just as gold in the real world is valuable and scarce due to the cost of extracting it from nature.

So the first reason why BTC is digital gold is because the work to create the blocks is the same work that is required to issue the coins.

The second reason is that it has a fixed monetary policy. Bitcoins are not only costly to create, but they are being created at a decreasing rate (50% less per block every 4 years) and this establishes a total supply of 21,000,000 that will ever exist.

## Why Is Ethereum Classic Programmable Digital Gold?

In exactly the same way as Bitcoin, to create the coins in ETC, miners have to do a lot of computational work and invest a lot of capital in operations and electricity. The ETC tokens are not issued unless this enormous cost has been incurred, thus making ETC digital gold just like BTC.

And, as Bitcoin, ETC has a fixed monetary policy. ETC is being created at a decreasing rate (20% less per block every 2 years) and this also establishes a total fixed supply, but in the case of ETC it will be 210,700,000.

However, the additional feature that ETC has is that it supports smart contracts. Smart contracts are software programs that when they are sent to the ETC network, they become decentralized because they get replicated across all nodes of the system globally just like the ledger with accounts and balances.

This means that ETC coins are digital gold, but they can also be managed by these software programs or “Dapps” inside ETC, which means that ETC is programmable, and therefore programmable digital gold.

## Why Is Ethereum Classic More Trust Minimized?

Indeed, arguably, ETC is the most trust minimized blockchain in the world as its decentralized applications are hosted inside the largest proof of work smart contracts blockchain in the world.

If to manage digital gold, users need to use external applications that are not hosted inside the POW blockchain, then those applications are not as secure, thus not as trust minimized.

But in ETC, because the dapps are inside the highly secure environment of its POW system, then not only the digital gold is trust minimized but also its applications.

This is what makes ETC more trust minimized, and why programmable digital gold is so unique and valuable.

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

On a macro level, the blockchain industry may be divided into two large categories; the truly decentralized blockchains and the centralized systems that try to mimic the attributes of decentralized blockchains but changing some parts of their designs to conform to certain misguided ideas.

However, these misguided changes in themselves are what remove the main attribute of true blockchains which is trust minimization.

The other categorization is between those networks that are more versatile and those that are narrow in their use cases.

In this post we will explain the 7 key reasons why Ethereum Classic (ETC) is in the most valuable position with regards to these categorizations.

## 1. ETC Is a Proof of Work Blockchain

ETC is a proof of Work (POW) blockchain, and this puts it in the category of truly decentralized systems because POW is the only way known to man that guarantees decentralization and the free participation of any node in a peer to peer network.

By “free participation” we mean that anyone in the world may operate a node or mine ETC without any permission or censorship.

It also means that anyone in the world may send transactions and have addresses with balances in ETC with the guarantee that they will not be confiscated nor tampered with by any special interest.

POW aditionally means that there is a cryptographic wall that protects the history of transactions in the system that is practically impossible to violate.

## 2. ETC Is Hard Money

ETC is hard money because it is a POW blockchain, therefore the cost of creating the blocks is the cost of creating the coins, thus creating scarcity, unforgeable costliness, and value similar to gold in the real world.

ETC also has a fixed coin supply schedule in its monetary policy, meaning that there will only be 210,700,000 ETC ever in existence.

This stock is being issued as rewards are paid to miners on a per block basis, and is managed by reducing the amount paid by 20% every two years.

The current inflation rate in ETC as per its present issuance is 3.91%; it will be less than 2% by 2032; and less than 1% by 2036. This trend will tend to zero in the following years.

As hard money, ETC protects the value of users’ savings and investments in the long term.

## 3. ETC Is Programmable

Ethereum Classic is programmable at the base layer through smart contracts inside its highly secure environment.

Smart contracts are software programs that when they are sent to the network, they get replicated in all the nodes of the systems, therefore becoming totally decentralized.

The other competing POW chains such as Bitcoin, Litecoin, DOGE, Monero, or Kaspa, are not programmable, thus are simple and limited systems that only hold accounts, balances, and can move money from one account to the other, but nothing else.

ETC is a leap in versatility comparable to how computers were a leap in versatility versus pocket calculators in 1980s.

## 4. ETC Is Fully Replicated

ETC’s blockchain; or database, with accounts, balances, and smart contracts; is fully replicated, meaning that 100% of the nodes keep an identical copy of all the information. The more nodes there are, the more secure the system is.

This was the original goal of blockchains; to achieve the full replication of the data in as many participating peers as possible to guarantee maximal redundancy.

POW was the key to achieve this replication through consensus in a decentralized way, and is actually the second most important security guarantee of the technology.

Full replication was the first security guarantee, and it offers a redundancy that makes the system resistant to tampering by man or destruction by nature. ETC can survive even a nuclear war!

## 5. ETC Is Composable

Ethereum Classic is composable, which is a very important quality.

Composability is possible because all accounts, balances, and decentralized software programs are inside the same system, therefore complex multi-app transactions may be performed in single transaction executions.

When systems are separated; such as in Bitcoin, where the money is inside the blockchain but the applications are in other external platforms, because BTC is not programmable; then complex multi-app transactions are not possible as the blockchain does not have certainty of what is the state of the external system and the external system does not have certainty of what is the state of the blockchain.

Composability is very important because it enables instantaneous transactions, shorter settlement times, reduces friction, and lowers transactional costs.

## 6. ETC Is the Largest POW Smart Contracts Blockchain in the World

Since Ethereum migrated to proof of stake in September of 2022, Ethereum Classic has become the largest proof of work smart contracts blockchain in the world.

Having this position makes ETC extremely attractive because, when markets start to realize that proof of stake and proof of authority consensus are centralized and vulnerable, developers, investors, users, miners, and node operators will start to move to ETC.

In the blockchain industry, security is only achieved through proof of work, and proof of work is only secure when the blockchain is the largest in its POW algorithm.

ETC is now the largest blockchain in the ETHash/ETCHash algorithm, which makes it the most secure in that aspect as well.

## 7. Applications in ETC Are the Most Secure Apps in the World

Applications in ETC are the most secure in the world because the combination of proof of work, hard money, programmability, full replication, composability, and the fact that it is the largest in its category make it the most secure environment there is to run and execute applications.

There is no other place in the universe where applications can be more secure than it ETC.

Not in military data centers, not in corporate data centers, not in cloud services, and not in any kind of network that is not the largest proof of work programmable blockchain.

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

## What Is Security in Ethereum Classic?

Security in Ethereum Classic (ETC) and any blockchain that is well designed is to depend as least as possible on trusted third parties.

Trusted third parties are security holes because they hold our wealth and they hold our information, but they can make mistakes, commit fraud, be controlled by tyrannic governments, or abuse their position of trust.

The most effective way humans have found to reduce the risk of trusted third parties in history has been to divide their power and to distribute their functions and responsibilities in as many parts as possible.

This is at the heart of the purpose of blockchains such as ETC.

## The Security of Full Replication

In the case of Ethereum Classic this distribution is done by having the same database; which contains users’ accounts, balances, and dapps; copied identically in as many participating nodes as possible.

This full replication of the blockchain is the essence of the security model of a proof of work (POW) blockchain.

When the accounts, balances, and decentralized applications are replicated in more nodes, then the data is more redundant, and the more redundant the data is, the less likely it is that it will be corrupted or destroyed by man or nature.

Indeed, the full replication of ETC makes it even resistant to nuclear war!

## Common Mistakes in the Industry

Many think that proof of work blockchains are only protected by miners. This can’t be further from the truth because POW is just one part of the security model. The complete security model includes proof of work, full replication, verification by nodes, and the coordination problem of the social layer.

However, only proof of work blockchains as ETC can have this complete set of security guarantees.

Thinking that only “the community” or the social layer provides security is another gross error in the industry.

As explained above, the lack of coordination ability by the ecosystem is only one of the security components, and the weakest one at that.

When blockchain designers have this confusion, then they introduce false security models such as proof of stake or proof of authority, which depend solely on the “honesty” of the social layer, thus re-centralizing their systems in trusted third parties all over again!

## Each Additional Node Subtracts a Fraction of Risk

If you think of it mathematically, then each additional node in a blockchain that has a replicated copy of the whole history of the chain adds an additional fraction of security or, said another way, subtracts a fraction of risk.

If there is only one computer in the system, then all the risk is resting on that computer. This can be described as having a risk of 1, which is the highest risk.

If there are two computers in the system, then the system will halve the risk, or the risk will be resting in two nodes instead of only one. This can be described as having a risk of 1/2.

If we keep adding nodes, for example, then three will lower the risk to 1/3, four to 1/4, five to 1/5, and so on, until the risk will tend to zero.

This is why blockchains such as ETC are so secure, because many nodes around the world have replicated its database.

## The Importance of Globality

We will emphasize the term “around the world” above because if all the nodes of a blockchain were operated or held in the same place, then they would all count as one because one or very few people would controle them, thus bringing back the high dependency on trusted third parties.

The key is to have the nodes distributed in as many people, countries, regions, cultures, religions, languages, and jurisdictions as possible.

This reduces even more the risk of coordination of the social layer and creates a physical redundancy that protects the system against natural disasters and also man made disasters such as tyranny, wars, excessive regulation, etc.

## Security at the Individual Level

Security is also enhanced individually by running a node in ETC.

When people use wallets, exchanges, dapps, and other services to process their transactions, manage their smart contracts, and check their balances all their activity goes through ETC blockchain nodes.

If these nodes belong to third parties, then users are depending on these entities as to the veracity of the information.

The most secure setup to use a blockchain is to run your own node and to verify by yourself all information and to process all transactions safely.

## Security at the Network Level

Unfortunately, there is no way to force, dictate, or to incentivize node operators safely to run more nodes in as many countries, regions, cultures, religions, languages, and jurisdictions as possible. Many have proposed some economic models or even are paying tokens to node operators to run more nodes, but these ideas usually have hidden risks.

The way blockchains gain nodes is by the individual incentives described in the previous section. Usually high value economic nodes, such as popular wallets, exchanges, institutional investors, high networth individuals, banks, custodians, and others, tend to run several nodes each because of the value at risk that they manage in blockchains such as ETC.

The more value at risk, the more node operators will want to run their own nodes, thus the more nodes will exist on the blockchain. This is one of the reasons why the increase in market capitalization of a POW cryptocurrency is so important and central to its design.

## The Purpose of Proof of Work Was Always Full Replication

The main goal of Cypherpunks when designing systems for a cryptocurrency was to have what they called secure property titles with ownership authority. And, the main security model was to replicate the data in as many nodes, in as many places as possible.

Proof of work was the solution that provided the consensus mechanism so that all nodes could agree on the same replicated database, but it was a means to the end of full replication.

As secondary benefits, POW provides hard money because the cost of creating the blocks in the blockchain is the same as creating the money; and a barrier to reverse the chain because the work will have to be done all over again to change past transactions.

These were additional benefits, but what was sought was full replication in as many nodes, in as many places as possible.

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

## 1. Ethereum and Ethereum Classic Were Originally One Proof of Work Blockchain

When Bitcoin (BTC) was created it was meant to have smart contracts inside its proof of work (POW) environment.

In 2013, Vitalik Buterin came up with the idea of how to integrate smart contracts to a POW blockchain but it was not possible in Bitcoin because of its technical design.

This is how Ethereum (ETH) was originated. Mr. Buterin put together a team, they did a crowdsale to finance development, and they built a blockchain from scratch that was launched in 2015.

At this time, there was no “Ethereum and Ethereum Classic (ETC)” as the whole community was united in one project and there was only one smart contracts blockchain.

## 2. Then Ethereum Separated From Ethereum Classic

In 2016, there was a controversy in the ETH community due to a hack to a dapp called The DAO.

At that moment ETH decided to reverse the hack, while a small group of the community decided to continue the original untampered chain, which was subsequently called Ethereum Classic with the ticker symbol ETC.

There is a common misconception in the market that ETC is a fork of ETH, but the truth is the opposite: ETH is a fork of ETC as they changed the rules of the network and reversed the funds of the hack, breaking immutability. But, ETC did no changes, thus remaining as the original untampered chain.

## 3. Code Is Law vs Social Consensus

Ever since the separation between Ethereum and Ethereum Classic a wide gap between them has emerged.

ETC adopted a “Code Is Law” philosophy and ETH a “Social Consensus” one.

Social Consensus means exactly what they did in 2016: That whenever there is a controversy or problem in the chain, then the community, which is supposed to be all knowing, ethical, and good, will correct such problems.

But, this is exactly the opposite of what blockchains are supposed to be! This is why ETC adopted a philosophy that it will be as objective as possible and that anything inside the blockchain will be immutable. Any problems between humans must be solved in the legal system, not by tampering with the chain.

## 4. Proof of Stake and Saving the Trees

Later in 2016, Vitalik Buterin wrote an essay where he explained that he liked proof of stake (POS) rather than POW because:
- POW killed trees
- POW had a symmetrical 1:1 attacker to defender ratio

Well, the truth is that POW is very difficult to attack, and the only possible attack is double spending which is increasingly difficult as users can protect themselves by waiting more confirmations, and the transparency of blockchains deters attackers from doing so as they may get caught very easily.

This leaves POS with no advantages other than saving trees, which is a fallacy in itself, because by not being POW, POS networks actually stop contributing to the migration of electricity production to renewable energy, as POW does!

## 5. Proof of Stake Is Not Even Scalable

Another great advantage that the Ethereum Foundation promoted about POS was that it would provide much more scalability because its design supposedly enabled the fragmentation of the database, therefore the processing in parallel of a much greater number of transactions.

Ethereum could process between 10 and 20 transactions per second at the time, but the Ethereum Foundation talked about processing thousands of transaction per second if they used POS.

The truth is that now Ethereum is a POS chain, and may only process between 20 to 30 transactions per second!

This means POS is not even scalable.

## 6. The Ethereum Migration to Proof of Stake

Because of its “Social Consensus” philosophy; that assumes that the community will solve any controversies that may arise in the system rather than keeping it immutable and having people solve their disputes elsewhere; and due to the abstract objectives that the ETH community had of saving the trees, achieving scalability, and reducing the issuance of ETH; Ethereum migrated to POS in September 15 2022.

At the time, Ethereum was the second largest blockchain in the world and all other smart contract blockchains of relevance in the rankings were already POS as they were seeking to frontrun Ethereum by supposedly becoming scalable and environmentally friendly first.

## 7. Ethereum Classic Became the Largest In the World

When Ethereum migrated to POS, ETC had a hashrate of around 20 TH/s but after the migration it jumped to more than 200 TH/s, and subsequently stabilizing, at the time of this writing, at around 166 TH/s.

Nevertheless, just by remaining as a POW coin, ETC became the largest smart contracts blockchain in the world. All the other programmable chains above in the rankings are POS, therefore centralized and insecure. It is just a matter of time until the market realizes this, and ETC will dominate the segment.

## 8. Applications in ETC Are the Most Secure Apps in the World

Ethereum Classic is the environment where the most secure applications in the world will exist because it is a proof of work blockchain, it has a fixed monetary policy, it is programmable, fully replicated, composable, and is the largest one in the world with this combined design.

These attributes in the same integrated system provide the highest level of decentralization, thus trust minimization, thus security to any application hosted in it.

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

One of the most impactful discoveries when one starts to learn more about proof of work blockchains such as Bitcoin (BTC) or Ethereum Classic (ETC) is the honesty and truth behind these systems.

Traditional industries such as banking, insurance, asset management, or investing advice depend on the boasting and exaggeration of their services or institutions, often over inflating their features and attributes of trustworthiness.

Proof of work blockchains are harsh truths.

Elaine Ou put it best in a Bloomberg article:

“Financial institutions make people feel safe by hiding risk behind layers of complexity. Crypto brings risk front and center and brags about it on the internet. It’s a bit uncivilized, but for some participants, a world where risk is quantified and individual is preferable to one where it’s unknown and distributed.”

As proof of stake systems are centralized, they suffer of the same kind of dishonesty as traditional fiat industries.

A prototypical example of this phenomenon is the Ethereum (ETH) blockchain community.

Ethereum Classic and Ethereum are practically the same technology, but since the split of both chains in 2016, ETC has consistently followed a “Code Is Law” philosophy, sticking to proof of work, and Ethereum a “Social Consensus” way of managing the system, while migrating to proof of stake.

ETC’s approach is the same dry and cut reality as Bitcoin. Whatever is inside the chain is immutable, uncensorable, and permissionless. But Ethereum is about community ethics, political acceptance, and punishment of the supposedly undesirable.

This mindset has led Ethereum to brag and boast about imaginary attributes of their system that put it in stark contrast with the truths of Ethereum Classic.

In this post we will go over some of these contrasts.

## The Weak Subjectivity Fallacy

The founding assumption of blockchains that are not proof of work, that is, that use the proof of stake or proof of authority consensus mechanisms, is the principle of “weak subjectivity”.

This was an invention by Vitalik Buterin, founder of Ethereum, that he explained in his essay “Proof of Stake: How I Learned to Love Weak Subjectivity”. In it, he argued that computers and blockchain networks are just helpers of humans, and that humans are very good at achieving honest consensus in the long term. Therefore, to introduce some minor subjective rules into these systems was perfectly fine.

This is a flagrant contradiction of trust minimization, the main goal of blockchains, which was even stated in the Ethereum white paper!

Bitcoin and ETC seek to minimize as much as possible the dependency in trusted third parties precisely because any margin of trust in people will always be abused. It is just a matter of time.

Proof of this abuse is that Ethereum has migrated to proof of stake, a centralizing consensus mechanism, and that they have changed the monetary policy more than 5 times.

## The Proof of Stake Saves Trees Fallacy

The main reason for Ethereum to move to proof of stake was that proof of work is too energy intensive, that it would eternally need a large security budget, and thus kills the trees.

However, it is becoming increasingly evident that proof of work in Bitcoin and ETC actually saves trees.

As mining is distributed globally and constantly moves to seek cheaper sources of energy, it provides cash flows to renewable energy sources promoting clean power industries across the globe.

In their quest to tap stranded energy, proof of work miners even use methane gas from oil fields as an energy source, which reduces its climate impact by more than 80 times.

By moving to proof of stake, Ethereum is actually the one killing the trees by not producing the positive environmental effects it would have had it stayed as a proof of work blockchain!

## The Cost of Attack Asymmetry Fallacy

In his seminal essay “A Proof of Stake Design Philosophy” Vitalik Buterin, the main promoter of proof of stake in Ethereum, argued that proof of work failed to realize the cypherpunk spirit which says that the cost of attack in the system should be orders of magnitude higher than the cost of defense.

If this were a principle, in any case, it would be a mantra of cryptography, but not of Cypherpunks. But, in truth, it was never a stated goal of Bitcoin or ETC.

The proof of work consensus mechanism was always meant to be a symmetrical kind of defense and it has been stated as such since the Bitcoin white paper of 2008, that whoever had more than 50% of the computing base of the system could reorganize the chain. This is so much so that this attack vector is called a 51% attack, marking its practical symmetry even in its name!

Establishing imaginary problems and then supposedly solving them is one of the main argumentative tactics of fiat institutions and insecure centralized blockchain networks.

## The Proof of Stake Finality Fallacy

Another widely held belief in Ethereum and proof of stake circles is the idea that because those networks have specific “finality” rules, that transactions are indeed final after a certain threshold.

The curious thing about this belief is that even Vitalik Buterin has openly declared that “finality is always probabilistic” in any system.

However, the fallacy relies in not clarifying that even though proof of work systems as Bitcoin and ETC have no subjective finality rules, that finality in those blockchains is orders of magnitude stronger than in proof of stake.

As proof of work demands a lot of work and electricity to seal the blocks, then it is practically impossible to reverse older transactions that happened in the past because all the subsequent blocks would all have to be redone with the same amount of work and energy all over again.

As Ethereum’s proof of stake does not use any work, the whole history of the chain may be rewritten with a fraction of the effort.

Proof of stake has no protection other than the good will of the community, which, again, is what blockchains were trying to avoid in the first place!

## The Low Fees and High Scalability Fallacies

The last two fallacies that we will mention (there are many more, but to cover all of them would require too many more paragraphs in this article!) are the low fees and the scalability fallacies.

In terms of low fees, one of the main expectations of Ethereum users when it migrated to proof of stake was that the high fees that they were paying when it was a proof of work blockchain would go down significantly.

However, this did not happen, and it didn’t happen because the migration to proof of stake was never meant to solve that problem!

What causes high fees is not the proof method in consensus mechanisms (whether proof of work or proof of stake) but the size of the blocks. And as long as blockchains want to be fully replicated, then blocks will have to remain small. And in small blocks fit a limited number of transactions. This is what causes the competition for block space that increases the cost per transaction.

This same restriction in block space causes the lack of scalability in Ethereum as well as in Bitcoin and ETC.

However Bitcoin and ETC never stated the goals of becoming scalable at the base layer.

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

## The Vision of the Cypherpunks

When public key cryptography was invented at the end of the 1970’s the internet already existed and personal computers were about to hit the market.

By the late 1980’s and early 1990’s a group of cryptographers and computer scientists had already realized that, in time, although the internet and personal computing would revolutionize the world, that a centralized tecno tyranny would threaten basic liberties unless good cryptographic tools were invented to assure values such as privacy and sound money.

With this in mind, they formed an online mailing list, started calling themselves “Cypherpunks”, and began delineating what were the potential threats and planning designs to counter them.

## What Are Trusted Third Parties

As cryptography assumes that the main threat are “evesdroppers” who may intercept messages and decrypt them, for Cypherpunks the threats were trusted third parties that intermediated in all of our affairs.

In the context of online interactions, trusted third parties would see all of our communications and activities, record them, and start profiling us politically or otherwise, and arbitrarily censoring our speech, deplatforming us, cancelling us, and controlling our behavior. Sounds familiar?

Trusted third parties may be banks who process our payments and hold our financial wealth, communications apps, social media apps, search engines, cloud services, and governments who may impose their agendas through these technology companies and services.

## What Is Trust Minimization

So, the internet and personal computing presented two opposing phenomena: The opportunity of free speech and commerce on a global scale, and the threat of trusted third parties capturing us through the centralized technological platforms.

The solution that Cypherpunks envisioned was to minimize the trust needed third parties as much as possible using cryptography to avoid the control by corporations, governments, and special interests.

This goal was called “trust minimization” since, even with decentralized technologies, some trust is always deposited in third parties to relay the information.

## The Bitcoin White Paper Mentions Trust Minimization 14 Times

Within the efforts of seeking sound money on the internet, the first and most successful design to achieve trust minimization on a global scale was Bitcoin.

Trust minimization was such a central goal, that it was mentioned 14 times in the Bitcoin white paper.

In the case of money, savings, and payments trust minimization means to reduce the reliance in banks, central banks, and governments with regard to the issuance of money, processing of payments, and custody of the currency.

However, Bitcoin never evolved further than just being a ledger with accounts and balances. This implied that trusted third parties would still be needed to run external apps to use it.

## Trust Minimization In Ethereum Classic

This is why it was such an important goal to recreate the idea of smart contracts that Nick Szabo had envisioned in the early 1990’s.

If in the real world everybody needed trusted third parties such as banks, escrow agents, payment apps, exchanges, property registries, and central banks, then it was necessary to attempt to replace these entities with online decentralized agents that would perform these tasks.

This is why Vitalik Buterin worked on, and came up with the idea of Ethereum Classic (the original Ethereum) in 2013, a smart contracts proof of work blockchain that would not only host accounts and balances as Bitcoin, but also smart contracts to power decentralized applications that would replace trusted third parties.

## Examples of Dapps That Accomplish Trust Minimization

Smart contract powered decentralized applications (dapps) are the second most important invention in the blockchain industry because they finally accomplished the goal of minimizing trust in third parties.

Examples of dapps in ETC are:

Decentralized exchanges: Decentralized exchanges replace the need for brokers and traditional exchanges by providing on-chain liquidity pools that represent autonomous market makers that can trade with users enabling all sorts of token exchanges.

Non-fungible tokens (NFTs): NFTs are smart contracts that can represent online and offline assets, functioning as full service property registries, that are censorship resistant and permissionless.

Ethereum Name Services (ENS): ENS services on ETC replace the traditional DNS services and enable domain names on the blockchain that may be assigned to addresses or smart contracts to avoid the long and complex format of accounts on the blockchain.

## A Warning of False Dapps

However, because smart contracts make blockchains such as ETC generalized computing platforms, this means that any kind of design may be hosted. And, this may even include centralized applications!

Examples of centralized applications may be:

Governance and voting tokens: Any applications that have governance or voting tokens are basically regular centralized entities, controlled by third parties, the voters, but where the back end code is hosted on a blockchain.

Stablecoins: Stablecoins look like decentralized applications, but the truth is that the custody of the external convertible assets, usually fiat currencies, always fully depend on off-chain trusted third parties.

Staking pools: Staking pools in proof of stake blockchains are not only centralized because those networks are centralized, but also because they have filtering mechanisms that select who can propose and validate blocks in those chains, and have governance systems that give their developer teams ample centralized decision making power over their systems.

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

## The Two Most Important Inventions: Proof of Work and Smart Contracts

Most people think that Bitcoin (BTC) is a brilliant invention, and it is, but the truth is that nearly every component of the system already existed before Bitcoin for a considerable time.

What was the brilliant discovery by Satoshi Nakamoto was that the proof of work (POW) cryptographic stamp not only could be used to create the analogy of gold on the internet, called “Bit Gold”, but that the information of the POW itself could be a focal point for all the nodes of the network globally to be on the same exact state of the database, all at the same time, in their complete isolation, without the need to consult with any other source or authority. This was the key to decentralization.

Smart contracts are the second most important invention of the blockchain industry.

Because of technical problems with its design, Bitcoin did not support smart contracts inside its highly secure POW environment. This is why Vitalik Buterin invented Ethereum Classic (ETC), which is the original Ethereum, to be a POW blockchain, with digital gold, and that it could be programmable.

## How Does Bitcoin Work?

In its essence Bitcoin is a very simple system. It is just a ledger that accepts new transactions to move BTC from account to account. Nothing more!

The main goal of the network was to create this fully replicated ledger that would be hosted in many computers around the world so that it could be as redundant as possible, thus as resilient as possible.

As we said before, the key was to use POW to get all the computers in the network to be insync in a decentralized manner.

Bitcoin’s Nakamoto Consensus rules consist of the network constantly receiving new transactions; then having those transactions retransmitted and copied in every node of the system; then having a subset of the machines, called miners, hash batches of those transactions with a cryptographic stamp, doing a lot of work, spending a lot of electricity; and then sending those blocks of data to the rest of the network for verification.

When the rest of the nodes of the system receive these stamped blocks, it is very easy for them to verify the cryptographic hash and to see that it is the correct block in each round, thus to be insync with the rest of the nodes in a decentralized way.

## Why Is Bitcoin Digital Gold?

Each time a new block is verified in Bitcoin, the network issues and credits in the account of the miner who built the block a newly minted amount of BTC.

Because Bitcoin uses POW to reach consensus, and this proof of work requires a lot of work and energy to produce, and because only after this work is done is that the BTC are printed to pay the miners is that it is considered “digital gold”.

The above is affirmed by the fact that the supply schedule of BTC is capped, meaning that only 21 million coins will exist in the history of the system.

This is because Bitcoin started paying 50 BTC per block to miners, but it is programmed to discount this by 50% every four years. This decreasing schedule of creation of coins, which is at the day of this writing paying 3.125 BTC per block, guarantees the limited supply of the money, thus making BTC similar to gold in the real world.

## Satoshi Nakamoto Actually Wanted Smart Contracts in Bitcoin!

We wrote before that smart contracts are one of the two most important inventions of the blockchain industry. Smart contracts are such an important concept that Satoshi Nakamoto even wanted smart contracts in Bitcoin!

Proof of this is that he wrote the following in 2010:

“The design supports a tremendous variety of possible transaction types that I designed years ago. Escrow transactions, bonded contracts, third party arbitration, multi-party signature, etc. If Bitcoin catches on in a big way, these are things we'll want to explore in the future, but they all had to be designed at the beginning to make sure they would be possible later.”

-- Satoshi Nakamoto

BitcoinTalk:

https://bitcointalk.org/index.php?topic=195.msg1611#msg1611

## How Does Ethereum Classic Work?

This brings us to Ethereum Classic!

As we mentioned in the first section of this post, Vitalik Buterin invented ETC and launched it in 2015 precisely because Satoshi, and many others for that matter, couldn’t add smart contracts to Bitcoin.

ETC is basically the same design as Bitcoin. It is a network of nodes that constantly receives new transactions; these transactions are grouped in batches and hashed by miners; then the blocks are sent to the rest of the network for verification; and the network pays the miners a reward per block.

However, the brilliant invention by Vitalik was to add smart contracts in ETC by adding a virtual machine to the system that is replicated on all nodes of the network; creating the gas system to pay for computational power to miners; adding a programming language to the system; and enabling the ledger to host these smart contracts inside the highly secure POW blockchain.

## Why Is ETC Programmable Digital Gold?

Not only does ETC use the same base POW design as Bitcoin, making it truly decentralized, but it also uses a very similar supply schedule as BTC.

In ETC, the payments to miners are also decreasing as time passes by. In 2015, Ethereum Classic started by paying miners 5 ETC per block as a reward for their work. After that, every 5 million blocks it reduces that payment to miners by 20%.

Because the block time of ETC is 13 seconds, this means that every two years the reward to miners is cut by 20%.

At the day of this writing, ETC is on block 19,857,092 and is paying 3.20 ETC per block to miners, but when it hits block number 20,000,000 it it will reduce that payment to 2.56 ETC per block.

This schedule eventually diminishes, putting a cap in the supply of ETC that will ever exist of 210,700,000.

So, if BTC is digital gold, then, because ETC shares the same base design as Bitcoin, but it is programmable, then ETC may be considered “programmable digital gold”.

## Bitcoin and ETC Should Be the Largest Blockchains in the World

As Ethereum Classic is the base design of Bitcoin but programmable, it can host what are called decentralized applications (dapps) to manage its scarce programmable digital gold resource, which is its currency, ETC.

This programmability not only makes it more versatile than Bitcoin, but it has positioned it as the largest POW smart contracts blockchain in the world.

As the largest POW smart contracts blockchain in the world, applications in ETC are the most secure apps in the world.

This is an extremely valuable positioning for ETC that proof of stake and proof of authority networks such as Ethereum and Ripple could never claim because they are centralized systems.

As Bitcoin is the largest blockchain in the world, and ETC is like it but programmable, which is the next most important invention after POW, then it stands to reason both BTC and ETC should be, together, the largest blockchains in the world.

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

## Bitcoin as a Payments System

As we noted in our previous post Bitcoin’s amazing invention was not really digital money, peer-to-peer networks, or even proof of work (POW). The real invention was to use the proof of work itself as a consensus mechanism to enable sound digital money in a truly decentralized peer-to-peer network.

POW consensus unlocked the door to synchronize computers on the same state of the data on a global scale with no need of central arbiter or administrator.

This was the crucial discovery that changed everything.

However, Bitcoin is a very basic system. It only moves coins from one account to the other. Nothing more!

Hence, it may be said that Bitcoin is really a payments system.

## Ethereum Classic as a Global Computer

The next generation of blockchain technology would be the same as Bitcoin but programmable.

This is how Ethereum Classic (ETC) was designed.

ETC has the same basic structure as Bitcoin but includes smart contracts. Smart contracts are enabled by a technology called Ethereum Virtual Machine (EVM), a Turing complete programming language called Solidity, and a transaction fee payment mechanism called the gas system.

Combined, these components on top of the basic structure of Bitcoin created a global computing system that may be used to program the money of the protocol.

Hence, ETC is a decentralized global computer rather than a payments system.

## The Limitations of ETC

However, ETC may not be considered a decentralized cloud service.

Traditional centralized cloud services put enormous amounts of computing power and storage capacity at the service of corporations and the public.

These infrastructures may easily handle and process big data, artificial intelligence, and machine learning applications. These technologies require ample computing capacity and data storage.

ETC, because all the information and execution of software programs must be fully replicated and handled in parallel in all the computers of the network so that it may remain decentralized, is very inefficient and, consequently, has a limited data storage and computing capacity.

## Social Scalability

Nevertheless, this computing and storage inefficiency is actually purposeful!

In ETC there is a deliberate tradeoff between computing scalability and what Nick Szabo, a blockchain pioneer, termed as social scalability.

Social scalability means that the system is permissionless and censorship resistant. It means that anyone in the world may use it, as long as they are following protocol rules, and they will not be limited in their access.

Traditional systems may scale computationally to handle large computational and data tasks, processing big volumes of transactions per day, but because they must be centralized to offer this efficiency, they will impose restrictions and barriers according to political correctness and ideological bias.

ETC does away with these barriers at the cost of computational and data scalability.

## Decentralized Applications

So, if ETC is a decentralized, thus secure, uncensorable, and permissionless global computer, but inefficient, what is it good for?

Well, it turns out that there are many use cases that are still valuable because of ETC’s security.

Some examples may be:

Decentralized exchanges: Decentralized exchanges are critical infrastructure in ETC as they provide a way of exchanging assets without the risks and restrictions of trusted third parties.

Stablecoins: Stablecoins have proven to be an enormous use case, especially in third world countries where people needed a way to get a hold of stable money to hedge their rapidly devaluing national currencies.

NFTs: NFTs are also critical infrastructure as they not only may be used to represent art that can be traded on the blockchain, but they may represent many other kinds of assets, even in the real world.

Property registries: Some of the assets that may be represented on the blockchain as NFTs are real estate and vehicles. These will be bought and sold on the blockchain and the property titles and loans against them will be executed seamlessly on the same action, shortening settlement times from days, weeks, or months to seconds.

## Web 3

Speaking of use cases, another kind of application of a decentralized programmable blockchain or global computer as ETC is to serve as the back end code for decentralized web applications.

The concept of decentralized web applications or the Web 3 stems from the understanding that the first websites were static, hence they were called Web 1. Then, social media websites revolutionized the world by enabling dynamic user generated content, and was called Web 2. And, the next generation will be a web with decentralized uncensorable applications, which is why it is called Web 3.

ETC, as a global computer, will serve as the core code of these applications, handling the security and the underlying value, and other decentralized networks will provide file storage, image management, scalability of transactions, and other features.

## The Layered Future of the Blockchain Industry

As all these different components evolve, the topology of the blockchain industry will more and more look like as a layered ecosystem where ETC will likely be a base layer secure technology that will handle backend code and large amounts of value.

Above this base layer, there will be proof of stake and scalability solutions that will enable larger volumes of smaller transactions. There will also be file storage and other solutions that will enable the full vision of the Web3.

Above this second layer, a third layer with decentralized applications will provide the end user services, such as decentralized exchanges, lending and deposits services, NFTs, stablecoins, and property registries, amongst many others.

And, finally, the fourth layer, or user facing layer, will be the wallet web and mobile apps that users will use to interact with all these systems.

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

This is an introduction to the Ethereum Classic course.

Ethereum Classic (ETC) is one of the most important and valuable blockchains in the world. Indeed, it is the largest proof of work smart contracts blockchain, and the most secure system to host and operate decentralized applications.

This course is meant to be a detailed explanation of each part of Ethereum Classic, but to accomplish this task it is necessary to learn the background of the blockchain industry, how everything works, what is in store for the future of the sector, and how Ethereum Classic fits in all this.

The Ethereum Classic Course is organized in fours sections:
1. History
2. How ETC Works
3. Industry Organization
4. What Is in Store for the Future

Below are the classes with the topics that we will touch in each section.

## Part 1: History
1. Public Key Cryptography
2. Cypherpunks
3. The First Digital Currency Attempts
4. Satoshi Nakamoto and Bitcoin
5. Vitalik Buterin and Ethereum
6. Ethereum Classic Is the Original Chain
7. Ethereum Classic Philosophy of Code Is Law
8. Programmable Digital Gold: The Ethereum Classic Monetary Policy

## Part 2: How ETC Works
9. The Units and Denominations of Ethereum Classic
10. How Proof of Work (PoW) Works
11. The PoW security model: The Physical vs the Social Layers
12. What Is Proof of Stake?
13. What Is Proof of Authority?
14. What Are Smart Contracts?
15. What Are Dapps?
16. What Is WETC?
17. What Are Private Keys, Public Keys, and Addresses?
18. The Difference Between Wallets and Addresses
19. What Are Raw Private Keys, Private Key JSON Files, and Secret Passphrases?
20. What are Custodial and Non-custodial Wallets?
21. What Are Hardware and Software Wallets?
22. What Are Hot and Cold Wallets?

## Part 3: Industry Organization
23. What Are Native Cryptocurrencies?
24. What Are Programmable Native Cryptocurrencies?
25. What Are ERC-20 Tokens?
26. What Are Convertible Stablecoins?
27. What Are Algorithmic Stablecoins?
28. What Are Privacy Coins?
29. What Are Decentralized Finance (DeFi) Coins?
30. What Are File Storage Coins?
31. Where to Find Cryptocurrency Lists and Prices
32. What Are Block Explorers?
33. What Are Centralized and Decentralized Exchanges?

## Part 4: What Is in Store for the Future
34. The Layers of the Blockchain Industry
35. Non-Fungible Tokens
36. Ownership Records and Property Registries on Blockchains
37. DAOs
38. Contracts Between Individuals and Businesses on the Blockchain

As seen in this introduction, the Ethereum Classic course promises to be a thorough educational experience about ETC and the industry in general. It is divided into several sections with small units so they are easier to process and comprehend.

The course will be delivered as one class per week in 5 to 15 minute videos and accompanying text posts so it is more versatile and flexible for people to learn in their preferred formats and timing.

The videos will be posted in a playlist on the Ethereum Classic Updates YouTube channel and the blog posts will be listed in one page on the Ethereum Classic community website.

Thank you for reading this post!

To learn more about Ethereum Classic please go to: https://ethereumclassic.org/

You can listen to or watch this video here:

## Satoshi Nakamoto

Satoshi Nakamoto had such knowledge and focus on the same principles as Cypherpunks that it is very likely he was one.

It is important to note that the fact that he used a pseudonym was very common among Cypherpunks. Ever since they had started working on cryptography and building systems for privacy, non-government money, and self sovereignty in the 1980s they had been frequently investigated, restricted, and surveilled by authorities.

In October of 2008, Satoshi released the Bitcoin white paper and in January of 2009 he launched the Bitcoin network.

## Bitcoin

The structure and service that Bitcoin provides is very simple. It is a ledger with accounts and balances and users may send new transactions to move money from one account to another.

That’s it. Nothing more!

However, this simplicity must not undermine the enormous feat it was. Only comparable to the invention of the internet or the printing press.

In the next sections we will explain how it works, what it accomplished, and what are the implications for Ethereum Classic.

## Full Transmission and Full Replication

Although not an innovation of Bitcoin, one of the main principles of the system is that all data must be fully transmitted and fully replicated in all the nodes of the network.

Full transmission and full replication provide the most assurance of uptime and redundancy.

The way it works is that each time a transaction is sent, it is re-transmitted by all nodes to all other nodes participating in the network so they can keep a replicated copy. This includes miners, who then proceed to build and stamp batches of data with these transactions.

## Proof of Work

The batches of data in the database of Bitcoin are called blocks and they are also fully transmitted and replicated:

When miners receive the transactions, they package them into blocks every ten minutes and then stamp them with a cryptographic function called a hash.

These hashes or stamps require enormous amounts of work and consumption of electricity for computers to generate them. This is why the process is called “mining”.

Once the miners hash the blocks of transactions, then they send them back to the rest of the network for verification and full transmission and replication.

Once verified, the blocks are included as the next batch of transactions by all nodes in their local databases, forming a chain of blocks, hence the term blockchain.

## Fixed Monetary Policy

The way Bitcoin is issued and distributed is by paying miners a reward for doing all the required work while spending enormous amounts of electricity.

When a block is verified, a preset amount of Bitcoin is created and credited to the account of the miner.

The rewards schedule per block every ten minutes determines the supply of Bitcoin, and it was preset in periods of four years, where the payment per block has been decreasing by 50% in each period.

So, from 2009 to 2012, the payment was 50 bitcoins per block every ten minutes, four years later it was 25, then 12.50, 6.25, 3.125…and so on.

This schedule guarantees that there will only be 21,000,000 bitcoins created by the year 2140 and no more will ever exist.

## Security Model

Proof of work provided an unprecedented level of security never seen before in computer science because of these four characteristics:

1. The cost of creating blocks is equal to the cost of creating the currency: As seen above, the rewards are paid to miners only if they do the work required to hash blocks, therefore the cost of creating blocks is the same as creating the money.

2. Enables consensus between all computers: Because the only block that will be accepted as the next block by all machines in the network will be the one that has all the work done, then it is very easy for all nodes to decide on the same exact block every 10 minutes. Any block sent by imposters that did not do the work will always be eliminated.

3. Focal point for entry, exit, and reentry: The same information, the great amount of work done by miners, that assures perfect consensus every ten minutes between all machines in the system, is the one that may be used by any new entrant into the system, or any machine that leaves and then wants to enter again, to know which is the correct chain of blocks just by verifying that the work was done. Any imposter chains that did not do the work will always be eliminated.

4. Protection of all the history of transactions: For any transaction that has been sent and included in a block in Bitcoin to be reversed or deleted the same amount of work that was done for its inclusion must be done again. This prevents any attacker from reversing past transactions, and the older a transaction is the more difficult it is reverse or delete.

## Nakamoto Consensus

The system invented by Satoshi Nakamoto is called Nakamoto Consensus and includes all the components described above:
1. Full transmission
2. Full replication
3. Proof of work
4. Block production
5. Fixed supply

And, all these combined assure the immutability and security of the blockchain.

## What Does it Accomplish?

As said before, Nakamoto Consensus accomplishes a level of safety and security of the system never reached before while keeping it decentralized.

This makes it trust minimized, meaning that users may interact directly between themselves in a peer-to-peer way, sending and receiving money, without the need of trusted third parties, who may be captured by special interests, restricting freedom and human action.

Just like the internet, Bitcoin is designed to survive a nuclear war. On top of that, it assures hard money for the internet.

## Implications for Ethereum Classic

Ethereum Classic uses the same consensus mechanism as Bitcoin. However, ETC adds to the base technology of Bitcoin the ability to store and execute smart contracts or decentralized programs. This turns applications in ETC into decentralized applications which execute their code inside the highly secure environment of the blockchain.

So, ETC has the same two base pillars as Bitcoin; a fixed supply and the proof of work based consensus mechanism; but to that it added smart contracts. This makes ETC’s principle of Code Is Law a true statement. Therefore, ETC gives money and applications the benefits of soundness, survivability, censorship resistance, and unstoppability making them uncompromisable and uncapturable.

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

## History: How Ethereum Split From Ethereum Classic

As we explained in the previous class, Ethereum (ETH) used the base technology of Bitcoin, a distributed ledger updated through proof of work based Nakamoto Consensus, but added programmability to the network.

It may sound counterintuitive because the industry has been misinformed for a long time, but Ethereum Classic (ETC) is actually the original and real Ethereum network founded by Vitalik Buterin.

This is true because the network we know as ETH today resulted from a chain split that occurred on July 20 of 2016. The cause was a hard fork introduced to the Ethereum network that created an irregular network state allowing the reversal of transactions that had exploited a programming error in the smart contract called "TheDAO".

What happened is that the community at the time decided to confiscate the money from the hacker to return it to the original owners. The intervention occurred on block 1,920,000.

Approximately 95% of the Ethereum community went with the proposed irregular network change, but 5% continued with the unaltered Ethereum network, becoming known as Ethereum Classic.

By executing the fork and the confiscation of funds, Ethereum broke its original immutability ethos. This is when Ethereum Classic decided to follow a "Code Is Law" ethos by continuing with the original untampered Ethereum chain.

ETC is the same uninterrupted history of transactions to this day, and will continue forever.

Additionally, consistent with their “Social Consensus” philosophy, Ethereum moved to proof of stake, which is an inferior consensus design, in September of 2022 and has no fixed monetary policy.

Ethereum Classic will stay with proof of work based Nakamoto Consensus, the most secure consensus mechanism known in computer science, and a fixed monetary policy to guarantee the soundness of its cryptocurrency.

Consequently, as we will see in this class, Ethereum Classic is the philosophy of Bitcoin with the technology of Ethereum.

## Illustration of the Ethereum Split From Ethereum Classic

Ethereum Classic and Ethereum were one blockchain when it was founded in 2015. Then, Ethereum split from Ethereum Classic on July 20th of 2016, on block 1,920,000, as they implemented the reversal of funds through an irregular state change.

Today, ETC is the original chain with an uninterrupted history of transactions, running the proof of work consensus mechanism, with a fixed monetary policy, and a Code Is Law philosophy. ETH has a Social Consensus philosophy, no monetary policy, its history has been changed and may be changed at any time, and runs the proof of stake consensus mechanism.

## Ethereum Classic’s Design

As said above, Ethereum Classic uses the same base technology as Bitcoin but added programmability.

The Ethereum Classic ledger stores accounts and balances as does the Bitcoin ledger, but it adds software programs known as smart contracts that become decentralized when sent to the network.

To accomplish this Ethereum Classic has 6 major components:
1. The Ethereum Virtual Machine (EVM)
2. A programming language
3. State transition
4. The gas system
5. The ETChash mining algorithm
6. A fixed monetary policy

## 1. The Ethereum Virtual Machine (EVM)

The EVM is a software component that behaves like a computing machine. As part of the node software, it is replicated in all machines in the network, therefore it’s a decentralized virtual machine.

The way it works is that it has over 120 computing operation codes, or opcodes for short, that together provide near full computability.

Because node software clients may be installed in many kinds of computers with diverse operating systems, the EVM enables nodes to operate in their local environments with their local machines, and at the same time interact with the global network of blockchain nodes with a single and compatible computing standard.

This assures a unified way of operating the network and executing smart contracts inside the secure environment of Ethereum Classic.

## 2. A Programming Language

For software programs to be sent to, stored in, and executed by the network and its EVM, there have to be programming languages that are compatible and adapted for a blockchain environment.

Solidity is one of the programming languages that was created for writing programs for the Ethereum Virtual Machine. It remains to this day the most popular language used for building dapps (decentralized applications) on Ethereum and Ethereum Classic.

It is syntactically similar to JavaScript which is widely used by many developers around the world but has been adapted so it may work in a decentralized peer-to-peer setting.

## 3. State Transition

State transition is a computing model that Ethereum Classic uses so that the EVM may take inputs, execute programs, and produce new state outputs. This is done on a per block basis.

Bitcoin, in contrast, does not have state transition as account balances are calculated by netting out all the history of transactions that point to each account.

State transition in Ethereum Classic mimics the computing model of normal computers and enables all the participating nodes in the network to behave as a single machine, or global computer.

## 4. The Gas System

Basically, the 120 plus opcodes that work with the EVM have a specific cost in a unit called gas to be executed. When users send their transactions, they need to pay for the corresponding gas for miners to execute them.

This payment serves as compensation to miners and imposes a cost per transaction, which reduces spam significantly.

The gas system also imposes a limit of computation cycles that the ETC miners must use to resolve specific executions. If this limit is reached without results, then miners must stop and return the money to users. This solves what is called the halting problem, which is when machines get stuck when trying to resolve a computation.

## 5. The ETChash Mining Algorithm

One of the unique features of Ethereum Classic is the ETChash mining algorithm.

As Ethereum was using the ETHash algorithm, Ethereum Classic had to differentiate its mining format to defend itself from 51% attacks that came from the Ethereum computing base. This led to the creation of ETChash.

ETChash is a modification of ETHash wherein one component, a large file called the DAG that must be used during the mining process, was reduced in size and slowed in size growth. This permits miners using GPU cards with a lower amount of memory, such as 3GB, 4GB, or 6GB of VRAM, to mine and stay mining on Ethereum Classic for a longer period of time.

## 6. A Fixed Monetary Policy

The monetary policy of ETC is similar to that of Bitcoin:
- The cryptocurrency is issued only to pay for miners work, making it sound money.
- It has a supply cap of 210,700,000 coins.
- It has a decreasing schedule of miner rewards where they are discounted by 20% every 28 months.
- It is part of the protocol, therefore the monetary policy is fixed.
- The cryptocurrency unit is highly divisible by 10^18.

## Next Classes: Ethereum Classic Features in More Detail

In this class we have explained that Ethereum Classic is the original chain and gave an overview of some of its components.

In the next three classes we will see in more detail the following features:
- ETC’s Philosophy of Code Is Law
- ETC’s Monetary Policy
- The Units and Denominations of the ETC Cryptocurrency

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

As we explained in our previous class, Ethereum Classic (ETC) decided to follow a Code Is Law ethos by continuing with the original untampered chain when Ethereum (ETH) split from the mainnet due to TheDAO hack.

ETH decided to tamper with the history of transactions to reverse the chain, but ETC is the same uninterrupted history of transactions to this day, and will continue forever.

In this class we will explain the meaning of the principle of Code Is Law, how it works, how it is applied in real life, and we show the foundational documents of ETC where this philosophy was originally laid out.

## The Meaning of Code Is Law

To understand Code Is Law it is important to remember that the first and overarching goal of blockchains is to reduce the dependency on trusted third parties with regards to the soundness of the currency, payments and savings with the currency, and for conducting economic transactions between individuals.

This level of safety was achieved inside the highly secure environment of blockchains such as Bitcoin and Ethereum Classic.

In this context, Code Is Law means that, once applications and transactions are entered into this secure blockchain environment, they become immutable and final.

Immutable and final means that they can never be changed again.

These guarantees enable human action on a global scale without any restrictions or barriers and assure a level of fairness and basic rights never achieved before.

The key to maintaining this secure environment is to keep it as neutral as possible. The only way to maximize neutrality is to make it as rigid and strict as the laws of physics, hence the term Code Is Law. It is an analogy to physics.

This last concept is important because Code Is Law does not mean “the law of the jungle”. Humans will always have disputes and problems to solve, but Code Is Law relegates these issues to be resolved outside of the secure internal environment of the blockchain.

So, Code Is Law means safety, immutability, and finality of the blockchain. Any conflicts or disagreements must be resolved between the parties through the traditional legal systems.

## How It Works

Code Is Law is a real feature of Ethereum Classic and not an inspirational statement. This is because decentralized applications, or dapps, and transactions in ETC are protected physically by the design of the network.

The three pillars of the design that provide this protection are smart contracts, a fixed supply, and proof of work.

Smart contracts are decentralized software agents that replace trusted third parties in the real world but inside the blockchain; fixed supply puts a long term algorithmic cap in the stock of ETC that will ever exist, so, as Bitcoin, it can guarantee the long term value of its currency; proof of work is the mechanism that secures the system by imposing a prohibitively large cost in computational work and energy to tamper with it.

These three pillars combined guarantee that the network is truly decentralized and immutable, and these characteristics make possible and true the principle of Code Is Law.

Code Is Law: all decentralized applications in the system will run as designed with no possibility of tampering and transactions will be posted and never reversed. It guarantees the benefits of long-term survivability, censorship resistance, and unstoppability of Ethereum Classic making it uncompromisable and uncapturable.

## How Code Is Law Is Applied in Real Life

There are only two inventions in the blockchain industry:

The proof of work based consensus mechanism, also known as Nakamoto Consensus, which provides the security of the system, and is the most secure method known to man able to achieve true decentralization in a peer-to-peer computing network.
Smart contracts, which provide programmability to blockchains, thus enabling the creation of autonomous agents that may replace trusted third parties, significantly reducing their costs and agency risks.

Ethereum Classic is the largest blockchain in the world that has these two inventions integrated in the same system. Therefore, decentralized applications are truly unstoppable in ETC. This is its real life value proposition.

## The Ethereum Classic Foundational Documents

The Code Is Law principle of Ethereum Classic was declared and stated since Ethereum split from it in 2016. This was expressed in various documents at the time and one other writing after.

To learn more about ETC’s principles it is worth reading them, so we list them here:

“Declaration of Independence“ - 2016

“Let it be known to the entire world that on July 20th, 2016, at block 1,920,000, we as a community of sovereign individuals stood united by a common vision to continue the original Ethereum blockchain that is truly free from censorship, fraud or third party interference. In realizing, that the blockchain represents absolute truth, we stand by it, supporting its immutability and its future. We do not make this declaration lightly, or without forethought to the consequences of our actions.”

Link: https://ethereumclassic.org/ETCDeclarationof_Independence.pdf

“A Crypto-Decentralist Manifesto“ - 2016

“It’s important for anyone participating in blockchain-enabled cooperation to be on an equal footing with everyone else. It doesn’t matter if you wield huge economic power or only a tiny amount. It doesn’t matter whether you’re a saintly Mother Theresa or a vicious drug dealer. It doesn’t matter whether you’re a human or a refrigerator. It doesn’t matter what you believe in, what political theory you subscribe to, or whether you’re a moral or immoral person. A participant’s ethnicity, age, sex, profession, social standing, friends or affiliations, make or model, goals, purposes or intentions — none of this matters to the blockchain even a bit.”

Link: https://ethereumclassic.org/blog/2016-07-11-crypto-decentralist-manifesto

“Code Is Law and the Quest for Justice“ - 2016

“It’s this whole snake’s nest that could be avoided by refusing to be dragged into conflict resolution and quest for justice as related to smart contract execution. And it only requires sticking to principles of blockchain neutrality and immutability.

So, code is law on the blockchain. All executions are final, all transactions are immutable. For everything else, there is a time-tested way to adjudicate legal disputes and carry out the administration of justice. It’s called [the] legal system.”

Link: https://ethereumclassic.org/blog/2016-09-09-code-is-law

“Let’s Keep Ethereum Classic Classic“ - 2021

“Our response to this is that particularly in the case of ETC, pragmatism is downstream of principles. Since day 0 (block 1,920,000), ETC has sold itself on these principles and has attracted its sizable following primarily because of these principles. Many of the developers and contributors working on ETC are only here because of those goals, and have contributed based on this understanding.”

Link: https://www.ethereumclassicclassic.org/

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

When checking sources as CoinMarketCap, at the time of this writing, the supply of ETC was 139,080,468 coins and was growing at a rate of 2.56 coins per block.

However, as explained in previous classes, in the beginning Ethereum Classic and Ethereum were one blockchain and the monetary policy consisted of perpetually issuing 5 ETC/ETH per block to pay miners for their work.

When Ethereum split from Ethereum Classic on July 20th of 2016, the ETC ecosystem decided to follow a Code Is Law ethic which must include a more constrained monetary policy to guarantee the soundness of the currency.

This prompted the community to adopt a new but permanent monetary policy mimicking that of Bitcoin. The change was implemented on block 5,000,000 which occurred on December 11th of 2017.

In this class we will explain the monetary policy of Ethereum Classic by describing its components, which include the following:
1. The pre-mine
2. Eras
3. Block rewards
4. Uncle blocks
5. The fifthening
6. Inflation rate
7. Supply cap
8. Stock-to-flow ratio

We will refer to the cryptocurrency of the original unified chain as ETC/ETH, and as ETC or ETH when mentioning them separately after the Ethereum split.

## 1. The Pre-Mine

In early 2014, Vitalik Buterin and his founding team did a presale, also called “pre-mine”, of ETC/ETH to finance the initial development of Ethereum for approximately 18 months.

This resulted in the eventual issuance; on the genesis block, before any mining ever took place, hence “pre-mine”; of 60,009,990 ETC/ETH, which were allocated in July of 2015 to the initial supporters who invested in the pre-sale.

To this, the founding team allocated to themselves and the Ethereum Foundation another 12,000,000 ETC/ETH.

So, this brought the total pre-mine issuance of ETC/ETH to 72,009,990, and this forms part of the current supply of ETC and ETH in their respective networks.

## 2. Eras

As mentioned before, starting on block 5,000,000, ETC changed its monetary policy of unlimited supply to a capped supply model as Bitcoin’s.

The schedule followed was that every 5,000,000 blocks, or 28 months, ETC would discount by 20% the payment per block to miners. In this way, it would resemble Bitcoin’s schedule, which discounts the payment to miners by 50%, but every 48 months.

This means that in every era, miners would get paid 20% less as follows:
- Era 1, from block 1 to 5,000,000: 5 ETC
- Era 2, from block 5,000,001 to 10,000,000: 4 ETC
- Era 3, from block 10,000,001 to 15,000,000: 3.20 ETC
- Era 4, from block 15,000,001 to 20,000,000: 2.56 ETC (current era)...

...and so on until block rewards will diminish completely by approximately the year 2140.

## 3. Block Rewards

Block rewards are the method of issuing the money fairly and of compensating miners to secure the network by producing blocks.

It is described as “fair” because the coins are being issued and paid to people and entities who actually perform work for the network. Miners secure the network because their work imposes an enormous cost for any bad actors to tamper with the blockchain.

Additionally, the fact that the currency is issued only after performing significant work makes it sound money as it is unforgeably costly and scarce.

Block frequency and block rewards are the key components of the monetary policy because they determine the timing of the issuance, thus inflation rate and stock-to-flow ratio.

For example, as the ETC blocks are produced every 15 seconds on average, and the current block rewards are 2.56 ETC, then, in this era, the rate of currency issuance is 5,382,144 per year. This rate of inflation will be reduced by 20% every 28 months.

## 4. Uncle Blocks

As Ethereum Classic produces blocks every 15 seconds, instead of every ten minutes as Bitcoin, there are instances in which more than one valid block is produced by miners at any given time. However, only one block per round may be permitted, so to prevent any disincentive that miners may have for producing extra blocks in vain, there is a payment for these stale blocks, also called “uncle blocks”.

Since inception, uncle blocks are produced at the rate of more or less 5.4% of total blocks which equals approximately 270,000 uncle blocks per era.

Uncle blocks were paid 4.375 ETC/ETH in the first era, but that payment was lowered to 0.125 ETC when the monetary policy was changed, and will be discounted, together with the normal block rewards, by 20% every 5,000,000 blocks.

## 5. The Fifthening

The event of the fifthening is celebrated by the ETC community every 28 months or 5,000,000 blocks and it happens on the date when the block of the next era is mined.

For example, we are in the 4th era and the 5th era will start on block 20,000,001, which will happen sometime in August of 2024.

It is called the fifthening (fifth-ening) because the discount of 20% in each era is equivalent to one fifth of the block rewards and annual issuance.

The importance of the fifthening is that the annual supply rate is lowered, making ETC sounder money as time passes by. This soundness is reflected in both a lower annualized inflation rate and a higher stock-to-flow ratio.

## 6. Inflation Rate

What is called the inflation rate is the rate of production or issuance of new currency per year.

When Ethereum Classic and Ethereum were one chain, the annual rate of coin production was very high, more than 14%, because the base was small and issuance was still high.

However, as the ETC eras have been progressing, its inflation rate has been drastically reduced.

The production rate in this current era 4 is 3.91%, which is similar to the production rate of silver.

By the year 2032, in era 7, the issuance rate of ETC will be similar to gold’s.

And, by the year 2036, in era 9, it will be close or lower than the real estate annual production rate.

## 7. Supply Cap

Given the eras of ETC every 5,000,000 blocks, the block rewards and frequencies mentioned above, the discounts per era, the average uncle block rate of 270,000 per era, and the fact that it is divisible by 0.000000000000000001 (1e-18), then the ETC maximum supply in all of its history will be in a range of between 199,000,000 to 210,700,000 ETC.

The lower number of 199,000,000 reflects the current average production of uncle blocks of 5.4%, but in the unlikely scenario that uncle blocks are produced 100% of the time, then the maximum supply would be 210,700,000.

This is why it is generally stated that ETC has a supply cap of 210,700,000, but it is very likely that it will be lower than that.

## 8. ETC’s Stock to Flow Ratio

Stock-to-flow (S2F) ratio is a measure that is used to predict the value of commodities in the market. It is a concept very similar to inflation expressed as the current stock of a commodity divided by the new annual production or issuance.

For example, as there are 185,000 tonnes of gold in the world, and there are approximately 3,000 additional tonnes extracted every year, then the stock-to-flow ratio of gold is 61.67 (185,000 / 3,000 = 61.67) which corresponds to a 1.62% inflation rate. The higher the S2F ratio is, the more valuable the commodity should be.

As we have fairly accurate projections of the stock and issuance of ETC at all times, because its monetary policy is transparent and predictable, we can calculate what will be its stock-to-flow ratio in the future.

By 2025, the S2F ratio of ETC will be similar to that of silver at 24.91; by 2032, it will be similar to gold’s at 59.98; and, by 2036, it will be similar or higher than that of real estate at 100.40

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

## Nakamoto Consensus

The most important invention in the blockchain industry is the proof of work based consensus mechanism that Bitcoin and Ethereum Classic use.

It is called Nakamoto Consensus and is the only way in which tens of thousands of computers around the world may reach an agreement as to the latest state of the network in a truly decentralized fashion.

The way it accomplishes this is by having computing machines, also called miners, do enormous amounts of work, consuming enormous amounts of electricity, to build blocks of transaction data which are then include in the database.

The process consists of the network receiving new transactions; transmitting them to all participating nodes in the system; then the same identical database of transactions is replicated across all nodes; this replication is enabled by miners who use proof of work to seal batches of transactions with costly cryptographic stamps; producing costly transaction blocks with these stamps which then they send to the rest of the network; the network then verifies the blocks and miners get paid for doing this work in the cryptocurrency of the system which has a fixed supply to make it sound and valuable.

## What Is a Cryptographic Stamp?

A cryptographic stamp or hash is a process by which any arbitrary piece of data may be transformed, through a hashing function, into a fixed large number.

For example, the word “Hello” may be transformed into the number:

0b8a44ac991e2b263e8623cfbeefc1cffe8c1c0de57b3e2bf1673b4f35e660e8
9abd18afb7ac93cf215eba36dd1af67698d6c9ca3fdaaf734ffc4bd5a8e34627

No matter what is the input, large or small, the function will always generate a large number which will represent the data given.

It is very easy for any computer to verify the hash by performing the hashing function with the provided data.

## What Is a Chain of Blocks?

When a block of data is hashed, then the cryptographic stamp may be part of a chain of blocks of data by connecting the cryptographic stamps by hashing them sequentially.

For example, if we have the hash of block 1, then we can hash it and get the hash of block 2, then block 3, block 4, and son on indefinitely. This is how chains of related blocks of transactions are created in blockchains such as ETC, hence their name.

## How Proof of Work Works

The proof of work system in ETC consists of fours parts:

1. The block data to stamp
2. Hashing (creating the cryptographic stamp)
3. The target range (also known as difficulty)
4. The jackpot (hitting the target or difficulty range)

## 1. The Block Data to Stamp

The data to stamp in each block is very important because it includes three critical pieces of information and an independent random iterating number that is used to change the stamp in case the previous one didn’t work (see point 3. The Target Range, below).

The three critical pieces of information are the previous block hash to create a new link in the chain of blocks, a stamp of the current transactions to make sure that each one is included, and a time stamp of the moment the transactions for the block were gathered.

## 2. Hashing (Creating the Cryptographic Stamp)

Once the four pieces of data are put together by the miner machine, then it will create a cryptographic stamp or hash of that data using the hash function prescribed by the network algorithm.

After doing this, it will check if the hash was successful, if it was not (see point 3. The Target Range, below) then it will go back and change the random iterating number and try again.

## 3. The Target Range (Also known as Difficulty)

Each time the block data to stamp is hashed, a number will be generated, if this number does not hit a small target range determined by the network protocol, then it will fail and the miner must try again with a different random iterating number. This is done millions of times per second because the majority of stamps fail, and this is the “work” in proof of work which is so costly and consumes so much electricity.

However, if the cryptographic stamp hits the target range, then that hash was successful.

## 4. The Jackpot! (Hitting the Target or Difficulty Range)

When the miner hits the target range after millions or trillions of tries, then it is entitled to earn the reward for that block.

To earn the reward, the miner must immediately send the block to the rest of the network for verification. When the block is verified, meaning that all transactions, data, and hashes are correct, then the network will credit the reward payment into the miner’s account.

## Proof of Work Features

The revolutionary features of proof of work based Nakamoto Consensus are the following:

1. Enables consensus between all computers: Because the only block that will be accepted as the next block by all nodes in the network will be the one that has all the work done, then it is very easy for all nodes to decide on the same exact block every 15 seconds. Any alternative block sent by imposters that did not do the work will always be eliminated.

2. Focal point for entry, exit, and reentry: The same information, the great amount of work done by miners, that assures perfect consensus every 15 seconds between all machines of the system, is the same one that may be used by any new entrant into the system, or any machine that leaves and then wants to enter again, to know which is the correct chain of blocks just by verifying that the work was done. Any proposed impostor chains that did not do the work will always be eliminated.

3. Protection of all the history of transactions: For any transaction that has been sent and included in a block in ETC to be reversed or deleted the same amount of work that was done for its inclusion must be done again. This prevents any attacker from reversing past transactions, and the older a transaction is the more difficult it is to reverse or delete.

4. The cost of creating blocks is equal to the cost of creating the currency: As seen above, the rewards are paid to miners only if they do the work required to hash or stamp blocks, therefore the cost of creating blocks is the same as creating the money. This makes the cryptocurrency sound and attractive.

## Proof of Work Benefits

The features of proof of work based Nakamoto Consensus mentioned above combined produce the following benefits:

Decentralization: In their complete isolation, without consulting with anyone else, any node in the network anywhere in the world can know which is the latest block to add to the chain or which is the correct chain to join just by checking the proof of work. This enables an unprecedented level of decentralization in the system.

Permissionlessness: Because anyone in the world, without consulting anyone else, just by having an internet connection and checking the proof of work, may join and leave the chain whenever they want, then the system is completely permissionless. There are no filters, licenses, or permissions to fulfill.

Censorship resistance: As the system becomes decentralized and permissionless, then the capacity to censor the system is dissolved. There is no way of preventing participants to participate or transactions to be sent to the network.

Immutability: Because proof of work consensus requires so much work to build the blockchain, then it is practically impossible that past transactions, accounts, balances, or smart contracts may be changed arbitrarily by third parties.

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

## 1. The Complete Security Model of Ethereum Classic

In past classes we have explained how Satoshi Nakamoto invented the proof of work (PoW) based consensus mechanism, what are its revolutionary features and benefits of decentralization, and how the mechanism works in detail.

However, Nakamoto Consensus alone is not the complete security model of a blockchain as Ethereum Classic (ETC). Proof of work is the most important safety barrier of the live operating network, but the operators themselves, who constitute what we call the social layer, collectively represent the other critical layer.

In this class we will explain what are the physical and social layers, their security models in more detail, how they work combined, and what are the possible attack types in each layer.

## 2. The Physical Layer vs the Social Layer

The physical layer, which is the live operating network, is the most well known and consists of the protocol rules, the software clients that people must run in their machines to participate, cryptography, and the energy PoW uses that protects the blockchain.

The social layer consists of all the node operators (e.g. exchanges, wallets, dapps, startups, Node as a Service (NaaS) providers, block explorers, and independent participants), mining pools, and independent miners. It also includes the developers who conduct research and development to advance the protocol and fix bugs when necessary. All these constituents, plus users and investors who own the native cryptocurrency, decide whether to adopt changes through an improvement proposal process and by running the protocol through software clients.

Although the physical layer may be highly secure and indestructible, the truth is that if all the constituents in the network at the social layer were to agree on bad changes or corrupt practices, they could, technically, implement them.

However, this is extremely difficult because blockchain communities are usually very conservative and principled ecosystems where there is usually ample activism that analyzes and filters proposals and potential changes. This is why the combined systems of the social and physical layers are the complete story of how Ethereum Classic is protected.

But, how do the security models in each layer work? And, how do they work combined?

## 3. Physical Layer: Proof of Work Security

As we mentioned before, proof of work is the key security component of the physical layer, or live operating network.

In order for the system to work, there must be demand for ETC’s decentralized computing. When there is demand, people buy the cryptocurrency to use it and as an investment causing the price to rise. When the ETC price rises, mining becomes more profitable. When mining becomes more profitable, miners place more machines in service adding more hashing power to build blocks for the network. With more hashing power dedicated to the ETC network, it becomes more secure. When ETC is more secure, demand for its decentralized computing grows, which, in turn, makes the price go up further, thus continuing the virtuous circle.

## 4. Social Layer: Coordination Problem Security

On the social layer, the key security component is that all the constituents who participate in the network (i.e. exchanges, wallets, dapps, startups, Node as a Service (NaaS) providers, block explorers, independent participants, mining pools, and independent miners) reside in different parts of the world, in different cultures, with different languages and worldviews making it is extremely difficult to coordinate an attack on the network, or to censor or corrupt it.

The economic incentives to use the network are conducive to increased use as demand for decentralized computing grows. When demand for decentralized computing grows, more dapp developers build useful things on ETC. The more useful dapps that exist on the blockchain, the more users are attracted to it. As more users are attracted to ETC, then more node operators will participate. The more node operators participating from different parts of the world, the more difficult it becomes to coordinate attacks, making the blockchain even more secure. And when ETC is more secure, the demand for its decentralized computing grows, encouraging even more dapp developers to build on ETC, again continuing this virtuous circle.

## 5. The ETC Security Model Combined

The way these two security virtuous circles work combined; with proof of work as the key component at the live operating network, and the coordination problem as the key component at the social layer; is that both have incentives to increase price and participation, and as both sides grow, then demand for ETC computing services grows, which increases price and participation even more.

## 6. Social Layer Attacks and Defense Mechanisms

But what are the possible attacks at the social layer and what are the defense mechanisms?

Proposals for bad changes: These are fixes or upgrades that reduce decentralization. Usually these proposals need to go through the Ethereum Classic Improvement Proposal (ECIP) process. The way the global ecosystem defends ETC against this type of attack is by opposing and not approving such changes, or not adopting them if for some reason they are approved.

Censorship: When Ethereum migrated to proof of stake, it became more than 60% censored by the US Office of Foreign Assets Control (OFAC) nearly immediately because staking pools are centralized. The way ETC prevents this is by enabling an environment where miners may freely join and leave the network whenever they want, wherever they are in the world, taking advantage of the lowest electricity prices possible wherever they may be. This level of decentralization is only possible with the attributes of proof of work explained in previous classes and this is why the PoW mining business is practically impossible to capture.

External restrictions of use: As mining is decentralized and practically impossible to capture, then external restrictions such as know your customer (KYC) and anti-money laundering (AML) prohibitions are only effective upon users in their own jurisdictional geographies. So long as transactions or smart contracts are sent to ETC, from anywhere at any time, that comply with protocol rules, ETC will always process and execute them.

Backward compatibility: Sometimes there are upgrades that break past smart contracts. These must be stopped at the social layer and are stopped in the same way as proposals for bad changes.

Important: In the unlikely scenario that the worldwide social layer entirely agrees to integrate bad changes, censorship, external restrictions, or upgrades that break backward compatibility, then there would be permanent losses of security. The only recourse left by individual users would be to pursue restitution through normal traditional systems such as the legal process and law enforcement, but this would be very difficult to achieve because of the decentralized nature of the system.

## 7. Physical Layer Attacks and Defense Mechanisms

Because proof of work is such a powerful safety mechanism, the most plausible attacks may involve the most recent transactions rather than medium to long term past activity in the network.

51% attacks: These attacks consist of accumulating 50% or more of the computing power of the mining sector in ETC and then sending malicious blocks where very recent transactions are deleted, thus stealing money from the victims. The best defense against this kind of attack is by increasing the computing power dedicated to the network, but this is difficult to do in the short term. The other way is to wait for more confirmations than usual to make sure that, when ETC are received, it is highly unlikely that the transactions involved will be reversed.

Disruption of dapps and contracts: Another effect of 51% attacks, which can only delete recent transactions, is that sequences of transactions and economic activity between smart contracts may be disrupted. For example, if ETC are received, then transformed into WETC to trade in a decentralized exchange, then sold for another ERC-20 token, and that ERC-20 is then used to make a payment for something, all this sequence could be disrupted if the first transaction were deleted in a future block in the next few minutes or hours.

The defense mechanism against these disruptions is the same as with the more plain and simple 51% attacks mentioned above.

Important: If attackers were able to build a computing power larger than 50% of the mining computing base of ETC, then they could disrupt the chain with 51% attacks, disrupt dapps, and this would constitute a permanent loss for those particular transactions. The only recourse left by individual users would be to pursue restitution through normal traditional systems such as the legal process and law enforcement. This would be easier to achieve because 51% attacks involve individual attackers and their victims only and not the system as a whole.

ETC has, indeed, suffered 51% attacks in the past, but these are much less likely now that it is the largest PoW smart contracts blockchain in the world and its hashing power has increased five times since Ethereum migrated to proof of stake.

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

## Proof of Stake Purpose

As we explained in class 5 of this course about Ethereum, proof of stake (PoS) eliminates the need for proof of work (PoW), which uses enormous amounts of computing power and electricity, and replaces it with user deposits in special accounts inside the ledger.

These deposits are called stakes and give their stakers the right to produce blocks, vote on them, and then include them in the blockchain. For this role, they get paid a reward per block.

The stated benefits of proof of stake are that it uses less electricity and it is more scalable. However, these saving in energy and scalability are accomplished at the expense of safety, as proof of stake is very similar to traditional systems as it does not have the decentralization guarantees that proof of work based Nakamoto Consensus has.

## Staking

Initially, the idea was that stakers were going to run a validator node, deposit capital in an account that would remain locked for several months, and produce and validate blocks for the network.

However, by the time Ethereum migrated to the proof of stake consensus mechanism in September 15th of 2022, the dominant model was to use staking pools to participate in the system.

This means now that the functions in staking have been deconstructed into three roles: staking (stakers deposit money), validating (network node operators run the validator software clients), and pooling (organizations that organize large pools of capital and hire validators).

Stakers in Ethereum now only make deposits in staking pools and don’t worry about the rest. In exchange, they receive a proxy token that represents the coins they staked so they can sell them in the market, recovering their capital whenever they want. For doing this, they receive rewards that derive from the block production process.

## Validators

In this deconstructed format described above, validators are the participants who run nodes in the network that produce and validate blocks.

Depending on the arrangement with the staking pools for which they work, these node operators bear the risk of the various penalties that the PoS system imposes for being offline, sending invalid blocks, or affirming wrong blocks.

Because of this, the validating node business has become a very specialized activity as sophisticated operations are needed to maintain very reliable data centers, with high uptimes, and ample redundancy to make sure their task is done as reliably and correctly as possible.

## Staking Pools

Staking pools serve the role of aggregating capital from regular users and running themselves or hiring validating node operators to deploy that capital to earn rewards.

Staking pools have evolved into two main models for now:
1. Exchange Sponsored Pools: These staking pools are managed by well known exchanges such as Coinbase or Binance. They offer their customers the possibility of staking their coins, and then they turn around and use this capital to run their own nodes in their own data centers to produce and validate blocks in the networks they target. These pools give their staking customers proxy tokens such as cbETH (Coinbase Wrapped Staked ETH) and BETH (Binance staked ETH).
2. Liquid Staking Derivatives (LSD) pools: Pools such as Lido and RocketPool are considered “liquid staking derivatives” pools because they invented the method of exchanging staked coins for proxy tokens. The way they work is that they deploy a smart contract in the blockchain and let anyone deposit coins to use as staking capital. Then, they hire node operators to deploy this capital and validate and produce blocks.

## Block Production Process

It is important to note, that even if the market has evolved into the staking pool model mainly, technically, however risky and unprofitable, it is entirely possible for end users to set up their own validating nodes, deposit their own capital, and produce and validate blocks directly.

Regardless of the model followed, the block production process works as a voting mechanism:
1. Of the validator set, one is chosen to produce the next block.
2. When the block is produced, it is sent to a committee of validators formed for that block.
3. The committee must vote with a supermajority of 2/3rds to validate the block.
4. Once the block is validated, then it is sent to the rest of the network for inclusion as the last state of the network.

## Centralization Risks

The main centralization risks of the proof of stake model revolve around the economies of scale of the system and how easy it is to capture the various staking operations.

Staking pools and node operators/validators are static and easy to find: Staking requires static accounts on the network, therefore it is easy to track and find validators and pools.

Staking pools take deposits that are securities: The Securities and Exchange Commission in the United States has decided that staking deposits in exchanges are securities, therefore completely subject to government regulation.

Staking pools and node operators are inside the ledger: In contrast to PoW mining, which is external, staking is an activity that happens inside the ledger of the blockchain. This means that if pools and validators get censored and captured, there is no way of separating from them as they would tag along even if the network splits.

Staking pools will all be regulated financial institutions: As seen with the growth and market share of centralized exchanges in the staking pool business, and now that the SEC has defined such business as a security, we can now more clearly observe that financial institutions are going to be the main stakers, node operators, and pool operators in Ethereum and other proof of stake networks.

Staking pools suffer unrestricted economies of scale: Just as the banking system, the staking industry will be dominated by 3 or 4 cartelized entities. This is because capital inside the network may flow with no local or real world restrictions.

Staking pools and validators must be online all the time: The fact that the design of proof of stake has many restrictions that proof of work does not, such as locked deposits, liveness penalties, and slashing, makes it very difficult to exit the system to relocate or hide in case of legal changes or geopolitical problems.

In proof of stake, there is no alternative to centralized and captured pools: Once the staking pool industry is centralized, there is no recourse by users to enter transactions that could eventually be processed by some staker outside of the dominating cartels. For the reasons stated above, the pooling cartel in proof of stake will necessarily have nearly 100% control of the system.

Proof of stake does not have the decentralization guarantees that proof of work has: Proof of work guarantees that miners and mining pools may change all the time, migrate from place to place, and exit and enter the network whenever they please because it has the two guarantees that proof of stake does not have: It enables consensus without having to check with anyone in the world except by just verifying the proof of work in the latest block, and it enables free entry and exit without having to check with anyone in the world except by just checking the most work done on the network.

## Benefits

The main benefit promoted by proof of stake advocates is that it saves 99% of the electricity that proof of work uses and thus helps the planet. It is true that it saves energy, but it is doubtful that large proof of work blockchains as Bitcoin and Ethereum Classic cause any harm to the environment. In fact, proof of work mining is actually performed using renewable energy in its majority, promoting and accelerating the migration to that electricity generation model.

The other benefit touted is that PoS is better for implementing new scaling solutions compared to the proof of work architecture. This is true, but in the end, both in PoS and PoW the great majority of high volume, low value transactions will be executed in layer 2 systems and above, so this benefit hardly has any marginal value over PoW.

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

In the previous class, 25, we explained the fundamental benefits of proof of work (POW) and how, applied to Ethereum Classic (ETC), it produces the key innovation of this blockchain when it was invented: Unstoppability of applications.

In this class, 26, we will explain a related topic to “unstoppability” which is the difference in philosophies between a network such as ETC and another such as Ethereum (ETH).

ETH has a philosophy called “Social Consensus” which made it lose a great part of its security, thus making it largely a centralized system.

ETC’s philosophy is called “Code Is Law” which keeps it inline with the ethos of decentralization, immutability, and censorship resistance.

Following we will explain the differences between “Social Consensus” and “Code Is Law”.

## Ethereum Reframed the “Decentralization” Narrative

Because POS is centralized, the Ethereum “community” began reframing the “decentralization” narrative and using the term “Social Consensus”.

In their view decentralization was just a phase in the history of Ethereum to gain trust from the public. After this phase, their vision is that they will rely on something they invented called “credible neutrality”.

This means that the world should believe in the neutrality of the Ethereum community of developers, the staking elites, and the Ethereum Foundation for the management of the system.

In a way, they are implicitly saying something like “let’s keep acting as if Ethereum is decentralized so people keep believing it is secure”.

As evidence of these machinations, in this section we show a conversation Ethereum founder, Vitalik Buterin, had with Ethereum developers in July of 2023.

## Social Consensus in a Nutshell

Social Consensus means that “the community” decides when things are wrong, according to their worldviews, so they can change things by social consensus.

This is, by irregular state changes, changing account balances manually, deleting dapps, censoring “bad actors”, and things like that.

Basically, social consensus brings back in full force the trusted third parties that blockchains were supposed to minimize.

The philosophy by Cypherpunks was that wherever trust was deposited, that trust was going to be abused. It is just human nature.

Social consensus is a sort of gas light argument that says that now wherever trust is deposited, it will not be abused for some magical reason.

## Code Is Law Is True Decentralization

POW is “Code Is Law” which is exactly the opposite.

Where Social Consensus believes "people are good", Code Is Law believes "trusted third parties are precisely the problem we are trying to solve!"

Code Is Law is a set of principles that are at the top of blockchain design. Everything flows down from the philosophy, or is downstream from the principles.

This kind of mindset only produces rules at the protocol layer that seek to minimize the influence of people or communities as much as possible.

Code Is Law relies primarily on objective physical forces to protect the system.

The decentralization enabled by proof of work, which is designed into the system precisely because of the philosophy of Code Is Law, makes the network trust minimized, thus secure, thus immutable.

## Comparison Table

In this section we show a table we described in a post we published in January of 2023 where we laid out the differences between Social Consensus and Code Is Law. Below we briefly explain each line in the table.

Security of Last Resort: In Social Consensus the belief is that people are the ones who have to deal with security and solve any problems that may arise on the blockchain. In Code Is Law the ultimate resolution is proof of work. Deciding each block in each round is determined by the work done, not by subjective community decisions. If there are conflicts or hacks to smart contracts, those must be resolved off-chain by the parties, but the chain remains immutable.

Chain Selection: When new entrants wish to join the network, or when nodes leave and need to connect again, Social Consensus doesn’t have an objective decentralized way to inform them. They need to check with public websites, a friend, or other trusted parties. In Code Is Law, the accumulated proof of work, or “most work done” rule, always determines which is the chain to follow.

Consensus: In a Social Consensus system, the way of deciding each block in each round is by a human process that involves a 2/3rds vote from staking validators because networks that don’t use proof of work may be attacked by only 1/3 of dishonest participants. In Code Is Law, consensus is reached with a purely physical and objective process. No voting takes place nor human agency.

Design Focus: The design focus of the safety of Social Consensus systems depends on what they termed “crypto economics” which is basically human financial incentives of the staking elites. In Code Is Law blockchains the design focus to make the system safe is the brute force and sheer energy used to build the POW stamps per block.

Incentives: In Social Consensus, the incentives to keep the system secure revolve around rewards to follow the rules and penalties for sending blocks outside of the protocol. This method, coupled with the purely human based and subjective consensus design, is prone to conflict and instability. In Code Is Law, there are only rewards, and all are incentivized to run and win a race of efficiency and computing power.

Fork Policy: In Social Consensus systems, because they are prone to centralization and governed by staking and other elites, voluntary forks are motivated not only by desired upgrades and bug fixes, but also by political goals such as punishments, confiscation, reversals, and social justice issues. In Code Is Law, anything that is not desired upgrades or fixing bugs will usually be thoroughly rejected.

Definition of Finality: In Social Consensus, finality is defined by a vote of the staking elites. However, this is extremely weak as the chain has no work done, so these participants may trivially make changes and reverse the chain whenever they wish. In Code Is Law, the blockchain is immutable because it is extremely difficult to reverse the chain as to do so would require to do the work all over again.

Purpose Externality: In terms of externalities, the philosophy of Social Consensus seeks to conform to political ideologies such as climate change. This was the main driver to create proof of stake as a blockchain consensus mechanism in Ethereum. In Code Is Law, all the design focus and principles are geared toward human flourishing.

Objective: Social Consensus seeks for the system to be as scalable as possible regardless of risk and centralization. Any problems that may arise may be solved by decisions at the social layer. In Code Is Law, the objective is to provide social scalability so anyone may use the system freely without risks of censorship or the need of permission by central administrators.

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

In the previous class, 26, we explained the difference in philosophies between a network such as ETC and another such as Ethereum (ETH).

We talked about that ETH has a philosophy called “Social Consensus” which made it lose a great part of its security, thus making it largely a centralized system, and that ETC’s philosophy is called “Code Is Law” which keeps it inline with the ethos of decentralization, immutability, and censorship resistance.

In this class, 27, we will dig deeper into what is the meaning of “security” in proof of work (POW) blockchains.

We will delve into what are the safety goals of POW networks and the external benefits that they bring to the world in the context of the techno tyranny that is coming.

## The Meaning of “Security”

In the context of the blockchain industry, the term “security” means to depend the least possible on trusted third parties when it comes to money and applications to manage that money.

To reduce the dependency on trusted third parties through decentralization increases censorship resistance and immutability.

The questions then are, why should we not trust third parties? And, what are the benefits of censorship resistance and immutability?

## People Are Not Aware of the True Meaning of “Security”

A large part of the market for these technologies comes from advanced free nations, who tend to forget their revolutionary origins, and former lack of freedoms, so people have been attracted just for the speculative side or perhaps for the technological innovation.

The United States, for example, which was forged through the revolutionary war against the tyranny of Britain, is the largest market for crypotassets, but the value placed in decentralization, censorship resistance, and immutability seems to be scarce.

A great number of American users use centralized exchanges such as Coinbase and Kraken as their wallets; if they use non-custodial wallets, they store their seed phrases in file storage services such as Google Drive or Dropbox; blockchain nodes are run on centralized cloud computing providers, such as AWS and Azure; and transactions for major networks are channeled through centralized infrastructure, such as Infura.

All this shows a major unawareness of what security means.

## Trust Minimization is Key to Our Future

So, to answer the two questions we posed above, POW blockchains were invented to avoid the abuse of government, woke corporations, elites, and special interests. This abuse is increasing even in advanced countries.

Their abuse is manifested in surveillance technology and laws that violate individual rights.

The individual rights violated may be privacy and private property, both critical to the flourishing of human action and life.

This is why censorship resistance and immutability through decentralization is key to our future.

Globalism and techno-tyranny are at our doorstep, and we must be prepared.

## The Techno Tyranny That Is Coming

But, how would globalism and techno-tyranny be manifested?

Soon, the threat of global government, digital passports, CBDCs, constant health emergencies, and climate hysteria (as seen by the attacks on POW) will tend to enslave us.

Once the elites know each of our transactions and gain the ability to control them, they will impose their worldviews on everyone on a global scale.

They will stop purchases of meat on the grounds of the government recommended food pyramid; stop purchases of gas for our vehicles on the grounds of climate change; and cancel donations to churches on the basis of national security.

The only escape to the calamitous globalist absolutism that is coming will be non-compliance, and non-compliance will only be possible through technologies such as POW blockchains as ETC.

Even in biblical terms, this was prophesied thousands of years ago, and it was called to avoid the mark of the beast to be saved.

## How Does POW Protect Basic Rights

We mentioned above privacy and property as examples of basic rights that will be violated by government, special interests, and elites.

But, as we wrote in class 8 of this course, the security features that POW blockchains as ETC promote protect many more basic rights, such as freedom of contract, free speech, freedom of assembly, freedom of religion, liberty, and, as a result of all these, life itself.

On a programmable blockchain such as Ethereum Classic many dapps may deter the techno-elites to mark us and control us.

For example a decentralized exchange will let us trade crypto assets permissionlessly, smart contracts will let us enter into agreements avoiding obstacles, and web3 dapps will let us communicate without censorship.

## There Will Only Be 3 or 4 Large POW Blockchains in the Future

Because of all of these things that we are expressing in this class, it is very important to discern what blockchains will be truly secure and protect our rights, and which ones will not.

Proof of stake and proof of authority blockchains such as Ethereum and Ripple are not secure and will not protect us from the techno-tyranny that is coming. They can be easily controlled by special interests and government because they are centralized.

As we wrote in class 13 of this course, there will only be 3 or 4 truly secure POW blockchains in the future. It is important to spot them as of now to go accumulating our savings and wealth, and for developers to build on them.

Among these, we will have Bitcoin very likely as the biggest one, and ETC as the second largest base layer POW blockchain in the world. Then, we may have Litecoin and Monero as part of the leading group.

Combined they will provide a technological refuge against the precursors of and the technologies that will try to enslave us.

Thank you for reading this article!

To learn more about ETC please go to: https://ethereumclassic.org

You can listen to or watch this video here:

In the previous class, 27, we explained what is the meaning of “security” in proof of work (POW) blockchains.

We delved into what are the safety goals of POW networks and the external benefits that they bring to the world in the context of the techno tyranny that is coming.

In this class, 28, we will talk about censorship resistance, why POW is censorship resistant, and proof of stake (POS) networks are not.

## POW Is Censorship Resistant

As we explained in the previous class, only POW blockchains will enable us to not comply with the techno-tyranny that is coming. This is because POW is censorship resistant, and all other systems are not.

POW enables computers around the world join and leave the network without having to check with third parties which is the correct block or blockchain. This is a very powerful feature because third parties are the source of arbitrary control and corruption.

In POW networks as Ethereum Classic (ETC) and Bitcoin (BTC) there is no need to ask permission to participate nor to send transactions. As long as transactions are correctly formed, they will be accepted by nodes and miners of the system.

If there is no third party controlling these systems, then there is no possibility of censorship.

## Economies of Scale In POS Produce Centralization

POS is censorable because it is prone to staker, validator, and staking pool centralization due to economies of scale.

Because staking has no geographic or technical friction as it is just a deposit in the global ledger, then economies of scale in that model are extremely efficient.

This makes staking through exchanges or staking through smart contracts equally centralized.

The smart contract based staking pools are centralized because they pool money anonymously on the network, but filter who can be validators through DAO voting, governance schemes, and other methods. We predict that soon they will start filtering stakers with KYC and AML restrictions as well.

## Governments Will Take Over Staking in POS

The smart contract pools are prone to backdoors, developer directed upgrades, and arbitrary rule changes.

This is because they have DAOs that are used to vote on new changes and upgrades to their systems, and because governments may pressure the pool developers, who may have majority control of these voting DAOs, to add arbitrary control mechanism to the systems.

Staking through exchanges is easily capturable by special interests and governments because the exchanges themselves are traditional regulated financial services, therefore they take staking deposits from their customers only after they do the KYC and AML checks, and they use their own validator nodes to produce blocks for the network.

With this setup, it’s only a decision of the exchange managers to censor the blocks they produce.

## POW Mining Has Diseconomies of Scale

In proof of work, mining is exactly the same as sending transactions or running a node in those networks in the sense that miners may connect or disconnect from the network whenever they wish, from anywhere in the world, without any possibility of censorship because the proof of work information is all they need to join and leave in a decentralized way.

Additionally, electricity generation and logistics is distributed around to the world, making economies of scale in that industry not efficient.

The Chinese Bitcoin mining industry is an example that POW is censorship resistant as the government prohibited crypto mining in 2021, but in early 2024 that country still had 15% of Bitcoin’s hashpower making it the second largest mining country behind the US.

## How Staking Pools Work

A description of the operation of the two types of staking pools will illustrate why they are centralized.

In centralized staking pools or exchange run staking pools, the exchanges are traditional financial services controlled by regulators. This means that making staking deposits is already not censorship resistant because many potential stakers are left out when they fail the KYC and AML filters.

As these pools run their own nodes, and they must comply with regulations, they have to censor transactions and smart contracts based on government restrictions such as those imposed by the Office of Foreign Assets Control (OFAC) in the United States.

As we explained before, “decentralized” staking pools do accept anonymous stakers on the blockchain for now, but they filter who may validate transactions to maximize uptime and minimize penalties.

As they can pick and choose who may validate, then they have the power to impose conditions to those validators, and those conditions may include what to censor and what not.

## How Mining Pools Work

In POW mining all these points of control are avoided.

This is because as transactions are received by the network, they are distributed to all nodes globally. Some of these nodes are miners who may be anywhere in the world there is cheap electricity to mine.

When the miners get the transactions they create batches of them and do the POW hashing to stamp the blocks.

When these blocks are sent to the rest of the network, each node in their complete isolation knows that it is the correct next block in the network just by checking the POW. This is what determines the decentralization in POW.

Pools, in POW networks as ETC and BTC, just aggregate smaller miners around the world and allow them to have a smoother cash flow by representing a larger share of the mining in the network than if they would be mining by themselves.

However, POW mining pools hardly do any KYC or AML checks on their users because they do not act as financial institutions as mining is a physical operation done externally to the network.

Additionally, POW mining pools would be deserted if they censored transactions as they would soon lose profitability as compared to other competing pools elsewhere.

Thank you for reading this article!

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