(Bloomberg) — Ethereum’s long-anticipated software upgrade has made the blockchain’s early offshoot an unexpected winner, pushing up the prices of the latter’s token in recent days.
Ethereum Classic, which was created after a 2016 software change known as a “hard fork” on Ethereum’s blockchain, saw its token’s price jump by as much as 29% on Wednesday. Ethereum also rose by as much as 18% as the crypto industry awaits the blockchain’s biggest transition, also called the Merge, which could take place in September after being kicked down the road for several years. Cryptocurrencies surged across the board Wednesday amid a broad rally in risk assets, with Bitcoin rising as much as 10%, the most in more than a month.
The Merge is set to take Ethereum to a system called Proof of Stake, in which staked Ether tokens will order transactions, from its current system called Proof of Work, a mechanism which uses powerful computers to order transactions.
The offshoot’s outperformance first came after Ethereum blockchain’s co-founder Vitalik Buterin mentioned it at the annual Ethereum Community Conference, or EthCC, in Paris on July 21.
“If you want to cancel Proof of Stake, we are not going to cancel you… there’s Ethereum Classic, which is the original Ethereum,” he said. “It’s a very welcoming community and I think they’ll definitely welcome proof of work fans…It’s not even a joke. If you like proof of work, you should go use Ethereum Classic. It a totally fine chain.”
Buterin’s comment has helped “drive speculation” among traders, Thomas Dunleavy, senior analyst at crypto research firm Messari, said.
Ethereum Classic, which still uses the Proof-of-Work mechanism, may be one of the biggest beneficiaries of the Ethereum’s migration, which is expected to cut off earnings for as many as one million people. Miners who are looking for a platform for their costly mining equipment may turn to Ethereum Classic.
The “original Ethereum” was pushed further into the limelight after AntPool, the mining pool affiliated with mining giant Bitmain Technologies Ltd., said it has invested $10 million to support it.
But analysts remain skeptical of the fate of Ether’s sister token. Since its inception, Ethereum Classic, which is the No. 20 largest cryptocurrency, has never gained a similar level of success as Ether. Its network has also suffered several attacks in the past.
“This seems like a trade more than an investment,” Dunleavy said. “I don’t think Ethereum Classic has any long-term viability.”
(Updates to add size and scope of Bitcoin prices. An earlier version was corrected to fix the amount of the investment made by Antpool.)
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