Looking at recent developments, this is not a simple question that unsettles many traders and market observers.
Due to the unplanned decision of the Ethereum community to implement a new version of the blockchain, two different Ethereum markets now have the value of a formerly identical platform.
How large is the cryptosoft market?
The planned technical transition quickly became quite confusing when an entire ecosystem of exchanges, miners and traders jumped onto cryptosoft. As a result, a market for two tokens of two different blockchains was created like this review about cryptosoft. The blockchain ethereum created by the hard fork has a current market capitalization of over $900 million. The market capitalisation of Ethereum Classic, on the other hand, is just USD 141 million. Ethereum Tokens (Ethers / ETH) currently stand at 11 US dollars, while Classic Ethers (ETC) stand at only 1.70 US dollars.
Chris Burniske, Blockchain product manager at ARK Invest, comments on the sudden popularity of Ethereum Classic as follows:
“Initially, it looked like ETC would die a quick death as there was hardly any value left and the vast majority of Miner supported ETH.”
After the hard fork was executed, big players in the digital currency market began to buy larger quantities of ETC. In addition, those who owned ETH were automatically credited the same amount of ETC, which increased trading volume and fuelled speculation.
“The market was not really liquid, so a small increase in demand could have a strong impact on the price,” Burniske adds.
Now that the fog has subsided, many market observers are asking themselves how long ETC and ETH can coexist alongside each other. Will the Ethereum blockchain be abandoned by the developers? Will the new chain prevail? Or will both continue to coexist stubbornly? So far, the experts do not seem to agree.
Driven by ideology
Although the two blockchains are almost identical, some believe that the ideological differences leave room for different price dynamics.
Petar Zivkovski, Trade Director of Bitcoin’s trading platform Whaleclub, spoke about how the desire for an incorrigible ideology contributed to the creation of Ethereum Classic.
He argues that by rejecting the decision – to restore the stolen deposits by the so-called DAO hackers – ETC has established itself as a blockchain that preserves the finality of the transactions.
So he says:
“The emergence of ETC is proof of the power of a decentralized, non-governmental blockchain system that, despite its design flaws, clearly rejects ETH. The advocates of ETC see ETH as a centrally controllable system that is controlled by a few enlightened developers.”
In addition, some miners saw a lucrative business in the mines of the old blockchain version after the hard fork, with the increase in trading volume.
What about demand?
The question is how sustainable the current situation is. Will both markets provide the necessary fundamentals?
Zivkovski emphasises that the volatility of ETH trading pairs will remain high, as has been the case at ETH for a year now. The decisive factor here is whether the demand will also be sustained.
So he adds:
“In the past, the volumes of ETH and ETC were predominantly speculative and we all know that speculatively driven demand can quickly come to an end.
Zivkovski claims that both currencies still have to assert themselves as unique, like Bitcoin, as they have so far had only a limited use as a store of value.
Artuhr Hayes, CEO of Bitcoin’s trading platform BitMEX, says that both markets can be sustainable if they prove profitable for traders.
“ETH (pre-fork) owners have currently been able to increase their assets, since the hard fork, by combining the current prices of ETH and ETC,” says Hayes.
Some market observers point to the potential technical limitations of two platforms. After all, both tokens are designed to enable decentralized Ethereum applications, and it is currently not clear how the developers will deal with two versions.
Jacob Eliosoff of Calibrated Markets says that it is very cumbersome for end users to have two different markets.
“The different ideologies may have their appeal, but for those who are