The Difference Between the ETC Coin and ERC-20 Tokens in ETC
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One of the major confusions in the blockchain industry is how to define the different types of tokens.
Most people don’t know that not all tokens are part of the protocols of blockchains, or that tokens may be trivially created by anyone in programmable blockchains such as Ethereum Classic (ETC).
In this post, we will clarify these things by explaining the following topics:
- What is a native coin?
- What is a programmable native coin?
- What are ERC-20 tokens?
- Examples of ERC-20 tokens
- Why ETC is used as a wrapped token in dapps
- Monetary policies of ETC and ERC-20 tokens
What Is a Native Coin?
When Bitcoin (BTC) was invented, it was issued each time a miner created a block. Following Bitcoin’s example, ETC was created in the same manner, so both BTC and ETC are what could be described as “community fiat tokens” that are printed to pay for the work of miners in those networks.
The interesting thing is that both BTC and ETC are hard money, therefore considered digital gold, because they are only printed if a lot of work, spending a lot of electricity, is done by miners.
This unforgeable scarcity, and the fact that BTC and ETC have a foundational economic use case, which is to pay for the block rewards, is what gives value to both native coins.
Additionally, native coins such as BTC and ETC are used in proof of work (POW) blockchains to pay for transaction fees, which adds another economic use case to them.
What Is a Programmable Native Coin?
Some blockchains are plain vanilla ledgers with accounts and balances and that’s it. This means that the only thing that users may do is move coins from one account to another by sending transactions to the chain and paying straight fees for them to be included in the blocks.
In the case of ETC it is a programmable native coin because not only can users do what is described above, but developers can also send to the Ethereum Classic blockchain what are called smart contracts, which are software programs that become decentralized when they are stored in the network.
These smart contracts give programmability to ETC by enabling applications that may be used to manage the cryptocurrency in various ways, for example trading it in decentralized exchanges, using it to buy NFTs, setting up estate plans with inheritance rules, etc.
What Are ERC-20 Tokens?
It is precisely because of this programmability with smart contracts that many things may be created in Ethereum Classic.
Among these things that are enabled are non-native tokens using a smart contract standard that was adopted by the industry called ERC-20 tokens.
ERC-20 tokens are units of value, just like native cryptocurrencies, but that are really created as applications in the blockchain. They are not native tokens because they are not part of the base protocol of ETC and have no foundational economic use case such as paying for block rewards or transaction fees.
However, ERC-20 tokens may have value because they may have assigned use cases for dapps, such as paying for the utility of the dapps, or for governance purposes, where users may vote for various things in those ecosystems.
Examples of ERC-20 Tokens in ETC
In Ethereum Classic users may invest and trade in ETC directly or use the blockchain to issue, buy, and sell ERC-20 tokens. Some examples of ERC-20 tokens are:
HebeToken: $HEBE is the ERC-20 token issued by a developer team in ETC called HebeBlock who has built several applications such as HebeSwap, HENS, a wallet, and ETCInscribe.
ETCPOW: $ETCPOW is the ERC-20 token issued by a developer team in ETC called ETCMC who has launched a plug and play hardware node, an ETC mining pool, and a decentralized exchange.
Wrapped ETC: $WETC is a special type of ERC-20 token that accepts the native coin, ETC, as deposits and issues users what is called a wrapped token representing the coin on a 1-to-1 basis so that it may be used inside dapps.
Why Is ETC Used As a Wrapped Token in Dapps?
The reason wrapped tokens exist, even though they represent the native coins that they wrap on a 1-to-1 basis, is because the ERC-20 token standard was created after Ethereum Classic and Ethereum were launched.
The standard mostly used by dapps is the ERC-20 token standard, so this made it difficult to use the native cryptocurrencies of each chain inside dapps.
To solve this problem, wrapped tokens, using the ERC-20 tokens, were created to represent the native coins in each network.
This is why WETC exists inside ETC in parallel to the native coin, ETC.
In addition to its use inside dapps, WETC is also issued in other blockchains to represent ETC locked up in smart contracts in the chain of origin.
Monetary Policies of ETC and ERC-20 Tokens
As is well know, ETC has a monetary policy that resembles that of Bitcoin. It was issued initially at 5 coins per block, and every 5 million blocks, or roughly every two years, it reduces that payment by 20%. This schedule guarantees that there will be 210,700,000 ETC ever created in the history of the network.
ERC-20 tokens may have any kind of monetary policy their developers decide.
For example, ETCPOW is issued perpetually as a reward to users as customers use their various services. In the case of HebeToken, it has a fixed supply of 500,000,000 that will ever exist, of which around 102,000,000 have already been issued at the time of this writing.
The value of each kind of unit really depends on their applications, use cases, popularity, and soundness of their monetary designs.
Thank you for reading this article!
To learn more about ETC please go to: https://ethereumclassic.org
