3 Things Investors Need to Know About Ethereum Classic in 2026

Ethereum (CRYPTO: ETH) is the second-largest cryptocurrency, but there's a smaller alternative with a much lower price: Ethereum Classic (CRYPTO: ETC). When the original Ethereum blockchain underwent a hard fork in 2016, it split into two branches, one for Ethereum and one for Ethereum Classic.

Since then, these cryptocurrencies have fared much differently. If you're considering buying Ethereum Classic to build your crypto portfolio, you need to know a few key things first.

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1. Its key principle: Code is law

The hard fork that split Ethereum in two was the result of a 2016 hack. There was debate about whether to reverse the theft of 3.6 million ETH tokens or keep it in place to avoid altering the blockchain.

Ethereum is the version of the blockchain with the theft reversed. Ethereum Classic is a continuation of the original blockchain without reversing the hack. It was essentially a philosophical difference. Most token holders accepted the hard fork, but a small subset believed the blockchain record should remain unchanged.

On Ethereum Classic, code is law. It runs applications exactly as programmed without third-party interference. This may matter to you if you're a crypto purist who values an immutable blockchain. However, if your main goal is to make money by investing in cryptocurrency, there are more important considerations. The philosophy behind Ethereum Classic doesn't give it any notable advantages.

2. Ethereum Classic is a proof-of-work blockchain

A major difference between Ethereum Classic and Ethereum is their consensus mechanisms -- how they verify transactions. Ethereum Classic uses proof of work, where validators confirm transactions using computing power. It's the same system used by Bitcoin, and while it allows validators to mine cryptocurrency and earn rewards, it's also energy-intensive.

Ethereum originally used proof of work but switched to proof of stake in 2022. Validators put up crypto tokens as collateral, a process known as staking. The system randomly selects validators to confirm transactions. Since this doesn't require computing power like proof of work, it's more efficient. In Ethereum's case, the switch from proof of work to proof of stake cut energy consumption by over 99%.

Since Ethereum Classic has less activity than Ethereum, congestion hasn't been an issue, and gas fees (transaction fees) have been low. But its proof-of-work system limits scalability. Ethereum Classic can handle only 15 to 20 transactions per second (tps). Ethereum currently processes 26.5 tps, according to Token Terminal, and high-performance blockchains like Solana can handle thousands.

3. Ethereum has been the far better performer

The biggest problem with Ethereum Classic is that it hasn't caught on as Ethereum has. Going back 10 years, Ethereum Classic has increased by 561% (as of Jan. 31). To its credit, that tops the S&P 500 index's 219% return. But it's well behind Ethereum, which has increased by a staggering 18,670%.

Ethereum also has far more usage. There's currently $60 billion of total value locked (TVL) into the Ethereum blockchain, according to DeFiLlama. Ethereum Classic has barely over $150,000.

Of the two cryptocurrencies, Ethereum looks more likely to be the winner going forward. Ethereum Classic has been the less popular and less successful version of Ethereum from the beginning, and it's hard to see a reason why that would change now.

Lyle Daly has positions in Bitcoin, Ethereum, and Solana. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and Solana. The Motley Fool has a disclosure policy.