A Scenario Where Ethereum Classic Could Overtake Ethereum

Imagine this: in a few months, a Silk Road clone launches.* Since a black market values immutability above all else, it utilizes Ethereum Classic for certain functions.

As a result, most other quasi-legal, extra-legal and illegal schemes launch on Ethereum Classic. It’s an obvious move for them for 3 reasons: 1) immutability, 2) network effects, and even 3) slightly lower computing cost.

It’s obvious why gray market and black market projects would favor Ethereum Classic (ETHC). As a project, ETHC has committed on principle to the immutability of code built on their blockchain. From the perspective of a quasi-legal project, knowing that the code will be execute as written is invaluable.** They don’t have to worry about governments coercing 51% of miners to hard fork, or whether 51% of the community will disagree with their code enough to decide to override it.

The earliest adopters of technology are often things at the margin of society. Obviously, the classic example is adult entertainment and the VCR. But that also applies to the Internet, where the earliest profit opportunities were the 3 Ps: poker, pills, and porn.

So if a black market launched on Ethereum Classic and became popular, you could see why it could help ETHC become the platform of choice for all sorts of black and gray market activity. It would have a built-in base of black/gray market users for all similar or tangential projects. Network effects matter.



It would even be (slightly) cheaper to implement on the ETHC chain, because the ETHC is so much lower at the moment and from what we’ve seen of a year of Ethereum, the gas cost is unlikely to fully adjust.

Is this scenario likely to happen? Probably not. But the question is how likely is it? Roughly speaking, the market estimates it at about 12%.



If you’re consider holding ETH or ETHC, then the question is whether it is more likely than the 10-15% which ETHC’s valuation currently fluctuates as a % of Ether. If you think it’s more than 10-15% likely, then Ethereum Classic (ETHC) is undervalued relative to Ethereum (ETH). Of course, if you think it’s less than 10-15%, then ETHC is relatively overvalued.







* Obviously it doesn’t have to be a Silk Road clone, but that is a useful example.





** Let me be clear that I’m not condoning illegal projects; just analyzing. Even if you were to agree with Silk Road’s political aims, it seems pretty clear that things like this almost inevitably lead to things like the conspiracy to murder that Ross Ulbricht.



