As its name suggests, Ethereum Classic (ETC) is the original version of today's Ethereum (ETH). Like Ethereum, Ethereum Classic supports blockchain smart contracts and decentralized applications (DApps). The native token on the Ethereum Classic blockchain is ETC (corresponding to ETH on Ethereum), which is used to pay gas fees for interacting with the blockchain and its smart contracts.
If they are so similar, why are there two blockchains?
What is a Hard Fork?
A hard fork can occur when there is a fundamental split in consensus on a blockchain. As the name implies, a hard fork is when one blockchain splits into two separate chains. This typically happens during a major protocol upgrade. If the "updated" and "non-updated" versions of the chain become incompatible, and there is a disagreement among miners on which version to support, a hard fork will happen.
Ethereum Classic is the Original Version of Ethereum
As mentioned, a split in consensus can lead to a hard fork. Ethereum hard-forked from Ethereum Classic in July 2016 due to a disagreement on how to resolve "The DAO hack" incident.
This hack involved the theft of approximately 3.6 million ETH. Under a proposal led by Vitalik Buterin, a hard fork was implemented to create a new Ethereum chain that effectively "rolled back" the chain to restore The DAO funds. On this new chain, anyone holding The DAO tokens could reclaim their ETH from a recovery contract. This new chain evolved into the Ethereum we know today.
The original, unaltered chain remained as Ethereum Classic. On this chain, the hacker technically still possessed the 3.64 million ETC; however, due to strict monitoring and controls on these funds, it has become extremely difficult for the hacker to move or liquidate them.
Ethereum Classic Uses Proof of Work (PoW)
While Ethereum is transitioning to Proof of Stake (PoS), Ethereum Classic currently has no plans to do so and will remain on Proof of Work (PoW).
Furthermore, unlike Ethereum, Ethereum Classic has a fixed maximum supply of 210,700,000 ETC and a block reward reduction schedule. As Ethereum completes its transition to PoS, its miners will no longer be able to mine. Because ETC will continue to use PoW, it has attracted many miners from the Ethereum network to start mining on Ethereum Classic instead.
References
CoinMarketCap: https://coinmarketcap.com/currencies/ethereum-classic/
BlockTempo: Quick Overview: The Love-Hate Relationship of Ethereum (ETH) & Ethereum Classic (ETC): Why Did They Split?