Cryptocurrency forks are not a new ideation anymore. There have been various types of coin forks taking place for a long time, especially with the biggest cryptocurrency; the Bitcoin, which has experienced several different iterations and branches up till now. One of the most prominent of these forks took place in 2017, by the name of Bitcoin Gold.
Bitcoin Gold became the second hard fork of the original open source Bitcoin on October 24, 2017, with block 491,407 on the Bitcoin blockchain. When that happened, Bitcoin Gold took a snapshot of all the balances and transactions on Bitcoin up to that point. The new blockchain began from there and everyone who owned BTC before the fork received the same amount of BTG in a 1:1 ratio.
Bitcoin Gold’s Motto
While hard forks take place for numerous reasons, BTG’s stated purpose has been to “make bitcoin decentralized again”.
In the current picture, large companies with huge banks of mining computers now mine the vast majority of coins. This has made the blockchain all too centralized. According to Bitcoin Gold’s founders, these large companies having control of the bitcoin network abolishes the actual purpose of decentralized technology. With BTG, they hoped to change the paradigm around the mining on BTC blockchain.
BTG makes mining more equitable, as its roadmap states:
The goal of Bitcoin Gold is to create a network where anyone can become a miner with only basic hardware.
What is True ‘Decentralization’ of Mining?
In a distributed ledger, transactions that ever occur are recorded and miners compete for the privilege of adding a block to the blockchain by racing to solve difficult mathematical problems. A SHA-256 hash function is produced for the entire block and the miner wins whose hash begins with a certain number of zeros. The miner who wins the block is verified by the whole network.
While this may sound democratic enough, it has rather given rise to many new problems. Problems such as when two winning blocks are announced at the same time, the dispute is settled by another complicated race. This also means that a miner’s node influence is directly proportional to the computing power it has. So, dedicated hardware for mining means greater computing power and an almost certain probability of winning the block. This is how huge firms with greater computing powers and monetary status are now dominant with cryptocurrency mining whereas the small-time miners cannot compete.
How BTG is Different?
Bitcoin Gold certainly helps in this regard. The node’s influence is carried by the amount of computing power – known as proof of work. BTG uses an alternative proof of work algorithm, called Equihash and supporters believe that is it unaffected by the use of custom speeding up hardware. Equihash has also been adopted by Zcash for the same reason.
Ultimately, changing to Equihash would make Bitcoin mining more distributed, and that’s really the only change that Bitcoin Gold proposes for the network. The result, supporters hope, is that Bitcoin Gold will always be accessible to ordinary users who want to mine cryptocurrency with their PCs. This could give Bitcoin a more democratic character and reduce the influence of the big mining pools that are so powerful within the mainstream Bitcoin network.
Besides the goal of “re-decentralizing” Bitcoin, Bitcoin Gold’s developers have also been focused on issues relating to distribution, protection, and transparency. Bitcoin Gold’s whitepaper can be found here.
Bitcoin Gold took an extra effort to ensure security to its costumers’ accounts by introducing Replay Protection mechanism and unique wallet addresses. The replay protection mechanism helps in transactions that take place on both BTC and BTG. Such as when you want to pay someone in BTC and keep your BTG, an attacker could send a false signal between two forks that causes both currencies to be lost. Bitcoin Gold offers full replay protection on BTG to prevent such attacks where it rehashes transactions, meaning they can’t be transferred across from BTC to BTG.
Why Bitcoin Gold?
For all cryptocurrencies, one of the major factors which helps to determine both short-term and long-term success is its availability on the cryptocurrency exchanges. Users must be able to access the digital asset on exchanges in order to make transactions.
Sitting rather quietly at $19.47 as of press time, according to the Bitcoin Gold’s website, the cryptocurrency was trading live on Bithumb, Bitfinex, Binance, Bittrex, HitBTC, Uphold, YoBit, Gate.io, Changelly, Shapeshift, BitBay, Abucoins, Change Now, Evercoin, Tdax, Bitsane, Bitstarex, QuadrigaCX, Cex.io, Okex, Anybits, BestRate, Bitmarket, Indacoin, CoinSwitch, and Unocoin as of March 2018.
There are additional exchanges slated to offer Bitcoin Gold in the near future as well. The cryptocurrency is also available through a number of wallet services, including Trezor Wallet, Ledger Wallet, Exodus, Coinomi, Bitpie, Guarda, Freewallet, BTGWallet, and Kasse. According to the website, the cryptocurrency has been listed on 46 markets and 26 exchanges as of January, 2018.
Compared to its other toasts, Bitcoin,Bitcoin Cash and the SegWit2x fork, BTG certainly boasts some important specifications.
|Bitcoin||Bitcoin Gold||Bitcoin Cash||SegWit2x (cancelled)|
|PoW Type||ASIC||ASIC-resistant (GPU)||ASIC||ASIC|
|Block Time||~10 mins||~10 mins||~10 mins||~10 mins|
|Difficulty adjustment||~2 weeks||Each block||~2 weeks||~2 weeks|
|Total Coin Supply||21 million||21 million||21 million||21 million|
Bitcoin Gold is the only Bitcoin Fork that implements a new ASIC-resistant proof-of-work algorithm. Along with the new hashing algorithm, BTG supports both Segregated Wireless (SegWit) technology and replay protection.
According to its official website, Bitcoin Gold is co-founded by Chinese Jack Liao and North America based Robert Kuhne. Another name on the list of co-founders is of a Spanish national Alejandro Regojo, who is also the project manager.
The internationally versatile team is made up of Bulgarian Martin Kuvandzhiev as developer and co-founder, along with Colombian Franco Niebles, who is the lead designer and also the co-founder. The company’s legal advisor is Ivan Yankov from Bulgaria and Bitcoin Gold’s social media is handled by the social media manager Gustavo del Rio.
Controversy with Bittrex
Bitcoin Gold has recently been amongst the tabloids which have stated that it is set to be delisted from cryptocurrency exchange Bittrex. The reason for this proposed removal is that the currency has suffered a series of debilitating thefts of over $20 million in stolen funds.
Back in May, Bitcoin Gold was hijacked with rented computing power. After hackers took control of more than 51 percent of the overall hash power, more than 388,000 BTG (approx. $18 million at the time) was stolen from cryptocurrency exchanges like Bittrex. Hackers were able to use “double-spending,” a method of repeatedly tricking an exchange into transferring more coins than it should.
It is uncertain just how much was taken directly from Bittrex, but Bitcoin Gold maintains that compensation of over 12,000 BTG ($255,000) was requested.
In response, Bitcoin Gold’s development team issued a lengthy statement, as they declined to pay them 12,372 BTG in compensation:
Bittrex informed us that they make this decision because the BTG team would not “take responsibility for our chain,” and that taking responsibility meant paying Bittrex 12,372 BTG to cover the loss they incurred. They later informed us they would cover part of the loss from their own BTG reserves and requested we pay the remaining ~6,000 BTG ($127,000), and that if we did not, we would be delisted.
Obviously, Bittrex does not feel the same way, but whether or not this will have an impact on the long-term survival of Bitcoin Gold isn’t yet clear. Though, it shouldn’t be surprising, that by September 14, Bitcoin Gold will be completely removed from Bittrex.
Another detesting controversy occurred last year, when $3.3 million worth of BTG was stolen after users were tricked into downloading a fake wallet.
The Future of Bitcoin Gold
Bitcoin Gold’s vision of democratizing Bitcoin mining appeals to a lot of people in the mainstream Bitcoin world. But the currency still faces a ton of skepticism in the broader Bitcoin community.
The broader objection is that many bitcoiners look with suspicion on any effort that aims to split the Bitcoin community. They worry that having multiple, competing versions of Bitcoin will confuse the public. Opponents argue that Bitcoin Gold is unfairly capitalizing on the Bitcoin name.
But the Bitcoin Gold team insists that their project will be good for Bitcoin in the long run. They say their ultimate goal is to prove the viability of Equihash as an alternative proof-of-work algorithm and eventually convince the mainstream Bitcoin network to make a similar move.
That seems like an uphill battle, however, given the millions of dollars Bitcoin miners have invested in their existing hashing hardware, it might just stir up something.