What is Bitcoin Gold?
Just a few months after the Bitcoin Cash fork, Bitcoin's blockchain saw another community-led hard fork known as Bitcoin Gold (BTG).
Bitcoin Gold hopes to change the mining paradigm on the Bitcoin blockchain. According to the founders, Bitcoin's blockchain has become too centralized. Big companies with huge computer mining banks now extract the vast majority of Bitcoins. For the founders of Bitcoin Gold, the fact that large corporations control the Bitcoin network defeats the purpose of a decentralized ledger and peer-to-peer currencies.
In response, they initiated the Bitcoin Gold project. It is an alternative fork of the Bitcoin blockchain that implements the changes that make the extraction more equitable. The goal of Bitcoin Gold is to create a network where anyone can become a miner with only basic hardware. As a result, Bitcoin Gold mining would be widespread among many miners, instead of a few large companies.
In this guide, we cover all the things of Bitcoin Gold like:
Decentralize Bitcoin's Blockchain
In the very first days of Bitcoin, normal computers verified and completed the proof of the work necessary to power the Bitcoin blockchain. However, the last few years have seen a rapid development of the hardware used to extract Bitcoin.
What started out as normal computers on the original Bitcoin network soon graduated into specialized platforms with graphics processing units (GPUs) installed to speed up the demonstration of the work.
Today the hardware is even more advanced. Application-specific integrated circuits (ASICs) now perform almost all the mining on the Bitcoin blockchain. These are devices built specifically for the extraction of Bitcoins which are 1,000,000 times better for extraction than the home computer. The purchase, installation and execution of ASICs have a high start-up cost which makes it difficult for the average user to intervene.
[Editor’s note: The more expensive mining becomes, the fewer people can actually do it. This means that the mining network becomes that much more centralized. The argument Bitcoin Gold wants to make is to make mining Bitcoin something everyone can do, therefore keeping the mining as decentralized as possible.]
In addition, the most successful Bitcoin data mining operations today involve entire premises or warehouses full of ASICs running 24/7. Little time miners simply can not compete.
The Bitcoin Gold motto, "Rendi Bitcoin Decentralized Again", is an ironic reference to Donald Trump's campaign slogan. However, it also refers to Satoshi's original vision for Bitcoin of a peer-to-peer network in which anyone could take part in the mining process. In order to turn Bitcoin mining into something more equitable, Bitcoin Gold proposes to change the blockchain to eliminate ASIC mining.
SHA-256 vs Equihash
The fundamental change in Bitcoin Gold is the choice of a different hash algorithm that makes it more difficult to test the work for ASICs. This is achieved when a hash algorithm requires more memory (RAM) to complete. Because ASICs are about pure processing power, they require more memory bottlenecks and their processing capacity. This makes small-scale mining on GPUs even more competitive.
The current ASIC-based bitcoin blockchain uses a hashing algorithm known as SHA-256 for its job test. The founders of Bitcoin Gold use another algorithm known as Equihash instead. Alex Biryukov and Dmitry Khovratovich have developed Equihash as an ASIC-resistant algorithm, and have already seen the success of feeding other cryptocurrencies, the most famous of which is Zcash.
Ultimately, switching to Equihash would make Bitcoin mining more distributed, and this is really the only change Bitcoin Gold proposes for the network. While the centralization of mining is a problem in the Bitcoin blockchain, with miners blacklisting some users or giving preference to certain transactions, there is a limit to the amount of energy that these central miners can exercise. It is not clear whether the centralization of the mines has had too much negative impact on Bitcoin.
If it ever were, Bitcoin core developers could implement Equihash, essentially shooting all current ASIC miners on the Bitcoin blockchain. The prospect of losing the hundreds of thousands of dollars that have invested in their mining hardware with a change of algorithm is enough to keep most of the miners on the network honest.
Who received Bitcoin gold?
Since Bitcoin Gold is a fork of the original Bitcoin blockchain, all those who owned BTC before the fork received the same amount of BTG, with a 1: 1 ratio. You did not need to do anything special to receive the BTG, but to state that could have become complicated depending on how your wallet was set up.
You are able to trade BTG in almost 20 exchanges. The most popular options are HitBTC, OKEx, Bitfinex and Binance.
How to undermine Bitcoin Gold
If you are interested in how to extract Bitcoin Gold, we have good news. The configuration process is relatively simple and you only put a GPU – it does not require ASIC.
First of all, you need to join a data mining pool. You have more than ten to choose from with pool.gold as one of the most popular options. Next, download the mining software from the pool you added. Pool.gold has mining software available for NVIDIA and Radeon.
If you do not have a BTG wallet, set one. The available options include BTGWallet.online, the Bitcoin Gold Core wallet or any other service that supports BTG.
Continuing with pool.gold as an example, you have separate instructions based on your GPU:
- NVIDIA: Change the start.bat file to include the address of your Bitcoin Gold wallet followed by the name of the worker.
- Radeon: Change the config.txt file to include the address of your Bitcoin Gold wallet followed by the name of the worker.
Finally, double-click on "start.bat" and start mining.
When did it go live?
The Bitcoin Gold fork occurred on October 24, 2017, with block 491,407 on the Bitcoin blockchain.When this happened, Bitcoin Gold took a snapshot of all the balances and transactions on Bitcoin until then. The new blockchain started from there.
Is Bitcoin Gold a Bitcoin competitor?
Although Bitcoin Gold is a hard fork of the original Bitcoin blockchain, it is not actually a Bitcoin competitor. While other hard forks, such as Bitcoin Cash, have cannibalized some of the Bitcoin network miners to work on the new blockchain, Bitcoin Gold's anti-ASIC algorithm basically means that none of the current Bitcoin miners would like to switch to the mining BTG.
Instead, Bitcoin Gold competes with other anti-ASIC cryptocurrencies like Ethereum for mining power. Mining activities on these networks come in the form of small-scale GPU mining. The problem with Bitcoin Gold is that other anti-ASIC cryptocurrencies have a longer history and are more predictable for miners. It is not clear why a miner would like to switch to BTG, unless he raises the price for BTG.
The only advantage of Bitcoin Gold is the wide dispersion. All members of the received Bitcoin network will receive BTG, so there is potential for widespread adoption.
Bitcoin Gold vs Bitcoin, Bitcoin Cash and SegWit2x
With so many forks on the Bitcoin blockchain in such rapid succession, it can be confusing to keep track of the differences. Here is a table to help you:
|Bitcoin||Bitcoin Gold||Bitcoin money||SegWit2x (canceled)|
|Type PoW||ASIC||ASIC resistant (GPU)||ASIC||ASIC|
|Block Time||~ 10 minutes||~ 10 minutes||~ 10 minutes||~ 10 minutes|
|Difficulty of regulation||~ 2 weeks||Each block||~ 2 weeks||~ 2 weeks|
|Total supply of coins||21 million||21 million||21 million||21 million|
Bitcoin Gold is the only Bitcoin fork to date implemented with a new ASIC-resistant working test algorithm. Along with this new hash algorithm, Bitcoin Gold implements a new adjustment of the difficulty with each block, gradually increasing the difficulty based on past blocking times. Finally, Bitcoin Gold is one of the only Bitcoin forks to support both Secreted Witness (SegWit) and playback protection. SegWit increases the number of transactions possible per block and the playback protection prevents fraudulent transactions in parallel on two forks.
Repeat the protection after a fork
Reproduction protection is critical when implementing a fork of an existing blockchain. The shared code and wallet addresses between BTC and BTG allow you to implement a replay attack. Basically, if you want to conduct a transaction on both BTC and BTG at the same time, you're fine. However, if you want to pay someone in BTC and keep your BTG, you're open to an attack. An attacker could send a false signal between the forks that causes you to lose both currencies when you're only planning to send one.
Bitcoin Gold offers complete protection against replay on BTG to prevent such attacks. The solution provides a SIGHASH_FORK_ID mechanism that repairs transactions, which means that they can not be transferred from BTC to BTG.
What they say about Bitcoin Gold
Most new cryptocurrencies involve ASIC resistant hashing algorithms and is becoming an industry standard for promoting decentralization. In this regard, Bitcoin Gold has a lot to be enthusiastic about. At its core, it is about passing the Bitcoin network to a more decentralized mine.
However, as we have seen above, there is not much evidence that the current Bitcoin mining system is broken. There have been some small complaints and it is not ideal for the network to be so centralized. However, the miners on Bitcoin have a lot to lose if they exercise their power too aggressively. There are also new entrants to the Bitcoin mining community who are decentralizing control from some major ASIC farms.
The general consensus of Bitcoin experts is that it is not new enough in Bitcoin Gold to guarantee an independent investment. Although it certainly does not hurt you to keep your BTG free that you receive as a result of the fork (if you owned Bitcoin before October 24th), wait until the dust settles before deciding whether to buy more.
This article by Bennett Garner was originally published on CoinCentral.com.