Recently cryptocurrency and Bitcoin fans couldn’t complain about boredom. It has been almost 3 months since the previous BTC split, and we already have two other forks coming our way. Even though Bitcoin Gold is not as controversial as SegWit2x, it is still worth to get familiar with the project. At the end of the day, it's good to make use of the fork to get some “free Bitcoins”, which can end up in our hands with very little effort.
Many people may wonder why do we need another Bitcoin split. Recently the Bitcoin Cash has been created, and SegWit2x will lead to another hard fork in November. We can find many other BTC splits when we look back into its history. Starting from well known and widely implemented cryptocurrencies, such as Litecoin, Dash or Zcash, ending at projects such as Bitcoin XT, Classic or Unlimited, which haven’t achieved great success.
There may be many reasons to start an alternative chain based on the current one – both from the purely technical as well as ethical point of view. The concept actually comes from the dissatisfaction with the current state of the currency, gathering people supporting the changes and then introducing those upgrades. This was the case for the most recent fork when Bitcoin Cash came to life – creators wanted to introduce a significantly larger, 8 MB blocks and give up on SegWit. Even though the BCH hasn’t beaten the original Bitcoin in popularity, the current price at around 300 USD shows, that the efforts of the split followers may be justified.
What is the Bitcoin gold for?
The basic problem diagnosed by BTG creators is the progressing centralization of Bitcoin mining. The majority of hashpower of the whole network remains in hands of relatively small group of people and firms, which dominated the market. The best example is Bitmain and its president, Jihan Wu, who gathered the whole process of BTC mining in the frame of his group. Bitmain is a producer of ASIC chips, which are used in the most powerful mining machines, the owner of the largest mining pool – Antpool and cryptocurrency exchanges. Such situation over time may cause pathologies such as blocking changes of Bitcoin that are beneficial from the users’ point of view (just as in the case of SegWit) or an increased likelihood of forcing changes that resemble the 51% network attack.
Bitcoin Gold will not be able to be mined using a dedicated BTC mining hardware. Instead, similarly to Ethereum, it will be mined using GPUs. ASIC chip resistant Equihash algorithm is meant to attract more miners, leading to the decentralization of the network. What’s important, Bitcoin Gold is not supposed to compete with BTC, it is meant to be its complementary. On this field, it will have to compete against big players such as Bitcoin Cash, Ethereum and other GPU-mined cryptocurrencies.
Back to basics
Bitcoin Gold gathered a group of developers and miners supporting its development. One of the members is Jack Lia, the CEO of Hong Kong mining hardware producer LightningAsic. The project is meant to be supported by the Chinese mining tycoon and the owner of Bitcoin news portal, jinse.com. The main BTG developer still remains anonymous and known by the nickname H4x3.
The team developing the new cryptocurrency described the process as friendly towards Bitcoin. H4x3 describes Bitcoin Gold as the real blockchain to pilot upgrades of the actual Bitcoin. Interestingly, the supporters of BTG believe that the best developers work for Bitcoin Core. Therefore Gold development will be following the Core team as closely as possible.
Except the change in algorithm, another technological innovation that is significant from the miners’ point of view will be the block difficulty adjustment. In the case of Bitcoin, the block difficulty is updated around every 2 weeks. As Bitcoin Cash adjusts the difficulty more often, creating periods when it’s more profitable to mine BCH rather than BTC, the hashpower of the network is unstable. Bitcoin Gold is supposed to adjust the difficulty after every block.
Doubts
Even though there is a lot of positives, good intentions and assurance of creators, many people still have some serious doubts regarding Bitcoin Gold. Many significant elements of the new cryptocurrency are still not ready. Among them, there are some key aspects such as the full implementation of the proof-of-work system or the introduction of replay protection. The lack of the last factor may be exceptionally significant for the future development of the altcoin. Without the aforementioned protection, receiving support from some big exchanges and wallets will be quite difficult.
The community may have some compelling concerns regarding the financing of the project. One of the Reddit users has managed to access information, according to which Bitcoin Gold was supposed to have an ICO. Currently, it is unknown how that intention went. Creators of the new cryptocurrency were to premine 200 000 BTG. Since both situations were hidden from users, many people call the whole project a scam.
Where are my bitcoins!?
Regardless of the BTG’s past and its future, some people would like to just sell the additional cryptocurrency and for example, increase their BTC funds. In order to ensure receiving Bitcoin Gold, it is required to control one’s own private keys. One of the easier ways is installing a desktop wallet and moving BTC to the address, where private keys are in our hands. At the point of hard fork activation, you should receive the amount of BTG equal to your BTC.
For example – you moved your Bitcoins to a desktop wallet with a private key “xyz123456”. This key allows you to log in to your wallet and manage your BTC funds. In this wallet, Bitcoin Gold will not be available after the activation of the hard fork, because, for now, it doesn’t support BTG. In order to be able to control the new cryptocurrency, it will be required to find a wallet, which supports Bitcoin Gold (most likely they will appear after November 1). After downloading the new wallet and logging in using your private key “xyz123456”, you will gain access to your BTG funds.
If you hold your funds on an exchange, then it will be up to the exchange’s policy whether you obtain your altcoin or not. The majority of big platforms has already informed that BTG will be supported, however obtaining access to funds may take some time. Many exchanges haven’t given Bitcoin Cash to its users till this day or even sold their BCH.
Free money or a scam?
Many people warn about speculating on the Bitcoin Gold price due to doubts and controversies mentioned before. We also advise to be careful and withhold from any BTG transactions until the price and status of the new cryptocurrencies stabilizes.
However, if you just want to get rid of BTG, remember to hold your Bitcoins on an address of which private keys are controlled by you.