What is Bitcoin Gold? Everything You Need to Know About the Hard Fork

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[Editor’s note: This article was updated on 7.9.2018 to reflect updates on the project.]

What is Bitcoin Gold?

Only a few months after the Bitcoin Cash hard fork, the Bitcoin blockchain experienced another community-driven hard fork known as Bitcoin Gold (BTG).

Bitcoin Gold (BTG)
26.35 USD (1.31%)
RANK

20

MARKET CAP

$457.07 M

VOLUME (24H)

$6.74 M

 

Bitcoin Gold hopes to change the paradigm around mining on the Bitcoin blockchain. According to the founders, the Bitcoin blockchain has become too centralized. Large companies with huge banks of mining computers now mine the vast majority of Bitcoin. For the founders of Bitcoin Gold, having large companies control the Bitcoin network defeats the purpose of a decentralized ledger and peer-to-peer currencies.

In response, they’ve initialized the Bitcoin Gold project. It’s an alternate fork of the Bitcoin blockchain that implements changes that make mining 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 spread among many miners, instead of a few large companies.

In this guide, we cover all things Bitcoin Gold such as:

Decentralizing the Bitcoin Blockchain

In the very early days of Bitcoin, ordinary computers verified and completed the proof of work needed to power the Bitcoin blockchain. However, the past several years have seen rapid development in the hardware used to mine Bitcoin.

What started as normal computers on the original Bitcoin network soon graduated to specialized rigs with graphics processing units (GPUs) installed to hash the proof of work faster.

Today, the hardware has advanced even further. Application-specific integrated circuits (ASICs) now perform nearly all of the mining on the Bitcoin blockchain. These are devices built specifically for Bitcoin mining that are 1,000,000 times better at mining than your home computer. Buying, installing, and running ASICs has a high startup cost, making it difficult for the average user to get involved.

[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, most successful Bitcoin mining operations today involve entire rooms or warehouses full of ASICs running 24/7. Small time miners simply can’t compete.

Mining Farm

Mining farm. Photo by Marco Krohn – Creative Commons

Bitcoin Gold’s motto, “Make Bitcoin Decentralized Again,” is a tongue-in-cheek reference to Donald Trump’s election campaign slogan. However, it also references Satoshi’s original vision for Bitcoin of a peer-to-peer network where anyone could take part in the mining process. In order to change Bitcoin mining into something more equitable, Bitcoin Gold proposes changing the blockchain to eliminate ASIC mining.

SHA-256 vs Equihash

The fundamental change in Bitcoin Gold is choosing a different hashing algorithm that makes proof of work more difficult for ASICs. This is accomplished when a hashing algorithm requires more memory (RAM) to complete. Since ASICs are about pure processing power, requiring more memory bottlenecks their processing ability. This makes small-time mining on GPUs competitive once again.

The current, ASIC-driven Bitcoin blockchain uses a hashing algorithm known as SHA-256 for its proof of work. The founders of Bitcoin Gold instead use another algorithm known as Equihash. Alex Biryukov and Dmitry Khovratovich developed Equihash as an ASIC-resistant algorithm, and it has already seen success powering other cryptocurrencies, the most famous of which is Zcash.

Ultimately, changing to Equihash would make Bitcoin mining more distributed, and that’s really the only change that Bitcoin Gold proposes for the network. While mining centralization is an issue on the Bitcoin blockchain, with miners blacklisting some users or giving preference to certain transactions, there’s a limit to how much power these central miners can wield. It’s not clear that mining centralization has had an overly negative impact on Bitcoin.

If it ever did, the Bitcoin core developers could implement Equihash themselves, essentially firing all the current ASIC miners on the Bitcoin blockchain. The prospect of losing the hundreds of thousands of dollars they invested in their mining hardware with an algorithm change is enough to keep most miners on the network honest.

Who Received Bitcoin Gold?

Since Bitcoin Gold is a fork of the original Bitcoin blockchain, everyone who owned BTC before the fork received the same amount of BTG, at a 1:1 ratio. You didn’t need to do anything special to receive the BTG, but claiming it may have gotten tricky depending on how you had your wallet set up.

You’re able to trade BTG on nearly 20 exchanges. The most popular options are HitBTC, OKEx, Bitfinex, and Binance.

How to Mine Bitcoin Gold

If you’re interested in how to mine Bitcoin Gold, we’ve got good news. The set-up process is relatively simple, and you mine with just a GPU – no ASICs required.

First, you need to join a mining pool. You’ve got over ten to choose from with pool.gold as one of the most popular options. Next, download the mining software from the pool that you joined. Pool.gold has mining software available for NVIDIA and Radeon.

If you don’t have a BTG wallet, set one up. Your options include BTGWallet.online, the Bitcoin Gold Core Wallet, or any exchange that supports BTG.

Continuing with pool.gold as the example, you have separate instructions based on your GPU:

  • NVIDIA: Edit the start.bat file to include your Bitcoin Gold wallet address followed by the worker name.
  • Radeon: Edit the config.txt file to include your Bitcoin Gold wallet address followed by the worker name.

Finally, double-click “start.bat” and begin mining.

When Did It Go Live?

The Bitcoin Gold hard fork occurred 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.

Is Bitcoin Gold a Competitor to Bitcoin?

Although Bitcoin Gold is a hard fork of the original Bitcoin blockchain, it’s not really a competitor to Bitcoin. While other hard forks, like Bitcoin Cash, cannibalized some miners from the Bitcoin network to work on the new blockchain, Bitcoin Gold’s anti-ASIC algorithm means virtually none of Bitcoin’s current miners will want to switch to mining BTG.

Instead, Bitcoin Gold competes with other anti-ASIC cryptocurrencies like Ethereum for mining power. Mining on such networks comes in the form of smaller-scale GPU mining. The problem for Bitcoin Gold is those other anti-ASIC cryptocurrencies have a longer history and are more predictable for miners. It’s not clear why a miner would want to switch to BTG, unless the price per BTG surges.

The one advantage that Bitcoin Gold has is wide dispersal. Everyone on the Bitcoin network received will receive BTG, so there’s potential for widespread adoption.

 

This Article is Originally posted on CoinCentral.com and written by BENNETT GARNER.

Go to https://coincentral.com/what-is-bitcoin-gold/ to check the full version

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