When Bitcoin (BTC) was first introduced in 2009, it came to us with the premise that everyone could participate in its mining process. For a while, that seemed to be the case. However, as BTC gradually climbed the price charts, more people began to hop onto the mining train. As a result, the competition increased, effectively making it more challenging to mine BTC.
People soon realized that mining could be more efficient with custom-built application-specific integrated circuits (ASICs). As a result, leading companies would eventually wield an unbalanced amount of power over the network. This effectively specialized the Bitcoin mining industry and made it highly concentrated.
Due to this power shift, people on the network decided that a change needed to take place. That change eventually turned into what we know as Bitcoin Gold (BTG).
What is Bitcoin Gold?
BTG was a hard fork that happened on October 24, 2017. Forks occur for many reasons. Mostly, it’s because of the scalability issue that Bitcoin faces. However, in the case of BTG, it was the result of an unbalanced mining space. The developers of BTG aimed to dethrone the mining companies by using a different algorithm—one that’s less susceptible to ASIC-based optimization.
The algorithm that they used is called Equihash—the main answer to everyone wanting to learn how to mine Bitcoin Gold. It followed the same proof-of-work system that Bitcoin uses. However, Equihash is more memory-intensive than its predecessor, making it almost impossible to implement in an ASIC. Basically, this means the algorithm makes it incredibly expensive to optimize memory on an ASIC chip.
Most laptops and computers out there can handle 1GB of RAM, but it would be really expensive to put that kind of computing power on a chip. As a result, using ASICs for the Equihash algorithm is less efficient and less powerful than mining on memoryless algorithms.
In addition to the different proof-of-work system that was implemented, they also added more safety and protective measures to prevent users from being hacked or scammed. These new measures include unique wallet addresses and replay protection.
The aim of Bitcoin Gold was to “make Bitcoin decentralized again,” according to their website. Although that may sound a little confusing—since Bitcoin is already decentralized without any central bank or government body in authority—but it’s probably referring to the “centralization” in the mining space.
Despite the fork, BTG still heavily brands itself as a version of Bitcoin. It even keeps BTC’s transaction history, meaning that if you had Bitcoins before the fork, you’d own an equal amount of “gold” Bitcoins.
Benefits of Bitcoin Gold
Aside from the inclusivity of BTG’s mining process, the digital asset has many other characteristics that users may find beneficial. The first of which is pseudonymity. Just like a few other cryptocurrencies on the market, you can buy and sell Bitcoin Gold with extended anonymity, effectively adding an extra layer of security to your wallet. However, this anonymity isn’t full.
If you use a regulated network to buy your BTG, that platform will know how much you bought and when the transaction transpired. If you buy from an open marketplace, the person you bought from can tell how much you were given. Outside of these exceptions, BTG can be bought and sold anonymously—meaning that no one will see how much you’re holding or how much you’ve sent out.
The next benefit of Bitcoin Gold is its decentralization. Like Bitcoin, BTG makes use of a consensus algorithm. This means that the crypto is entirely community-driven and isn’t in the hands of a central authority figure.
Lastly, it has a fast transaction speed. Compared to Bitcoin’s 5 transactions per second (TPS) speed, Bitcoin Gold’s rate is over five times faster with a 27 TPS speed.
Its launch and controversy
When BTG launched in 2017, there were a lot of controversies surrounding it. The first point of controversy was that of the “post-mine” that the developers did before the launch. Before it officially launched, 100,000 coins had already been mined by the developers. This retroactive mining of 8,000 blocks was set aside as an “endowment” to maintain the broader Bitcoin Gold network. Uhh… 100,000 coins is a lot.
Another point of controversy was a significant exchange not supporting BTG, allegedly “because its developers have not made the code available to the public for review.” For them, this was a “major security risk.” Overall, the community just found them to be a bit sketchy with their code.
Lastly, a few days after its launch, miners began complaining about a 0.5% mining fee that was “hidden from the mining community.” Yikes.
The current trading status of Bitcoin Gold
When BTG first came onto the scene, it had a strong start. It reached its all-time high in December 2017 of almost 400 USD per BTG. Unfortunately, aside from a few spikes, the price chart has seen a downward trend over the past few years.
Towards the end of 2018, it dropped to the 15-20 USD per BTG range. By the end of 2019, it had reached around 5 USD per BTG. It has risen quite a bit in 2020—reaching the 8-10 USD range—but it’s still far from where it used to be.
The future of Bitcoin Gold
Just like most cryptocurrencies, BTG’s launch had its fair share of cynics and controversy. However, the developers remain ambitious with their expansion plans—looking into smart contracts, blockchain democracy, and decentralized fiat-crypto brokerage networks.
To this day, the developers remain conscious about the connections of BTG, its parent BTC, and the broader world of cryptocurrencies. They continue to work on improvements that not only pertain to the world of Bitcoin Gold but for the broader Bitcoin and crypto worlds as well.
As for what this could mean for Bitcoin and cryptocurrencies as a whole, we’ll just have to wait and see.
