Bitcoin Gold is a hard fork of the open-source cryptocurrency Bitcoin, which occurred on 24th October 2017 at block height 491407. The reason for the fork was to restore GPU mining functionality to Bitcoin as opposed to specialised ASICs with expensive entry prices.
After the fork had happened, the Bitcoin Gold team mined 100,000 coins in a ‘post-mine’. It did this via a rapid mining of approximately 8,000 blocks at 12.5 BTG per block.
The vast majority of the pre-mined coins have been placed into an endowment and will be used to grow the BTG ecosystem. Even so, five per cent of the 100,000 coins were set aside as a bonus for the team, or about 833 coins for each of the six members.
Bitcoin Gold uses a SHA-256 proof-of-work algorithm to the Equihash ASIC-resistant algorithm, which originally comes from Zcash.
Bitcoin Gold strengths and attributes
Bitcoin Gold is still very similar to Bitcoin – it has the same transaction processing time of 10 minutes and a maximum of 21 million coins in total supply. The main differences concern a new mining algorithm and replay protection.
- Mining algorithm – Unlike Bitcoin, which uses the SHA-256 algorithm to mine new blocks and transactions, Bitcoin Gold uses Equihash. Both are proof-of-work and require the miner to solve a hard cryptographic puzzle in order to mine a block. With Bitcoin, miners have an advantage if they use expensive ASICs. Bitcoin Gold on the other hand can be mined using standard equipment, providing an equal opportunity environment in line with Bitcoin inventor Satoshi Nakamoto’s vision of “one CPU, one vote”.
- Replay protection – A common problem with Bitcoin forks is transaction replay, because both the original and newly branched blockchain contain the same transaction history. As a result, malicious users can potentially replicate a transaction and receive twice the cryptocurrency. One of the first updates to the Bitcoin Gold ecosystem was replay protection, making one blockchain transaction invalid on the other.
Despite these differences, some people wonder what purpose Bitcoin Gold serves. In terms of solutions, unique features, and mass merchant adoption, there isn’t much that sets it apart.
Price and volatility
Immediately after the hard fork in late October 2017, Bitcoin Gold was the victim of a DDoS attack that knocked it offline at a critical moment. In the months following, Bitcoin Gold continued to be plagued by attacks across multiple vendors, which has affected its value.
While some attribute the attacks to opportunists who believe the fork undermines the crypto community, it has highlighted a wider issue about digital currency cybersecurity.
After recovering from various attacks and holding firm at around US$300 for several weeks, Bitcoin Gold enjoyed a price surge in mid-January 2018. Within just 24 hours, it went up by 50.37 per cent in what was described by The Merkel as a “pump-and-dump scheme rather than natural growth.”
In the same period, Bitcoin Gold had a 44 per cent gain over Bitcoin at a time when the original blockchain was continuing to fall.