2017 was an extraordinary difficult year for bitcoin’s development. The optimization of bitcoin-blocks (the volume of a bitcoin-block remained the same – 1 Mb) still did not allow to process the rapidly increased transactions’ amount.
The different variants of protocol modifications, which could have potentially scale the network, were suggested to fix the issue of a bitcoin network overload. The greatest part of the community supported the idea of Bitcoin Core team to activate SegWit and integrate Lighting Network “settings” in May 2017. The opponents to the solution suggested by a Bitcoin Core team wanted to modify bitcoin upon the Bitcoin Unlimited program.
Though the major part of the community did not support this program, it was decided that the designed modifications should have been realized through fork (“branching” of the main bitcoin-chain). In fact, it could have been realized through the creation of the upgraded bitcoin-version, which should have become the “true” bitcoin. The new coin, which resulted from the hardfork on the August, 1, was Bitcoin Cash (BCH).
The relative success of BCH did inspire a lot of people supporting the first fork. Some developers strived to maximize a new bitcoin-version efficiency through application of the number of revolutionary changes, which the community avoided to implement for a long time.
Bitcoin Gold coin, which will be discussed below, has turned to become one of the most remarkable forks, after Bitcoin Cash.
Bitcoin Gold network rollout
Bitcoin Gold (BTG) resulted from the fork (branching) of the bitcoin blockchain on the October 24, 2017. The alternative software algorithm, which is put in the basis of BTG, was launched in course of the fork deployment. All the other miners could have joined the developers at the end of the very same day when a new coin was started to be mined, that is on the 12th of November (read the details below). Thus, BTC and BTG blockchains were the same till the block 491406, after which the BTG supporters separated and initiated a blockchain for BTG.
Due to the fact that the original bitcoin blockchain was identical to BTG blockchain till the 24th of October, people could have obtained some amount of BTG coins, which corresponded to the balance of any local bitcoin-wallet on the date of 24.10.2017 (for example, 1 BTG for 1 BTC, or 0.043 BTG for 0.043 BTC).
Bitcoin holders did not have to mine BTG to obtain these free coins; in fact, people should have only imported the private keys of their bitcoin-wallets to the alternative wallets for BTG storage. Note that, in this case, it is important to transfer bitcoins in another secure bitcoin-wallets to enhance the security measures. Bitcoin-balance was only important to obtain BTG on the 24th of October; the current balance is not important in the similar cases.
However, the community soon have realized that the inaccurate activities with the private keys are potentially very dangerous. The only, at that time, “light” BTG-wallet Mybtgwallet turned to be poorly secure. Perhaps, it could be explained by the negligence of the third-party developer of the stated wallet. Due to the high vulnerability, about 300 BTC and 300 BTG were stolen.
Though the official “heavy” BTG-wallet wasn’t broken, it has never been popular due to the installation required downloading of the total blockchain.
Obviously, the situation with the wallet did negatively affected Bitcoin Gold’s reputation and developers team.
Besides, the community was perturbed by the fact that the BTG initiators had been mining BTG for some time before the network was finally launched (so-called pre-mine). The developers themselves claimed that the pre-mine was essential to cover the expenses for the upcoming project deployment. Additionally, they argued that the 60% of the mined BGT was blocked for some years and would become available in case of need for the supplementary financing. The full value launch of the network, followed by the unplanned “chain branching” and other technical difficulties, occurred only at the end of the day, 12th of November.
BTG technical peculiarities
Technically, Bitcoin Gold has many features of bitcoin. That is, the same block size and mining time (1 MB and about 10 minutes) are used; the space within the block is more optimally used thanks to the support of SegWit when processing transactions on this coin.
Comparing to BTC, BTG has been improved in a number of ways, for example, the correction of complexity in Bitcoin mining is being held every 14 days, and in case with BTG – whenever a new block is being mined. In addition, the BTG code has been further optimized to maximize the overall performance.
A small comparative characteristic of bitcoin, Bitcoin Gold and Bitcoin Cash is given below.
Bitcoin Gold and classic Bitcoin – fundamental differences
Unlike the BCH fork authorities, Bitcoin Gold developers have never claimed their fork to be the “only true bitcoin”. Bitcoin Gold team has been continually repeating that decentralization is severely limited in the context of the classic Bitcoin due to the high concentration of the mining facilities on the farms for industrial mining. The majority of such farms are located in China; each farm contains a few hundred or even thousand ASIC devices under the surveillance of little amount of employees.
The problem is that the major part of the bitcoin hash rate (computing capacity) is being controlled only by a couple of mining pools; the policy of these mining pools may not meet the expectations of the pool’s regular members. All of the above contradict the ideas of Satoshi Nakamoto, according to which “a single person should have just one voice” in the bitcoin-system.
The developers moved away from the algorithm SHA-256, which is a basis of the traditional bitcoin, in order to make BTG more decentralized,. Their coin applies a more peculiar Equihash algorithm that complicates the creation of ASIC devices specifically for Bitcoin Gold mining.
A profitable mining of BTG is possible only with the help of GPU (video cards). Thanks to this, according to the developers, a free bitcoin-mining should become accessible to everyone, including those who cannot afford to buy the “asics”; the price of the “asics” may be several times higher than the one of the video cards. Additionally, it may have a problematic payback.
Moreover, the relatively low mining complexity makes the BTG mining accessible even for the miners with not very powerful video cards. All this should increase the decentralization of BTG mining and pre-limit the possible impact of major mining corporations on the Bitcoin Gold network; the latter is undoubtedly useful especially in case if BTG ever becomes a serious competitor to the classic Bitcoin.
However, Bitcoin Gold, still can only be classified as altcoin by its position and authority.
Bitcoin Gold has a range of advantages comparing to the older altcoins. Still, the coin is progressively developing and include in the list of TOP-25 cryptocurrencies according to coinmarketcap.com.