What is Bitcoin Gold? Explained for beginners by Digimagg

What is Bitcoin Gold?

Just a short while following the Bitcoin Cash hard fork, the Bitcoin blockchain underwent another community-led split called Bitcoin Gold (BTG). Bitcoin Gold aims to revolutionize mining on the Bitcoin network, addressing concerns about centralization. The founders argue that the Bitcoin network has become overly centralized, dominated by large corporations with extensive mining setups, contradicting the principles of decentralization and peer-to-peer currencies. To counter this, they launched the Bitcoin Gold project, a fork of Bitcoin introducing changes to promote fairer mining opportunities. The objective is to enable anyone with basic hardware to participate in mining, fostering a more distributed network of miners compared to the concentration seen with large companies.

Distributing the Bitcoin Blockchain

During Bitcoin's inception, standard computers were sufficient for the required proof of work on its blockchain. However, advancements in mining hardware have rapidly progressed. Initially, basic computers on the original network evolved into specialized setups with GPUs for faster hashing. Presently, Application-specific integrated circuits (ASICs) dominate Bitcoin mining, outperforming home computers by a vast margin. Yet, the high initial investment for purchasing, installing, and running ASICs poses a barrier for average users. This trend towards expensive mining equipment leads to increased centralization of the mining network. Bitcoin Gold advocates for a more inclusive approach to mining, aiming to decentralize the process by enabling participation from a broader user base. Today, successful Bitcoin mining operations often entail vast facilities housing numerous ASICs, making it challenging for smaller miners to compete.

SHA-256 vs Equihash

The core innovation of Bitcoin Gold lies in its adoption of a different hashing algorithm, one that poses greater difficulty for ASICs by requiring more memory (RAM) to complete. As ASICs primarily excel in processing power, the increased memory demand creates a bottleneck, restoring competitiveness to small-scale mining using GPUs.

Contrary to the current ASIC-centric Bitcoin blockchain, Bitcoin Gold employs Equihash, a hashing algorithm developed by Alex Biryukov and Dmitry Khovratovich to resist ASIC domination. Equihash has been successfully utilized by various cryptocurrencies, notably Zcash.

The transition to Equihash aims to foster a more decentralized Bitcoin mining ecosystem, which constitutes the primary alteration proposed by Bitcoin Gold. While mining centralization presents concerns, such as selective transaction processing by dominant miners, the extent of its adverse effects on Bitcoin remains debatable.

In the event that mining centralization significantly impacts Bitcoin, the core developers could integrate Equihash themselves, effectively displacing existing ASIC miners from the network. The potential loss of substantial investments in mining hardware serves as a deterrent for miners to uphold network integrity.

Who was the recipient of Bitcoin Gold?

Given that Bitcoin Gold is a derivative of the original Bitcoin blockchain, all individuals who possessed BTC prior to the fork automatically acquired an equivalent amount of BTG, adhering to a 1:1 ratio. No specific action was necessary to obtain BTG, although the process of claiming it could have been complex based on your wallet configuration.

BTG can be traded on nearly 20 exchanges, with prominent platforms including HitBTC, OKEx, Bitfinex, and Binance being among the most favored choices.

How can one engage in Bitcoin Gold mining?

If you're keen on learning how to mine Bitcoin Gold, we've got some encouraging news. The setup process is quite straightforward, requiring only a GPU – ASICs are not necessary.

To begin, you'll need to join a mining pool. There are over ten options available, with pool.gold being one of the most popular choices. Afterward, download the mining software provided by the pool you've joined. For instance, pool.gold offers mining software compatible with NVIDIA and Radeon GPUs.

If you haven't already, create a Bitcoin Gold wallet. You can choose from options like BTGWallet.online, the Bitcoin Gold Core Wallet, or any exchange supporting BTG.

Using pool.gold as an example, here are the specific instructions based on your GPU:

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

Finally, execute "start.bat" by double-clicking it to commence mining.

When was its launch date?

The launch of the Bitcoin Gold hard fork took place on October 24, 2017, precisely at block 491,407 on the Bitcoin blockchain. At this juncture, Bitcoin Gold captured a snapshot of all balances and transactions on Bitcoin up to that specific moment, marking the genesis of the new blockchain.

Does Bitcoin Gold compete with Bitcoin?

Although Bitcoin Gold stems from a hard fork of the original Bitcoin blockchain, it doesn't directly compete with Bitcoin. Unlike other hard forks such as Bitcoin Cash, which attracted some miners from the Bitcoin network to its own blockchain, Bitcoin Gold's anti-ASIC algorithm means that very few of Bitcoin's current miners would find it advantageous to switch to mining BTG.

Instead, Bitcoin Gold vies for mining power against other anti-ASIC cryptocurrencies like Ethereum, primarily through smaller-scale GPU mining. However, Bitcoin Gold faces challenges in this regard, as other anti-ASIC cryptocurrencies have a longer track record and offer more predictability for miners. It's unclear why a miner would opt to switch to BTG unless the price per BTG experiences a significant surge.

One potential advantage of Bitcoin Gold is its widespread distribution. As everyone on the Bitcoin network received or will receive BTG, there is potential for broad adoption.

Bitcoin Gold vs Bitcoin, Bitcoin Cash, & SegWit2x

Given the rapid succession of forks on the Bitcoin blockchain, it can be challenging to distinguish between them. To alleviate this confusion, here's a table for clarity:

Bitcoin Gold stands out as the sole Bitcoin fork so far to introduce a novel ASIC-resistant proof-of-work algorithm. In addition, it adopts a fresh hashing algorithm and incorporates a unique difficulty adjustment mechanism, progressively adjusting difficulty with each block based on previous block times. Moreover, Bitcoin Gold distinguishes itself by supporting both Segregated Witness (SegWit) technology and replay protection, with SegWit enhancing block capacity and replay protection preventing fraudulent transactions occurring concurrently on two forks.

Ensuring transaction security post-fork

Replay protection is indispensable when executing a fork of an existing blockchain. The shared code and wallet addresses between BTC and BTG create a vulnerability to potential replay attacks. Essentially, if a user intends to transact simultaneously on both BTC and BTG, there's no issue. However, if the intention is to make a payment in BTC while retaining BTG, it leaves them susceptible to an attack. An adversary could manipulate the communication between the forks, resulting in the loss of both currencies instead of just one.

Bitcoin Gold addresses this concern by implementing comprehensive replay protection on the BTG network. This entails the utilization of a SIGHASH_FORK_ID mechanism, which rehashes transactions, rendering them incapable of being replicated from BTC to BTG.

What's the public opinion regarding Bitcoin Gold?

Many emerging cryptocurrencies adopt ASIC-resistant hashing algorithms, reflecting a growing trend in the industry toward decentralization. In this regard, Bitcoin Gold presents considerable promise, primarily aimed at decentralizing mining within the Bitcoin network.

However, as noted earlier, there's scant evidence suggesting that the current Bitcoin mining framework is fundamentally flawed. While there have been minor grievances and concerns over centralization, the existing Bitcoin miners face significant risks should they excessively exert their power. Furthermore, the emergence of new participants in the Bitcoin mining sector is gradually diluting control away from a handful of dominant ASIC farms.

The prevailing viewpoint among Bitcoin experts is that Bitcoin Gold lacks sufficient novelty to justify independent investment. While holding onto the complimentary BTG received from the fork (for Bitcoin owners before Oct 24) could be prudent, it's advisable to await clarity before considering further investment.