What is Bitcoin Gold? How does It work? Complete Beginner’s Guide [2024]

Bitcoin Gold is a cryptocurrency and a hard fork of Bitcoin, launched in 2017, to return mining to the common individual. A cryptocurrency is a digital asset conceived for use as a medium of exchange, which uses cryptography to secure transactions, control the supply of additional units and corroborate transfers. In short, cryptocurrency is a decentralised electronic currency. The so-called Block Size War, an important chapter in Bitcoin‘s history, triggered a fierce debate over the capacity of the Bitcoin network. It revolved around the idea of increasing the block size to accommodate more transactions, an adjustment some believed would ensure Bitcoin’s future scalability.

However, this controversy led to a series of hard forks, as different factions pursued their own visions of Bitcoin’s true path. One of these hard forks gave birth to Bitcoin Gold in 2017. Instead of focusing solely on block size, Bitcoin Gold sought to tackle another critical issue: mining centralization. The creators of Bitcoin Gold aimed to democratize the mining process, thereby preserving Bitcoin’s original ethos of decentralization.

KEY TAKEAWAYS

• Bitcoin Gold was a hard fork of the original open-source cryptocurrency, which took place on Nov. 12, 2017.
• Bitcoin Gold’s stated purpose was to “make Bitcoin decentralized again.”
• Primarily, Bitcoin Gold developers believed that by adopting a new proof-of-work-based algorithm for the mining process, Bitcoin Gold would not disproportionally favor major mining operations on specialized equipment.
• Besides the goal of “re-decentralizing” Bitcoin, Bitcoin Gold’s developers also focused on distribution, protection, and transparency issues.
• Be cautious with Bitcoin Gold; most of the available “official” information is outdated, misleading, or erroneous.

What Is Bitcoin Gold (BTG)?

Launched in October 2017 by Jack Liao, CEO of LightningASIC and BitExchange, Bitcoin Gold is a hard fork of the original Bitcoin blockchain. The main purpose behind this fork was to democratize the mining process by changing the proof-of-work algorithm of Bitcoin from SHA-256 to Equihash. This change was designed to reduce the dominance of Bitcoin mining by a small number of professional operations and return it to ordinary users with standard computing equipment, such as graphics processing units (GPUs).

The Bitcoin Gold project has faced some challenges since its inception. It was subjected to a significant DDoS attack on its cloud site on the day it launched in October 2017. Shortly after its inception, miners leveled accusations against one of BTG’s developers for secretly incorporating a 0.5% mining fee.

After launching Bitcoin Gold, the developers implemented a process known as “post-mine.” This method involved retrospectively mining 100,000 coins after the fork was completed, a move that caused apprehension among crypto exchanges contemplating listing BTG. This process was executed through the swift mining of around 8,000 blocks. The coins obtained from this were reserved as a form of “fund,” earmarked for fostering the growth and upkeep of the larger Bitcoin Gold network. An unethical and very worrying move, which has raised many other questions about whether Bitcoin Gold is truly as decentralized as the team claims it is.

Despite all the controversies, the coin has managed to maintain a niche market presence, securing the 125th position by capitalization on CoinMarketCap as of June 2023. Currently, Bitcoin Gold operates with 69 active nodes.

History of Bitcoin Gold: Launch and Controversy

The legacy of Bitcoin Gold is one steeped in controversy from the beginning. Within one day after the launch, miners accused one of the developers of Bitcoin Gold of adding a 0.5% mining pool fee hidden from the mining community. There was also concern that Bitcoin Gold’s security measures were not as robust as they had initially claimed, and these flaws could result in increased vulnerability to threats.

A few days later, BTG developers notified the community that an unknown entity had uploaded suspicious files on its website that created vulnerabilities, forcing them to recall wallet software and direct users to its GitHub page rather than download files from its website.

Post-Mining

Similarly, the developers of Bitcoin Gold used what is called “post-mine” after the launch, which concerned crypto exchanges as they were considering listing BTG. This was the retroactive mining of 100,000 coins after the fork had already occurred. The way this happened was through the rapid mining of about 8,000 blocks, the results of which were set aside as an “endowment” of sorts to be used to grow and maintain the broader Bitcoin Gold network.4 About 5% of those 100,000 coins were set aside for each of the six primary team members as a bonus. The remaining 95,000 coins were set aside to support the growth of the BTG community’s ecosystem.

Exchange Skeptics

While initially skeptical, crypto exchange Bittrex eventually agreed to list Bitcoin Gold. Their biggest concern was that Bitcoin Gold did not have “fully formed consensus code; [an] implemented replay protection; adequate code for testing and auditing; publicly known code developers.” Similarly, they gave their users the following warning: “Bitcoin Gold codebase also contains a private pre-mine of 8,000 blocks (100,000 BTG).

Please be aware that if a market does open, there is a possibility of the developers selling their pre-mined BTG on the open market.” Following the May 2018 51% attack, Bittrex requested more than 12,000 BTG (valued at $255,000 at the time) as compensation from Bitcoin Gold to make up for the loss sustained by the exchange. Bitcoin Gold did not compensate Bittrex, and the exchange delisted BTG.

At the time of the launch, all bitcoin owners were expected to receive Bitcoin Gold coins at one Bitcoin Gold token per one bitcoin token—a process known as air-dropping. Coinbase, one of the largest cryptocurrency exchanges in the world, was notably skeptical of Bitcoin Gold at launch time. Unlike Bittrex, Coinbase ultimately decided to keep BTG off its exchange. Coinbase representatives stated that the exchange did not believe BTG was safe because information about the blockchain was limited.

Coinbase did not air-drop BTG to Bitcoin holders on its platform upon its release in October 2017, and this action resulted in a lawsuit filed against Coinbase by plaintiff Daniel Archer on March 27, 2018, claiming Coinbase had violated the terms of its contract agreement—specifically negligence, conversion, and breach of contract. The original ruling stated that Coinbase’s agreement with Archer contained no part requiring Coinbase to provide services for cryptocurrencies from third parties. In August 2020, the appellate court affirmed the original court’s summary judgment in favor of Coinbase.

Network as of November 2023

Continuing the long-term downward trend of dwindling nodes as Bitcoin Gold continues to stay afloat, as of Nov. 2, 2023, Bitcoin Gold had 70 reachable nodes, a pale number in comparison to Bitcoin’s active nodes. The highest concentration of BTG nodes was in the U.S., Germany, and France.

How Does Bitcoin Gold Work? Equihash and Replay Protection

The creators of BTG intended to disrupt the dominance of mining corporations by implementing a new algorithm—one less vulnerable to optimization through ASIC technology. This algorithm is called Equihash and is a memory-hard Proof-of-Work algorithm introduced by Alex Biryukov and Dmitry Khovratovich.

It is designed to resist specialized mining hardware like ASICs, promoting decentralized mining by individuals using consumer-grade hardware, like GPUs. Equihash’s memory-hard property comes from its requirement to solve a complex computational puzzle, which demands substantial memory resources, making it inefficient for ASICs to solve.

Instead, devices with higher RAM have an advantage, making GPUs an ideal solution. Bitcoin Gold adopted Equihash to fulfill its vision of restoring mining decentralization to the Bitcoin network. Equihash’s design seeks to level the playing field and make mining more accessible and fair for individual participants.

The Replay Protection is an important safety feature implemented in BTG to protect users’ transactions. In the context of a hard fork, without replay protection, it is possible that a transaction on one chain could be “replayed” on the other chain, causing users to lose funds potentially.

In a scenario where an individual possesses Bitcoin (BTC) at the juncture of the BTG fork. Post-fork, this individual would hold a corresponding amount of BTG. If this individual elects to transact using their BTG, and the new chain lacks replay protection, it is possible that their BTC could inadvertently be transacted as well, given that the transaction could be replicated across both networks.

Replay protection in BTG prevents this by ensuring that transactions made on the Bitcoin Gold network are invalid on the original Bitcoin network, and vice versa. It creates a unique situation for every transaction making it impossible for them to be duplicated across both networks. The method modifies how transactions are signed, effectively segregating the two networks. A new transaction format includes a flag incorporated into the signature part of each Bitcoin Gold transaction, rendering it invalid on the original Bitcoin network. Similarly, transactions on the Bitcoin network lack this flag and are therefore deemed invalid on the Bitcoin Gold network.

Source: Exodus

BTG Use Cases

BTG was developed with the aim of democratizing cryptocurrency by making it more accessible to the average user. Some of its core use cases are:

• Peer-to-Peer Transactions: BTG is designed for executing peer-to-peer payments. The intent is to foster a more inclusive system where users, not just large miners or institutions, can participate in the digital economy.
• Trading: BTG provides an opportunity for financial speculation. With its listing on various cryptocurrency exchanges, investors can trade BTG to profit from market movements.
• Mining: The team behind BTG subscribes to the philosophy of “one CPU one vote,” enabling the everyday user to mine with general-purpose hardware.

Overall, the effectiveness of these use cases largely hinges on the level of network adoption and ongoing development within the Bitcoin Gold ecosystem.

Bitcoin Gold Ecosystem

The Bitcoin Gold ecosystem comprises numerous projects, products, and partnerships. Some key components include:

• Electrum G: This is a lightweight wallet specifically designed for Bitcoin Gold. It provides a secure and convenient way for users to store, send, and receive BTG.
• BTGPay: An initiative by BTG that helps merchants and service providers integrate BTG as a payment option into their business processes, fostering wider adoption of this cryptocurrency.
• NOWPayments: A cryptocurrency payment gateway that supports BTG payments. By using NOWPayments, businesses can accept Bitcoin Gold as payment, further enhancing the utility and applicability of BTG in real-world transactions.

These components significantly contribute to the growing Bitcoin Gold ecosystem, facilitating wider usage and integration of BTG into various domains.

Bitcoin Gold’s Availability on Exchanges

As the Bittrex and Coinbase examples have shown us, for all cryptocurrencies, one of the major factors that help to determine both short-term and long-term success is its availability on cryptocurrency exchanges. Users must be able to access the cryptocurrency on exchanges to make transactions.

According to the Bitcoin Gold website, as of Nov. 2, 2023, the cryptocurrency was trading live on 34 exchanges. However, of the exchanges listed in November 2023, it is only active on Bithumb, Uphold, Unocoin, and Coinone. The rest are defunct or no longer supporting Bitcoin Gold.

Bitcoin Gold’s website also claims it is supported by 18 wallet services, including Trezor Wallet, Ledger Wallet, Exodus, Coinomi, Guarda, Freewallet, BTGWallet, and Kasse.

Special Considerations

Besides the goal of “re-decentralizing” Bitcoin and making a more accessible digital asset for smaller miners that could be more fairly and efficiently distributed, Bitcoin Gold’s developers also focused on protection and transparency issues. Unlike other blockchains (including Bitcoin), Bitcoin Gold sought to increase anonymity by not publishing transaction details or wallet addresses. As a free, open-source community project, decentralization and transparency in the Bitcoin Gold community are inherently expected. However, threats from hackers and other malicious entities are an ongoing concern.

In the world of virtual currencies, smaller proof-of-work blockchains like Bitcoin Gold are particularly susceptible to 51% attacks, where an attacker seeks to gain control of 51% or more of the blockchain’s computing power or hash rate. While Bitcoin Gold has claimed it has implemented additional safety and protective measures from the time of its launch—like full replay protection—in an effort to help secure its customers’ accounts and coins, the blockchain has endured three 51% attacks and multiple BTG wallet thefts.

The most recent 51% attack occurred in January 2020. The first January 2020 attack netted attackers 1,900 BTG, or $19,000; in the second, approximately 5,267 BTG, or about $53,000, was stolen. In the immediate aftermath of the May 2018 loss of 388,000 BTG, or roughly $18 million, the cryptocurrency exchange Bittrex chose to de-list the BTG blockchain. This first incident required Bitcoin Gold to update its mining algorithm to Equihash-BTG.

Is Bitcoin Gold a Good Investment?

When considering the investment potential of Bitcoin Gold (BTG), it is important to note that sharing the Bitcoin name does not necessarily mean it will mimic Bitcoin’s success trajectory. BTG was created to democratize Bitcoin by making it more decentralized and accessible. However, its future remains uncertain. There are genuine concerns about the stability and security of the Bitcoin Gold chain, especially given the limited number of active nodes contributing to its network. This could potentially impact its resilience against attacks and general network performance.

The coin’s history also includes significant controversy and skepticism. BTG’s security has been questioned due to two significant 51% attacks it suffered, once in 2018 and again in 2020. These attacks, enabling hackers to double-spend BTG, resulted in considerable financial losses and highlighted potential vulnerabilities in the network’s security, further adding to investor caution.

Despite all of it, the project continues to have a lot of supporters, as shown by its continued prominence on coinmarketcap. Therefore, while BTG has its merits and potential, one must carefully evaluate these factors and conduct thorough due diligence.

The cryptocurrency market is highly volatile and investments should always be made based on individual risk tolerance and financial circumstances, rather than assumptions based on namesake alone.

How to Own BTG?

To own BTG, you can use the services of a centralized crypto exchange. Start by creating a Gate.io account, and get it verified and funded. Then you are ready to go through the steps to buy BTG.

News on Bitcoin Gold

In an interesting episode that happened in 2021, Bitcoin Gold (BTG) saw an unanticipated surge of 173% in its value, a phenomenon largely attributed to a case of mistaken identity. Traders seemingly confused BTG Pactual Bank – a prominent investment bank in Latin America that shares the ‘BTG’ ticker – with Bitcoin Gold, leading to the inadvertent price hike. The news was related to the fact that this bank wanted to take on the custodial responsibilities of BTG Dol.

This case serves as an intriguing example of market dynamics and highlights the unpredictable nature of cryptocurrency investing.

Take Action on BTG

Check out BTG price today, and start trading your favorite currency pairs.

• BTG/USDT
• BTG/BTC

Learn More: https://bitcoingold.org/

Future of Bitcoin Gold

It’s difficult to say what will happen to BTG over the long term. According to the 2021 BTG Roadmap (the latest available), the primary development areas of focus are interoperability, applications, infrastructure, and the lightning network.

Developers noted that they planned to shift from a board-based governance structure to a modern DAO-based model. Updates to the core items in their tech stack were underway, and updates to some of these items—like their explorers and ElectrumG, were being upgraded. BTG noted that while transaction volumes and fees at the moment don’t necessitate a layer-2 lightning network solution just yet, it’s on their radar.

The Bottom Line

Bitcoin is a cryptocurrency, forked from the Bitcoin blockchain in 2017. Since then, it has become a controversial coin with minimal use, as evidenced by the approximately 300 daily transactions on its blockchain (compared to Bitcoin’s average of about 3,000 transactions per block and about 144 blocks per day).

As of November 2023, it is also no longer listed on many of the exchanges it claims to be listed on, or there is no BTG trading or transaction volume shown. With dwindling updates and activity, it’s hard to predict how Bitcoin Gold will turn out in the future.

Disclaimer ||

The Information provided on this website article does not constitute investment advice ,financial advice,trading advice,or any other sort of advice and you should not treat any of the website’s content as such.

Always do your own research! DYOR NFA

Coin Data Cap does not recommend that any cryptocurrency should be bought, sold or held by you, Do Conduct your own due diligence and consult your financial adviser before making any investment decisions!