The project’s originator and primary financial backer says the goal of Bitcoin Gold is to compete with Bcash, Ethereum, and GPU Coins, increase mining decentralization, and protect the Bitcoin ecosystem.
Simply put, this update is crucial to the future of Bitcoin and the continued deterioration of centralization.
As of now on October 25th, the Bitcoin blockchain will hard fork, meaning SegWit, which has been delayed will activate and go through an update that will split the existing Bitcoin blockchain, resulting in a new cryptocurrency called Bitcoin Gold (BTG).
This is an update that was layed out back in 2015 by Jeff Garzik in preparation for SegWit2x with the intention of increasing network transaction speed, thus decreasing congestion and with it transaction fees.
At the time a significant percentage of the economic nodes signed an agreement to hard fork, known as the New York Agreement with the ultimate SegWit2x update in November, not SegWit now due in October.
The Bitcoin Gold update is meeting heavy resistance because this is a civil war against ASIC miners, who pretty much at this point monopolize Bitcoin mining.
“The inspiration for Bitcoin Gold was to create a version of Bitcoin that is anti-fragile against mining centralization.”
– Robert Kuhne, Bitcoin Gold’s volunteer organizer
Many however believe this to be a scam because the update should have already happened.
First and Foremost: How to Get Bitcoin Gold
It will work exactly as it did with the Bitcoin Cash split. Any owner of bitcoin, depending upon your wallet (stored on the blockchain) will receive an equal amount of BTG on November 1st. So let’s say you own 5 Bitcoin in your wallet, you will then be gifted 5 BTG.
Having your coins in a paper wallet/cold storage that is under your control will be the safest method. Make sure you have access to your private keys.
I have also included a list of online exchanges/wallets at the bottom of the article and their stance on the upcoming fork that I will continuously update.
As of now, an official wallet for Bitcoin Gold still has not been developed and may not be available in time, which could cause a delay of a few weeks before holders will be able to receive and use their new coins, so you may have to be patient.
It is important to understand that not all hard forks result in new currencies, it all depends upon the general consensus of the community as to whether or not they will accept the update.
The Ethereum Metropolis update set for Oct. 17th is a perfect example, as it will not result in a new currency.
Related Article: A Simple Guide to the Ethereum Metropolis Upgrade
Let’s get to the drama:
Battlefield Lines Have Been Drawn
Bitcoin mining has become centralized due to the creation of machines known as ASICs, which require tremendous capital and energy to operate.
ASICs are widely regarded among bitcoin’s development team and their supporters as the primary source of many of Bitcoin’s current problems, which has essentially caused Bitcoin to become centralized within the hands of a core group of miners, such as Bitmain.
Chinese based mining giant Bitmain, has become a powerhouse within the ASIC mining community, commanding 28.9% of all the processing power on the global bitcoin network, which equates to just over $2 million per day in newly mined bitcoins.
They not only run a vast mining operation through outlets such as Antpool and BTC.com, but also design the silicon that goes into their bitcoin mining rigs, assemble the machines, then sell them to customers around the world.
Bitmain’s newest product: Sophon is a revolutionary piece of deep learning AI technology that could soon be training neural networks in vast data centers around the world.
The deep learning industry is simply going through the same evolution that bitcoin miners already experienced.
They are poised to take on the likes of Google (currently transitioning their AI team over to Beijing), Nvidia, and AMD in the deep learning arms race.
“He (Jihan Wu: Bitmain cofounder) wants to control the code, he wants to control the environment. Then he can design the entire bitcoin ecosystem.”
– Jack Liao, CEO of Hong Kong mining manufacturer LightningAsic and the driving force behind Bitcoin Gold
Incorporated in Hong Kong as Bitmain Technologies Ltd, Bitmain’s controlling shareholder is a trust registered in the Cayman islands.
I would love to see who owns that trust.
Bitcoin Gold threatens the power these core miners like Bitmain currently have because it distributes mining capabilities to anyone who owns a computer with a graphics card.
It is interesting though that Bitcoin Gold’s development team is technically an ASIC miner.
Is this truly a rebellion against centralization or a scam to get rich quick.
What is Bitcoin Gold and How Will This Affect Bitcoin?
Bitcoin Gold will use a different mining algorithm that is resistant to ASIC chips, called Equihash.
“Bitcoin Gold will implement a proof-of-work change from Bitcoin’s SHA256 to Equihash, a memory-hard algorithm that is ASIC-resistant and optimized for GPU mining.” – Bitcoin Gold Developer “the Sorrow”
Making Bitcoin Gold mining ASIC resistant does seem like a direct move against all ASIC miners, including LightningAsic.
Equihash will allow GPU miners to get back in on the action. Instead of requiring tremendous processing and electrical power to mine Bitcoin, it will now be based upon the graphics card in your computer.
Essentially anyone can now mine.
Difficulty will now be adjusted per block, instead of every 2 weeks. Think of this as a ‘handicap’ setting that makes it easier or harder for miners to solve a block and get their reward, which tips the scales in favor of GPU miners.
Replay protection will also be included. This important code change ensures Bitcoin Gold users don’t accidentally spend real Bitcoin and vice versa, otherwise known as a ‘replay attack’.
“Reply protection is essential for the launch. In case there’s anything wrong with it, the launch date could be postponed.”
Bitcoin Gold is a complementary system that will support Bitcoin as it grows. BTG is a competitor of Bitcoin Cash and Ethereum, not Bitcoin.
“Bitcoin Gold is also a real blockchain to pilot (all) Bitcoin upgrades.”
Think of it as a disaster recovery backup for Bitcoin’s blockchain if the Segwit2x split in November doesn’t go well — positioning Bitcoin Gold to take over for Bitcoin if necessary. It could possibly even have its code merged with Bitcoin, thus eliminating Bitcoin’s problems that are rooted in an ASIC mining monopoly.
Could this be why Bitcoin Gold is meeting so much resistance?
The Controversial Premine Dilemma
BTG developers have officially premined 16,000 blocks in anticipation of the update. The ICO price is now supposedly 1 BTC = 10 BTG.
While many believe this to be a scam in the making, their reasoning is due to h4x3rotab initially withholding this information in an attempt to do a pump and dump, however I believe his intention could still be to ultimately benefit the Bitcoin ecosystem. H4x3rotab has after all been public with what they have premined:
A premine is where a developer allocates a certain amount of currency credit to a particular address before releasing the source code to the open community. This is often done based on the reasoning that they need to pay for certain features such as listing on exchanges and development of core features such as block explorers. (source)
An archived post:
BTCGPU will create 16000 blocks after forked from No 478558th Block. every block 12.5 BTG. it will be sold to ico investor. 1BTC=10BTG.
We are currently on 488973 block for BTC right now…so the fork has possibly already happened, however this is no official info on their website. They could have possibly moved the block number, or we could be in a testnet.
According to the original website text, Bitcoin Gold was even planning an initial coin offering (ICO) by which 1 percent of the bitcoin gold coins would go to the developer team, but these details have since been removed.
“Organisms derive benefits from creating offspring. With bitcoin gold we are conducting an experiment to see if that principle holds true in the world of blockchains.”
Kinda sounds like a possible testnet scenario. The possibility of a pump and dump is still not out of the picture, however I do believe h4x3rotab is doing this so he/she can successfully realign Bitcoin back with Satoshi Nakamoto’s original vision of what the coin really means.
Related Article: Bitcoin Is Unstoppable. Let the Revolution Begin
Ultimately, the value and success of Bitcoin Gold will be determined by GPU miners.
Aka: everyone else
Exchanges/Wallets For and Against BTG
* This section will be continuously updated as needed. Please feel free to comment with any leads.
- BitStar: “If a chain split occurs and results in unexpected chaos, we may extend the suspension of deposits and withdrawals until it is technically safe to resume normal processing.”
Still on the Fence/Undecided:
- Ledger/BTChip: Will Support SegWit2x, no word on Bitcoin Gold.
- BitPay: They did support BTC and will support SegWit2x, no word on Bitcoin Gold.
- Jaxx: Their response:
Will Bitcoin Gold be the result of the SegWit2x change? I’m not sure that is the case but either way:
1. We have not decided to implement Bitcoin Gold just yet.
2. If the SegWit2x will create a forked chain, Jaxx will patch and update the nodes so that our user’s funds are safe
- Bitfinex: Will support SegWit2x. This is their response to BTG:
We have currently not made a decision regarding BTC Gold – we will keep you informed via Bitfinex announcements for future information.
Regarding the withdrawal and deposit services and the buying and selling of the newly generated bitcoin gold, since the security design of the newly formed blockchain has not been sufficiently confirmed, its handling is undecided at this stage.
Avoid/Will Not Support:
“Coinbase may decide to support it at a later date. At that point your account would be credited with an appropriate amount of Bitcoin Gold.”
“… we have decided not to grant [access to]BTG, [including]deposits, withdrawals, and transactions at this time.” However, it added that “when all the possibilities of concerns have been resolved, the handling of BTG will be considered at our discretion just like other currencies.”
“… we are not planning to grant, deposit, withdraw, or trade bitcoin gold (BTG) at this time.”
- Bitbank: Announced on Thursday that it will not initially grant bitcoin gold to customers, for several reasons including the incomplete state of Bitcoin Gold’s code. However, the company will take a snapshot of customer assets at the time of the split. The exchange also stated the situation may be “reviewed in the future.”