by Nuno Menezes
The Bitcoin scaling debate is far from being while it seems that a new cryptocurrency is coming out of the new Bitcoin fork that took place on October 24, which aims to address miner centralization. However, users will have to wait for the software and comes with a premine of 200,000 Bitcoin Gold coins.
We have seen the most intense debates in regards to Bitcoin scalability in 2017. All through the year, buyers, builders, and miners engaged in a hard and important debate about the way on how to scale Bitcoin to deal with the growing purchaser base and transaction volume. On August 1, 2017, the adoption of new protocols which required a “hard fork” took place. The result was a split of the network into two entities; the standard bitcoin cryptocurrency – BTC – and bitcoin cash – BCH.
Now, there is a new split. On October 24 (or more precisely following block height 491407), the Bitcoin blockchain experienced a hard fork, and once again, gave birth to a new digital currency called Bitcoin Gold (BTG).
What is Bitcoin Gold?
Bitcoin Gold will be yet another version of bitcoin. Jack Liao, the founder of Lightning ASIC, a Hong Kong-based mining firm, first made the project public back in July 2017. He says Bitcoin Gold aims to protect the ecosystem by increasing mining decentralization and to compete with the top coins in the ecosystem.
At the predetermined block height, Bitcoin Gold miners will begin creating blocks with a new proof-of-work algorithm, and this will cause a bifurcation of the Bitcoin blockchain. The original Bitcoin blockchain will continue unaltered, but a new branch of the blockchain will split off from the original chain. The new branch is a distinct blockchain with the same transaction history as Bitcoin up until the fork but then diverges from it. As a result of this process, a new cryptocurrency will be born.
According to the project’s site, “the purpose of Bitcoin Gold is to make Bitcoin mining decentralized again. Satoshi Nakamoto’s idealistic vision of one CPU one vote has been superseded by a reality where the manufacture and distribution of mining equipment has become dominated by a very small number of entities, some of which have engaged in abusive practices against individual miners and the Bitcoin network as a whole. By changing Bitcoin’s proof-of-work algorithm from SHA256 to Equihash, all of the specialized SHA256 mining equipment will be obsolete for mining the Bitcoin Gold blockchain.”
“Thus, Bitcoin Gold will provide an opportunity for countless new people around the world to participate in the mining process with widely-available consumer hardware that is manufactured and distributed by reputable mainstream corporations. A more decentralized, democratic mining infrastructure is more resilient and more in line with Satoshi’s original vision.”
BTG Block Size
On the BTG website, we can read that “bitcoin gold implements the UAHF (user activated hard fork) proposal to accept GPU mining. Miners can choose the size of the blocks they want to mine, with a default of 1 MB. It includes replay and wipeout protection.”
Bitcoin Gold will adopt a new protocol that will change some of the consensus mechanisms around the currency. This will enable miners to go about mining for bitcoin in new ways. The project is trying to stay away from ASIC collectives, and according to bitcoinalk.org, instead of using Bitcoin’s SHA256 algorithm, BTG will implement the use of the Equihash algorithm that Zcash uses as an ASIC-proof protocol. Miners will also be able to select the block size they will be mining.
The project has been gaining popularity on social media and Slack and the BTG team already made the code available for public review. The full network launch of BTG is set for November 1, which is when bitcoin holders will be given the BTG tokens.
The Controversy around Bitcoin Gold: ‘Fool’s Gold?’
While many community members are shouting that this is an attack against Bitcoin and is a definite scam, there is still a lot of discussion standing in the way of another hard fork. Even though the plans for this new split were presented in July, many enthusiasts inside the Bitcoin community are still not fully aware of the project and the implications it might have. There are many who consider the second fork to be an attempt at trolling the earlier hard fork and SegWit2x adoption.
Recently, a programmer inside the Bitcoin Gold team revealed on the Slack group that the team was working on core protocol and would be launching the testnet as soon as possible. A lot of members of the community are not too happy with the project as there is still no testnet which miners could use to test out the new protocol fueling a wave of criticism saying that the possible fork project is disorganized, especially considering how quickly the date of the fork is coming up.
Accessing Bitcoin Gold
The distribution of the new token will work exactly as it did with the Bitcoin Cash split. Bitcoin holders wanting to access these new tokens need to make sure they have complete access to their private keys. The best and most secure way to do this is by having the coins in a paper wallet/cold storage that is under the user control. Holders won’t be able to claim their BTG or make any valid transactions with their BTG wallet before the Bitcoin Gold network’s scheduled fork on October 24, 2017. Any owner of bitcoin, depending upon their wallet will receive an equal amount of BTG. For instance, if a holder owns 10 bitcoin in his wallet, he will then be entitled to the exact same amount in BTG. Nevertheless, there is still a lot of debate around the distribution of the BTG tokens.
Bitfinex has credited their users with BTG already, but it seems at least some traders with margin shorts on bitcoin now have a negative BTG balance. Trezor also released an announcement on October 23 saying it would support Bitcoin Gold but the Trezor wallet will await adequate replay protection, meaning if you want to hold both BTC and BTG no further action is required.
TREZOR supports it, meaning you will get your forked coins. TREZOR Wallet will not offer interface yet. U can access BTG through other ways.
— TREZOR (@TREZOR) October 23, 2017
Bittrex has already stated it would not open trading markets for BTG, but will credit BTC holders with the forked altcoin. Others will not support the altcoin at all, such as Coinbase, Kraken, and ShapeShift.
Any secure Bitcoin wallet that gives the user exclusive control of the cryptographic private keys prior to the October 24 fork will enable you to claim Bitcoin Gold. Some wallets may offer you direct access to your BTG, while others may require you to take additional technical steps. For instance, Coinomi’s wallet will allow you to import your private keys from a bitcoin address and sweep them into the Coinomi wallet for BTG (you should only do this after sending bitcoin to another address of yours). Wallets and other similar services will introduce their own splitting tools in time.
Verified wallets that support BTC and BTG side-by-side will be listed on the Bitcoin Gold home page. We will publish more information for retrieving BTG from the most popular wallets, including Bitcoin Core, Electrum, Mycelium, hardware wallets, paper wallets, and more.