Cryptocurrency forks of various types now take place on a regular basis. Even bitcoin has experienced several different iterations and branches in this way. One of the largest and most discussed bitcoin forks took place late in 2017.
Bitcoin gold was a hard fork of the original open source cryptocurrency which took place on October 24, 2017. While hard forks take place for a number of reasons – including for the purposes of scaling as a cryptocurrency customer base grows, or because of developer conflict and differences of goals – bitcoin gold’s stated purpose has been to “make bitcoin decentralized again.”
On the surface, the idea of “making bitcoin decentralized again” may seem counterintuitive. Bitcoin, like all other cryptocurrencies, is designed to be decentralized already; it is not linked with any central bank, particularly country, or government body.
One of the major issues with bitcoin which prompted the development of bitcoin gold, however, was not related to the question of central issuance at all. Rather, it had to do with the mining process. Bitcoin gold developers believed that by adopting a new algorithm for the mining process (in this case, a so-called proof-of-work algorithm called Equihash), the new branch of the world’s most popular cryptocurrency by market cap would not disproportionally favor major mining operations.
Democratizing the Mining Process
Bitcoin mining is a lucrative but resource-intensive process. The most profitable mining ventures are often those which pool together a large number of mining rigs, each of which requires expensive, special equipment. (See more: How Does Bitcoin Mining Work?)
Individuals attempting to mine for bitcoin on their own either have to invest a huge amount of money and time into creating their own rigs, or they get passed by in the process, as their computers are unable to compete with the professional rig systems.
One of the primary goals of bitcoin gold has been to change the algorithm by which the cryptocurrency itself is mined, meaning that the mining process cannot be run faster on specialized equipment than it can on standard computer systems.
Bitcoin gold was not the first major hard fork of bitcoin. Bitcoin cash forked off from the primary cryptocurrency in August of 2017.
In 2018, bitcoin is anticipating several additional hard forks, prompting some to speculate that there may be diminishing returns in terms of investor interest as more offshoots of bitcoin reach the market. (See more: Bitcoin vs. Bitcoin Cash: What’s the Difference?)
Distribution, Protection, Transparency
Besides the goal of “re-decentralizing” bitcoin, bitcoin gold’s developers were also focused on issues relating to distribution, protection, and transparency. “Hard forking bitcoin’s blockchain fairly and efficiently distributes a new digital asset immediately to people all over the world who have interest in cryptocoins,” the bitcoin gold website states.
In the world of virtual currencies, threats from hackers and other malicious entities are constantly a concern. For that reason, bitcoin gold took additional safety and protective measures from the time of its launch, in an effort to help secure its customers’ accounts and coins. These include replay protection and unique wallet addresses. (See also: Can Bitcoin Be Hacked?)
The fact that bitcoin gold is “a free open-source software project that is built by volunteer developers and supported by a rapidly growing community of bitcoin enthusiasts that stretches around the globe” is also a draw for potential customers.
Bitcoin Gold On Exchanges
For all cryptocurrencies, one of the major factors which helps 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 in order to make transactions.
According to the bitcoin gold website, as of March 2018, the cryptocurrency was trading live on Bithumb, Bitfinex, Binance, Bittrex, HitBTC, Uphold, YoBit, Gate.io, Changelly, Shapeshift, BitBay, Abucoins, Change Now, Evercoin, Tdax, Bitsane, Bitstarex, QuadrigaCX, Cex.io, Okex, Anybits, BestRate, Bitmarket, Indacoin, CoinSwitch, and Unocoin.
There are additional exchanges slated to offer bitcoin gold in the near future as well. The cryptocurrency is also available through a number of wallet services, including Trezor Wallet, Ledger Wallet, Exodus, Coinomi, Bitpie, Guarda, Freewallet, BTGWallet, and Kasse. According to the website, the cryptocurrency has been listed on 46 markets and 26 exchanges as of January, 2018.
Launch and Controversy
The developers of bitcoin gold used what is called “post-mine” after the launch. This was the retroactive mining of 100,000 coins after the fork already took place. The way that 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.
About 5% of those 100,000 coins were set aside for each of the six primary team members as a bonus. At the time of the launch, all bitcoin owners received bitcoin gold coins at the rate of one bitcoin gold token per one bitcoin token.
Coinbase, one of the largest cryptocurrency exchanges in the world, was notably skeptical of bitcoin gold at launch time. Coinbase representatives stated that the exchange “cannot support bitcoin gold because its developers have not made the code available to the public for review. This is a major security risk.” (See also: Coinbase Hit with 2 Lawsuits: Accused of Insider Bitcoin Cash Trading.)
As of March 4, 2018, bitcoin gold has 253 reachable nodes. The highest concentration of nodes is in Germany (46 nodes), with the next-highest levels being the United States (38), France (37), and Russia (18).
In February 2018, bitcoin gold launched the bitcoin gold insight explorer, calling it a “fully functional bitcoin gold insight instance and web application service presenting the Insight UI and Insight API.”
Like most cryptocurrencies, bitcoin gold has had its share of detractors and controversies. Just days after the launch, miners accused one of the developers of bitcoin gold of having added in a 0.5% mining fee that was hidden from the mining community.
The Future of Bitcoin Gold
According to the bitcoin gold website, the cryptocurrency maintains ambitious plans for expansion into the future. In the first quarter of 2018, for instance, the website says its goals including “open source libraries integration” with BitcoinJS, BitcoinJ, and CoPay, as well as “academic and university collaboration” and “design and rebranding,” including a refreshed website.
In the second quarter of 2018, the digital currency aims to integrate a lightning network and decentralized mining through P2Pool. There is also a plan to integrate a debit card program and other payment systems integrations.
By the end of 2018, the cryptocurrency aims to develop “sidechains and cross-chain atomic swaps” as well as a number of meet-ups and developer conferences, university outreach, and more. Looking ahead to 2019, the cryptocurrency has its sights on private transactions and scholarship or research support.
Over the longer term, bitcoin gold will conduct research on smart contracts and blockchain democracy, as well as develop a decentralized fiat-crypto brokerage network. (See also: How Did Bitcoin Gold Prices Perform in 2017?)
Bitcoin gold developers are conscious of the connections between this cryptocurrency, its parent bitcoin, and the broader digital currency world. As such, they indicate that “the core improvements we’re working on are all of great interest in the broader bitcoin and crypto worlds, not merely for bitcoin gold.” They said some of these unilaterally applicable improvements may include scalable ways to address hard forks, “smart voting mechanisms,” and decentralized decision-making for the development of the digital currency.
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