Bitcoin Gold

What is Bitcoin Gold (BTG)?

Bitcoin Gold is a hard fork of Bitcoin that attempts to bring mining back to individuals and deliver a truly decentralized peer-to-peer electronic payment system.

The network of a proof-of-work cryptocurrency like Bitcoin is upheld by computers performing a function called mining. At Bitcoin’s inception, mining was carried out by the central processing unit (CPU) of individual computers.

Quickly, users realized that graphical processing units (GPUs) could accomplish this task faster. However, even GPU mining didn’t last. Specialized hardware called Application Specific Integrated Circuit (ASIC) took over Bitcoin mining, with the cost of a machine putting it beyond the reach of most casual users.

As a result, Bitcoin mining became an industry. Mining operations deployed countless ASIC machines constantly in search of locations promising cheaper energy and lower temperatures.

This centralization of mining into industrial-strength operations away from personal computers led the developers of Bitcoin Gold to transition away from Bitcoin. They did this with their own ASIC-resistant mining algorithm called Equihash.

What is a Hard Fork?

A hard fork is a change in the protocol of a blockchain network that causes the chain to split into two. This is usually done to upgrade the network, but sometimes it happens as a result of a community divide.

Bitcoin holders at the time of the Bitcoin Cash hard fork, block 478,558, automatically became holders of the same amount of BCH. Bitcoin Gold forked at block number (also called “block height”) 491,406.

Bitcoin has undergone many notable hard forks in addition to BCH and BTG, including Bitcoin XT, Bitcoin Classic, and Segregated Witness (SegWit).

Meanwhile, a soft fork is a change to a protocol that doesn’t result in the launch of a new cryptocurrency, as it is backward compatible.

When Was Bitcoin Gold Launched?

Bitcoin Gold forked away from Bitcoin in October 2017. Focused purely on mining rather than the block size-oriented forks prior, Bitcoin Gold retained all of the other qualities and basic principles of Bitcoin.

However, the Bitcoin Gold launch was fraught with controversy. On launch day, BTG was targeted with a DDOS attack, and days later, miners accused one of the developers of implementing a hidden 0.5% mining fee.

Even more significantly, the Bitcoin Gold developers rapidly mined close to 8,000 blocks, collecting 100,000 BTG coins. These “premined” BTG were supposedly set aside from the endowment to grow and maintain the Bitcoin Gold network.

However, 5% of these 100,000 BTG were set aside for the six primary team members.

The first major cryptocurrency exchange to list BTG was Bittrex, but there was a warning to users saying: “Bitcoin Gold codebase also contains a private premine 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 premined BTG on the open market.”

The Coinbase exchange was also skeptical of BTG, citing that the developers had not made the code available to the public. The exchange also refused to airdrop BTG to its BTC holders.

What was the Coinbase Controversy?

When a cryptocurrency undergoes a hard fork in the manner that Bitcoin Gold did from Bitcoin, it simply diverges starting from a certain block. Prior to that, the chains are identical. As such, BTC addresses prior to the fork automatically get the same amount of BTG.

Unfortunately, exchanges and similar platforms are custodial. This means that the currency generated at the hard fork goes to the exchange’s address, not the user’s. As a result, most custodians then “airdrop” the new tokens to their users’ accounts if they support the new currency.

Coinbase neither supported BTG nor allowed its BTC holders to receive any. As the saying in the crypto community goes, “not your keys, not your crypto.”

Coinbase was taken to court for negligence, conversion, and breach of contract by one of its users, Darrell Archer, who had 350 Bitcoin stored on his Coinbase account. However, the courts ruled against Archer, and the appellate court affirmed the original judgment in favor of Coinbase in August 2020.

Who are the Founders of Bitcoin Gold?

Bitcoin Gold was founded by six enthusiasts, three of whom remain involved with the project. The highest profile of these is Hang Yin, also known as H4X3ROTAB.

Hang Yin, the lead developer at Bitcoin Gold, is a graduate of Fudan University who spent three years at Google before founding Bitcoin Gold.

Martin Kuvandzhiev, a computer software engineering graduate from the Technical University of Sofia in Bulgaria, is the Operations Lead of Bitcoin Gold. Alongside his position at Bitcoin Gold, Kuvandzhiev is also the CEO of Assetify.

The third and final founding member still involved with Bitcoin Gold is Franco Niebles, who co-founded Cobru and Trixel in addition to Bitcoin Gold. The founding members no longer involved with Bitcoin Gold are Alejandro Regojo, Robert Kuhne, and Jack Liao.

The original idea for Bitcoin Gold has been credited to Liao, the CEO of LightningAsic—a Hong Kong-based vendor of the same sort of crypto mining equipment. Many detractors claim that one of the main reasons for Bitcoin Gold’s creation was that Liao’s company sold GPU miners that could use Equihash.

How Does Bitcoin Gold Work?

In almost every way, Bitcoin Gold works exactly like Bitcoin. In a 2017 interview, the lead developer, Hang Yin, said that “Bitcoin Gold can be thought of simply as a replication of the Bitcoin protocol and coin distribution that utilizes on (sic) a different type of computer hardware for security.”

Bitcoin and Bitcoin Gold both use cryptography to verify transactions and record them on a blockchain, which is a public distributed ledger.

This public distributed ledger, or blockchain, is made up of many ‘blocks.’ Each block contains a cryptographic hash of the previous block. This goes all the way back to the genesis block mined on Jan 03, 2009, by pseudonymous creator Satoshi Nakamoto.

These new blocks are formed by a new group of transactions that are accepted by the nodes of the network, added to the network, and then published to all nodes. Rather than requiring central approval and oversight, most computers on the network instead hold sway.

A new block is accepted by the rest of the network if it contains a proof of work (PoW). This proof of work can be boiled down to the computers on the network, or miners, solving cryptographic puzzles to arrive at a solution. This process is assigned a certain level of difficulty and, although time-consuming to generate, it’s easy to verify.

Miners solve these puzzles and are allowed to create the next block of the blockchain. These new blocks are mined at a fixed interval of ten minutes, and miners who create them get a block reward—a certain amount of Bitcoin Gold.

What Makes Bitcoin Gold Unique?

Bitcoin Gold is unique because it stays true to Bitcoin’s principles. It only changes the mining algorithm to eliminate ASIC mining and its inherent dangers.

ASICs are all about pure processing power, but the Equihash mining algorithm places significant emphasis on memory. This memory (specifically, random access memory or RAM) requirement bottlenecks ASICs severely but can be served by GPUs.

Equihash, which was developed by Alex Biryukov and Dmitry Khovratovich, is also used in the Zcash cryptocurrency, which is yet another fork of Bitcoin.

How is the Bitcoin Gold Network Secured?

Bitcoin Gold is secured similarly to Bitcoin. It uses proof-of-work consensus to validate transactions, although the algorithm BTG uses is called Equihash.

Like with Bitcoin, blocks on the Bitcoin Gold blockchain get confirmed every ten minutes and have a halving schedule that impacts the block reward.

What is Halving?

Halving refers to reducing block rewards paid to miners upon the successful creation of a new block.

These halvings bring an element of perfect transparency to the supply of Bitcoin and Bitcoin Gold, allowing factors like supply to be calculated easily.

Currently, Bitcoin Gold has a block reward of 6.25 BTG, which will halve to 3.125 BTG with block number 840,000 in April 2024. The last halving took place in April 2020 with block 630,000.

What is the Use of BTG?

Bitcoin Gold stays true to the original vision of Bitcoin in that it serves as peer-to-peer electronic cash or a transfer of value between individuals. This way, it eliminates the need for intermediaries.

However, it could be argued that Bitcoin Gold also shares Bitcoin’s qualities as a store of value. Since its supply is limited and decreasing as per the set halving schedule, Bitcoin Gold has every chance of retaining its value over time. This can happen as long as the community continues to give it worth.

Who Controls Bitcoin Gold?

Bitcoin Gold is managed by the Bitcoin Gold Organization, an international group of 20+ members that began with the six founders.

However, Bitcoin Gold is an open-source protocol, and developers can freely participate in the governance and development of the blockchain. This is one of the key tenets of the protocol, and the Bitcoin Gold Organization insists that it’s one of the main areas where Bitcoin can be found wanting.

How Much Is BTG In Circulation?

Bitcoin Gold has a maximum supply of 21 million BTG, and over 17.5 million of those coins are currently in circulation. The amount released via block rewards will continue to decrease thanks to Bitcoin’s halving schedule. So, even though a good proportion of BTG’s supply is already issued, block rewards will be paid out long into the future.

How Do You Buy BTG?

Bitcoin Gold is a peer-to-peer protocol first and foremost, so that’s often one of the best ways to buy it. However, centralized exchange (CEX) platforms make purchasing BTG easy, and you’ll find a lot of top CEX platforms listing BTG.

You can trade BTG for other cryptocurrencies, especially BTC. You can also trade BTG against stablecoins like USDT and even fiat currencies depending on your exchange of choice.

Is It Possible to Buy Bitcoin Gold Instantly?

Bitcoin Gold’s blockchain operates at a similar speed to that of Bitcoin. This means that transactions tend to be processed in about ten minutes, which is how long it takes for a new block to be created.

However, purchasing BTG on an exchange may seem much faster since spot trades or swaps are reflected in your account immediately. Unfortunately, that doesn’t mean that the BTG you buy is actually in your wallet, as many people found during the hard fork that saw BTG split away from Bitcoin.

If you do want to buy BTG on an exchange and withdraw it into your own wallet, you might be waiting for a while. Most exchanges must complete KYC (Know Your Customer) and AML (Anti-Money Laundering) procedures before even accepting your withdrawal request. Only then will the transaction be initiated, and then it’s up to the blockchain to send your BTG with the next block.

How Do You Store BTG?

Like most cryptocurrencies, including Bitcoin and its various forks, BTG is stored using cryptocurrency wallets. Bitcoin Gold uses public-key cryptography, meaning that a wallet consists of two keys, one public and one private.

Public keys identify wallets on the blockchain and are shared with other parties in order to receive BTG. Meanwhile, private keys enable you to access and send BTG from the wallet.

These wallets come in three main forms:

• Cold wallet: These wallets keep private keys offline and safely out of the reach of hackers. Cold wallets can come in several forms, from devices not connected to the internet to a paper copy of the private key. Cold hardware wallets like Ledger or Trezor devices are popular examples of cold wallets.
• Hot wallet: Unlike cold wallets, these are connected to the internet. There are many types of hot wallet, including full clients that store the entire blockchain. Lighter clients or even browser-based wallets are extremely popular for their convenience.
• Exchange wallet: This is a wallet operated by the exchange, and your account represents an entitlement to some of the coins held in the exchange’s wallet. As mentioned previously, this form of storage has severe disadvantages.

Bitcoin Gold Energy Consumption

Bitcoin Gold is a proof-of-work (PoW) cryptocurrency that functions similarly to Bitcoin when it comes to energy consumption. However, Bitcoin Gold has far fewer nodes on its network when compared to Bitcoin or even Bitcoin Cash. Furthermore, these nodes are GPU mining units rather than ASICs.

Were Bitcoin Gold to reach the levels of adoption and usage that Bitcoin has, Bitcoin Gold would be mined by far more nodes. Subsequently, the computing power on the network would ramp up.

This means that the actual success of the network is directly proportional to its energy usage. While this can be argued as a point against Bitcoin Gold, BTG is mined by GPUs. This means that a fair proportion of miners could well be users of the network.

Still, Bitcoin Gold solves similar problems to Bitcoin, meaning it aims at the traditional financial settlement system, too. As per Galaxy Digital’s estimates in 2021, the banking industry consumes a conservative 260 TWh each year. This figure is well beyond the consumption of even Bitcoin.

Is BTG a Good Investment?

Bitcoin Gold has several advantages, including a relatively decentralized distribution since it forked off Bitcoin. Its adherence to that quality makes it an appealing alternative to more centralized networks.

However, Bitcoin Gold isn’t the only ASIC-resistant blockchain in the industry. There are several other alternatives that add more benefits to the mix—from programmability and smart contracts to features like optional privacy.

Still, if the Bitcoin Gold Organization can keep innovating and developing the network to offer more benefits, it could well prove to be a lucrative bet in the long run.