What is Bitcoin Gold? All You Need to Know About BTG

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.

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.

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 Bitcoin Gold 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 Bitcoin Gold (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 Bitcoin Gold 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

Bitcoin Gold Use Cases

Bitcoin Gold (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 Bitcoin Gold 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.

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. Bitcoin Gold’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.

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