What is Bitcoin Gold?
The latest (October 26, 2017) of Bitcoin’s hard forks, Bitcoin Gold (BTG) is not a favorite in the crypto community, despite its seemingly laudable goal of making sure Bitcoin can’t be taken over by companies running huge mining computers. There are no obvious problems with the tech itself, and BTG is currently being traded, but concerns about its development team have not been fully allayed.
Jack Liao, the man behind Bitcoin Gold, runs a company that manufactures bitcoin mining equipment (ASICs), which are the very thing that BTG is meant to prevent. In addition, the lead developer of the project has chosen to remain anonymous, and there is a general lack of transparency. None of this means necessarily that Bitcoin Gold is a scam, but as with any crypto investment, it pays to enter with caution.
How Bitcoin Gold Works
With a few minor differences, Bitcoin Gold is exactly the same as Bitcoin. The “hard fork” means that the developers copied all the original code and every transaction from the original blockchain, made changes to the code, and reactivated the blockchain as a new cryptocurrency.
The only major change is the mining algorithm, which changed from SHA-256 (uses processing power) to Equihash (uses memory). Equihash is meant to be “ASICs-resistant,” meaning that people with lots of money and huge computers can’t dominate and centralize the currency, as memory is more expensive to scale up.
A more minor, but still important change is the “block difficulty.” In most other versions of Bitcoin, the amount of computing power needed to find a new block automatically adjusts up or down every two weeks. This ensures that if more computers join the network or some drop out, it will still take about ten minutes on average for each block to be mined.
With BTG, the difficulty adjusts with every block, or approximately every ten minutes. This means that no one can suddenly bring a lot of computing power online and take advantage of easy mining. It also instantly keeps the network from slowing down if the network loses some computing power.
The final change is “replay protection,” which makes sure that Bitcoin transactions and Bitcoin Gold transactions remain separate. Put simply, it prevents transactions in BTC from being run on the BTG network and vice versa—a situation which could otherwise result in one transaction being executed twice on two different networks.
In November of 2017, Bitcoin Gold suffered several major security breaches, including a scam wallet that was listed on the official website and ended up taking over $3 million USD from its users.
In their January roadmap update, the development team announced plans to implement the Lightning Network upgrade. This upgrade will also be incorporated into Bitcoin Core (the original Bitcoin) in order to increase transaction speeds.
How to buy Bitcoin Gold
Bitcoin Gold is mostly bought and sold on Binance. You can’t buy it with fiat currency yet (USD), so here is a quick guide on how to buy Bitcoin Gold starting with fiat:
1. Buy Bitcoin or Ethereum at an exchange that uses your fiat currency on Coinbase.
2. Transfer your BTC or ETH to an exchange that supports Bitcoin Gold. Currently, Binance is the best choice. (Tip: if you bought BTC/ETH on Coinbase, look into using GDAX to avoid transfer fees)
3. Buy Bitcoin Gold by trading your BTC/ETH for their coin, and you’re done!
The cryptocurrency’s slogan, “Make Bitcoin decentralized again,” is a play on Donald Trump’s campaign slogan: “Make America great again.”