Bitcoin stands out as the world’s most valuable and well-known cryptocurrency, but it has a few derivative tokens that have gained traction in the industry over the years. One such token is called Bitcoin Gold. But what exactly is bitcoin gold, why was it created, and does it beat bitcoin in any way?
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What is Bitcoin Gold (BTG)?
Bitcoin Gold (BTG) is a hard fork of Bitcoin created in November 2017. A hard fork occurs when a blockchain splits in two following a radical protocol change.
This change means that a token cannot exist on the previous blockchain, as it is incompatible with the previous block. Therefore, it needs its own unique blockchain. Therefore, both Bitcoin and Bitcoin Gold have separate blockchains.
But hard forks don’t happen by chance. They involve the manual development of a new chain for a specific token. So, why were BTC and BTG hard forked?
What is the purpose of bitcoin gold?
The initial purpose of Bitcoin Gold was to re-decentralize Bitcoin. As of 2017, bitcoin’s consensus mechanism, proof of work, favored a small number of miners, so regular individuals and beginners did not have much of a chance to get involved in the mining action. In this sense, the system was becoming increasingly biased and centralised.
On top of this, very expensive hardware is needed to mine bitcoins. Bitcoin mining hardware is known as an ASIC (Application-Specific Integration Circuit) miner and can cost thousands of dollars.
Because of this, bitcoin mining was a very specialized venture that you could only get into if you had a significant amount of spare cash.
Therefore, Bitcoin Gold was designed so that it could not be mined by ASICs. Instead, it can be mined using a GPU (Graphics Processing Unit), opening up mining opportunities for regular individuals.
While GPUs are not very cheap, they are certainly much more affordable than ASIC miners in most cases. While you can technically mine bitcoins using a GPU, this is almost impossible nowadays, which is not the case with bitcoin gold.
But is that the only difference between Bitcoin Gold and its predecessor, Bitcoin?
What are the differences between bitcoin gold and bitcoin?
One of the most integral differences between Bitcoin and Bitcoin Gold is the consensus mechanism they use. Bitcoin uses an original proof of work mechanism (and has been since its creation in 2009), which involves solving complex mathematical problems through a mining process to keep the blockchain network safe from attacks.
Bitcoin Gold, on the other hand, uses an Equish Proof of Work mechanism. In short, this mechanism makes it more difficult to generate a proof than to verify one. Because of this, it is very difficult for me to build custom hardware, which leads us back to the fact that ASIC miners cannot be used for mining on the BTG blockchain.
Given that Bitcoin Gold was created to tackle the unfair mining problem, there are not a large number of additional differences between the two tokens. But Bitcoin Gold has a smaller block size than Bitcoin, which generally leads to faster transaction speeds. However, faster speeds can sometimes come with higher fees, which is a balance that can be difficult to achieve. And there is another burning issue related to this crypto.
Major Weaknesses of Bitcoin Gold
But Bitcoin Gold is not without flaws. Since it is a smaller blockchain using a form of PoW mechanism, it is more vulnerable to 51% attacks. A 51% attack involves a cybercriminal or group of cybercriminals who control more than 50% of a network’s computing power. This is often achieved by renting hash power from a third party to control the network.
A 51% attack gives a person the ability to prevent a transaction from being confirmed, reverse a transaction, and even double-spend tokens. Unfortunately, the Bitcoin Gold network has faced several attacks over the years, including 2018, 2019 and 2020. Therefore, it is safe to say that it is not the most secure blockchain at the moment.
But that hasn’t stopped Bitcoin Gold from becoming a hugely popular crypto. The coin is currently valued at around $30 and has a market capitalization of over half a billion dollars. So, it’s safe to say that it doesn’t look like the coin is going anywhere anytime soon.
Bitcoin Gold opens up crypto mining to the average person
While the bitcoin mining landscape is now completely rife with experienced professional miners, bitcoin gold offers an open door for those who want to get started in the mining process without any upfront costs or heaps of knowledge. Bitcoin Gold also has a solid position in the market and has a promising future as one of the many hard fork derivatives of Bitcoin.