Bitcoin stands as the most valuable and well-known cryptocurrency in the world, but it does have some derivative tokens that have gained traction in the industry in recent years. One of those tokens is called Bitcoin Gold. But what exactly is Bitcoin Gold, why was it created, and does it outshine Bitcoin in any way?
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 after a radical protocol change. This change means that a token cannot exist on the previous blockchain, as it is incompatible with previous blocks. So you need your own unique blockchain. Therefore, Bitcoin and Bitcoin Gold have separate blockchains.
But hard forks don’t just happen. They involve the manual development of a new chain for a specific token. So why did the BTC and BTG hard fork take place?
What is the purpose of Bitcoin Gold?
The initial purpose of Bitcoin Gold was to decentralize Bitcoin again. By 2017, the Bitcoin consensus mechanism, work test, favored a small number of miners, so regular people and beginners didn’t have much of a chance to get in on the mining action. In this sense, the system was becoming too biased and centralized.
In addition to this, very expensive hardware is needed to mine Bitcoin. Bitcoin mining hardware is known as SO C (Application-Specific Integration Circuits) miner and can cost thousands of dollars. Because of this, Bitcoin mining was a fairly exclusive venture that you could only participate in if you had a large amount of money available.
Therefore, Bitcoin Gold was designed so that ASICs could not mine it. Instead, it could be mined using GPUs (Graphics Processing Units), which opens up the mining opportunity to normal people. While GPUs aren’t super cheap, they are in most cases much more affordable than ASIC miners. While you can technically mine Bitcoin using a GPU, it is practically impossible these days, which is not the case with Bitcoin Gold.
But is this 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 mechanisms that they use. Bitcoin uses the original proof-of-work mechanism (and has since its inception in 2009), which involves solving complex mathematical problems through the mining process to keep the blockchain network safe from attack.
Bitcoin Gold, on the other hand, uses the Equihash proof-of-work mechanism. In short, this mechanism makes it much more difficult to generate a proof than to verify it. Because of this, it is very difficult to build custom mining hardware, which brings us back to the fact that ASIC miners cannot be used to mine on the BTG blockchain.
Since Bitcoin Gold was created to combat the problem of unfair mining, there is not a huge 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 rates, which is a balance that can be difficult to strike. And there is another glaring problem associated with this crypto.
The key weakness of Bitcoin Gold
But Bitcoin Gold is not without its flaws. Because it is a smaller blockchain that uses a form of PoW mechanism, it is much more susceptible to 51% attacks. A 51% attack involves a cybercriminal or group of cybercriminals controlling 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 one the ability to prevent transactions from being confirmed, reverse transactions, and even double-spend tokens. Unfortunately, the Bitcoin Gold network has suffered from several such attacks in recent years, including in 2018, 2019, and 2020. So it is safe to say that it is not the most secure blockchain out there right now.
But this has not stopped Bitcoin Gold from becoming a very popular crypto. The coin currently has a value of around $30 and a market cap of over half a billion dollars. Therefore, it is safe to say that it does not 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 littered with highly experienced professional miners, Bitcoin Gold offers an open door for those who want to get started in the mining process without a huge upfront cost or a ton of knowledge. Bitcoin Gold also has a strong position in the market and has a promising future as one of the many Bitcoin hard fork derivatives.
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