Bitcoin Gold (BTG) Review: Should You Consider It?

Cryptocurrency forks are nothing new, in fact it seems we get a new one almost weekly these days.

Even Bitcoin is expecting to see several forks in 2018, and these come after the several forks already completed last year. One of the more controversial of these forks was the October Bitcoin Gold fork.

The Bitcoin Gold fork from the original Bitcoin blockchain took place on October 24, 2017 at block height 491407. There are any number of reasons for cryptocurrencies to experience a hard fork, including improvements to the code, differences among developers, or changing goals. In the case of Bitcoin Gold, the stated purpose for the fork was to “Make Bitcoin decentralized again.”

This seems a bit redundant on the surface. Isn’t Bitcoin already decentralized? It doesn’t have links to any government, central bank, or any specific country. It is a global currency, and is controlled by the community.

While all that is true, the developers of Bitcoin Gold weren’t concerned with the question of central issuance of Bitcoin. Rather they worried about the mining process and the rise of large ASIC mining operations, who were increasingly controlling the hash power of the Bitcoin network.

Bitcoin Gold’s developers proposed the fork in order to move to the Equihash consensus algorithm, and make Bitcoin Gold ASIC resistant, thereby putting the mining hash power back in the hands of individuals to a large extent.

Bitcoin Gold Mining Process

Bitcoin mining can be profitable, but it is also very resource intensive. This has led to miners choosing to pool their resources together, and to large centralized mining operations, housing hundreds of very powerful mining rigs, and bringing immense computing resources in the process.

This means that the solo miner, those who wish to simply mine on their own from home, were forced to spend large amounts of money to build their own super-powerful mining rigs. Those who didn’t choose to do this would be passed over in the mining process as their computers simply didn’t have the computational power to solve a block before the professional systems. Or they could join mining pools, further centralizing Bitcoin mining themselves.

Bitcoin Gold took as one of its central goals to change the mining algorithm, and in so doing prohibit the use of specialized ASIC chips in mining. This keeps the large mining operations from dominating the mining process, and allows solo miners to continue mining with only their computers GPU.

Distribution, Protection, Transparency

Aside from just returning decentralization to Bitcoin, the developers of Bitcoin Gold choose to address the issues of transparency, protection and distribution that are faced by Bitcoin. According to the Bitcoin Gold website:

Hard forking bitcoin's blockchain fairly and efficiently distributes a new digital asset immediately to people all over the world who have interest in cryptocoins.

As anyone who’s been involved with cryptocurrencies knows, one of the primary concerns users have is with security. There is always the threat of hackers and bad actors lurking in the background.

This need for security prompted Bitcoin Gold’s creators to add additional security measures to the coin right from the date of the hard fork. One of these measures was to create unique wallet addresses for Bitcoin Gold, while the other was to institute replay protection for the coin to avoid double spending.

Finally, transparency was added by making Bitcoin Gold open-source software, which is primarily being developed by volunteers from around the globe. The fact that the source code for the project is freely available is a strong draw for potential Bitcoin Gold users and investors. You can see the global distribution even of the official Bitcoin Gold team here.

If you happened to have held any Bitcoin at the time of the fork, make sure that you are following the correct procedures for claiming the coins. There have been a number of Bitcoin Gold scams that have attempted to phish Bitcoin private keys.

Bitcoin Gold Controversial Launch

There was some controversy surrounding the launch of Bitcoin Gold, with some calling it nothing more than greed that inspired the fork. This accusation came as the developers did a post-mine after the launch, retroactively mining the first 8,000 blocks or 100,000 BTG coins.

These coins were rumored to have gone directly to the wallet of Jack Liao, the founder of Bitcoin Gold, but in fact they were set aside as an endowment to help maintain and grow the Bitcoin Gold network.

There’s nothing unusual about this practice, and many new projects will set aside coins to fund their development. Roughly 5,000 of the pre-mined coins were distributed to the founding team members as a bonus, and all Bitcoin holders received Bitcoin Gold at a ratio of 1:1 or one BTG for each BTC held.

Coinbase, one of the largest cryptocurrency exchanges in the world, was one of the top skeptics of Bitcoin Gold at launch time. Coinbase representatives stated that the exchange:

cannot support bitcoin gold because its developers have not made the code available to the public for review. This is a major security risk

In fact the code is open-source and publically available, and this statement may have been politically motivated as the team at Bitcoin were supporters of the upcoming Bitcoin Cash fork.

As of April 30, 2018, Bitcoin Gold has 246 reachable nodes. The highest concentration of nodes is in Germany and the United States with 41 nodes each, next is France with 33 nodes, followed by Canada with 15 nodes and Russia and the Netherlands with 14 nodes each.

In February 2018, Bitcoin Gold launched the Bitcoin Gold Insight Explorer, a blockchain explorer for Bitcoin Gold running on a full Bitcoin Gold Bitcore node and hosted by the Bitcoin Gold Organization. The development of the explorer was done by bitpay and was supported by SatoshiLabs.

Bitcoin Gold suffered an additional controversy less than a month after its launch, when one of the lead developers was accused of hiding a 0.5% fee in a Bitcoin Gold mining pool. Again, this may have been politically motivated.

The fee was not hidden as the code was open source. And the fee is far less than the typical 1-2% fee charged by most mining pools. In retrospect he should have announced the fee, but the fact that the code was open source partially explains that omission.

Bitcoin Gold Exchanges

Almost all cryptocurrencies live and die based on their exchange listings. Without listings on the biggest exchanges, there simply isn’t enough interest and trading volume generated for the coin.

Bitcoin Gold has never had a problem with cryptocurrency exchange listings, and it was listed on some of the biggest right from its inception. And it continues to add more exchange listings even six months after the fork. This means you’ll never have a problem finding a place to buy or sell your Bitcoin Gold.

According to the Bitcoin Gold website, as of May 2018, the cryptocurrency is trading live on at least 30 exchanges including the largest. For example, they are listed on the Binance Exchange, Bitfinex and Bittrex. Below is an example of some of the exchanges.

A look at Coinmarketcap.com shows about 10 of these exchanges not trading, but it also shows about 20 exchanges that aren’t listed here. Presumably the Bitcoin Gold website is a bit out of date in this regard.

There are additional exchanges slated to offer Bitcoin Gold in the near future as well, including GDAX and BitFlyer. You’ll also find it easy to store your Bitcoin Gold, with the coin being supported by the following wallets (according to the Bitcoin Gold website): Trezor Wallet, Ledger Wallet, Exodus, Coinomi, Bitpie, Guarda, Freewallet, BTGWallet, Atomic Wallet, and Cobo.

Bitcoin Gold 51% Attack

Given that Bitcoin gold is a really new blockchain, it means that it does not have the benefits of a great deal of decentralisation and hence security. This makes the blockchain particularly susceptible to a dreaded 51% attack. This is particularly relevant in these times of "rented" hashing power where an attacker can garner the required hash power to attack the network.

This happened to the Bitcoin Gold Blockchain as they suffered a 51% attack on the 18th of May and the attacker was able to take off with 388,201 BTG (c. $17m at time of attack). You can view the hackers address here in the Bitcoin Gold explorer. According to a developer on the team:

An unknown party with access to very large amounts of hashpower is trying to use “51% attacks” to perform “double spend” attacks to steal money from Exchanges. We have been advising all exchanges to increase confirmations and carefully review large deposits

This was the largest 51% attack in recent history and raised a lot of nerves for developers who thought that their blockchains were safe from such an attack. While the Bitcoin Gold developers were able to hold off this attack, they have not fixed the underlying threat.

Given that Bitcoin Gold makes use of a shared hashing algorithm (Equihash), it means that the blockchain is that much easier to attack with equipment that mines other equihash coins. If the developers would like a permanent fix to the problem then they will have to adapt their hashing algorithm.

Bitcoin Gold’s Future

Bitcoin Gold is continuing its development and the 2018-2019 Roadmap spells out some ambitious projects for the expansion of the blockchain and network. The first quarter of 2018 was to see a rebranding of Bitcoin Gold and a refreshed website, as well as integration with open source libraries for BitcoinJS, BitcoinJ and CoPay. While we haven’t seen these developments yet, we have seen the launch of v3 of the testnet, as well as the launch of BTGPay and the Bitcoin Gold Blockchain Explorer.

The second quarter of 2018 is set to bring integration of a lightening network and increased decentralization via mining through P2Pool. Payment systems were to come, but we’ve already seen the launch of BTGPay. There are also plans for the launch of a debit card program.

Throughout the second half of 2018 the team is looking to add cross-chain atomic swaps and sidechains, as well as providing funding for a number of developer conferences and meet-ups, including university outreach programs and a worldwide ambassador program.

Moving into 2019 the team will be focused on private transactions and research support and longer term they plan to add support for smart contracts and blockchain democracy, as well as developing their own DEX, a decentralized fiat-crypto brokerage.

In Conclusion

It is clear that the founders and developers working on Bitcoin Gold are fully aware of its connection to the broader world of cryptocurrencies, and of the history and development of the parent Bitcoin. To that end they have been focusing on improvements that will benefit the broader cryptocurrency eco-system, not just Bitcoin Gold itself.

Despite some early controversy, the team is committed and has been clear in the future development of Bitcoin Gold. While they may not reach their ultimate goal, or could change course as the cryptocurrency world develops and changes so quickly, it is good to see such involvement and a vision for the future being carried through.

With just six months in existence, Bitcoin Gold is very new to the crpytocurrency world, yet it maintains a market cap over $500 million and remains near the top 30 of all cryptocurrencies. Of course, this has fallen quite as a response to general market conditions as well as the 51% attack. The latter still hangs over the coin as a underlying threat.

We can’t be sure what the future will bring, but the seemingly dedicated team is looking to tackle decentralized decision making, smart voting mechanisms and scalable ways to handle hard forks, all worthy projects to add to the already ambitious list of planned developments in the coming months.