Bitcoin Gold: Distribution, Protection, and Transparency

What Is Bitcoin Gold?

Bitcoin Gold was a hard fork of the original open-source cryptocurrency which took place on Oct. 24, 2017. While hard forks take place for a number of reasons—including to scale as a cryptocurrency customer base grows, or because of developer conflict and differences of goals—Bitcoin Gold’s stated purpose has been to “make bitcoin decentralized again.” Bitcoin Gold was one of the largest and most discussed bitcoin forks.

On the surface, the idea of “making bitcoin decentralized again” may seem counterintuitive. Like all other cryptocurrencies, Bitcoin is designed to be decentralized already; it is not linked with any central bank, a particular country, or government body.

One of the major issues with bitcoin which prompted the development of Bitcoin Gold, however, was not related to the question of central issuance at all. Rather, it had to do with the mining process. Bitcoin Gold developers believed that by adopting a new algorithm for the mining process (in this case, a so-called proof-of-work algorithm called Equihash-BTG), the new branch of the world’s most popular cryptocurrency by market cap would not disproportionally favor major mining operations.

Key Takeaways

• Bitcoin Gold was a hard fork of the original open-source cryptocurrency which took place on Oct. 24, 2017.
• Bitcoin Gold’s stated purpose has been to “make bitcoin decentralized again.”
• Primarily, Bitcoin Gold developers believed that by adopting a new proof-of-work-based algorithm for the mining process, Bitcoin Gold would not disproportionally favor major mining operations on specialized equipment.
• Besides the goal of “re-decentralizing” bitcoin, Bitcoin Gold’s developers also focused on distribution, protection, and transparency issues.
• The cryptocurrency has been listed on 40+ exchanges in 11 national currencies as of May 2021.

Understanding Bitcoin Gold 

Bitcoin mining is a lucrative but resource-intensive process. The most profitable mining ventures are often those that pool together many mining rigs, each of which requires expensive, special equipment. Individuals attempting to mine for bitcoin on their own either have to invest a huge amount of money and time into creating their own rigs or get passed by in the process, as their computers cannot compete with the professional rig systems.

One of the primary goals of Bitcoin Gold has been to change the algorithm by which the cryptocurrency itself is mined, meaning that the mining process cannot be run faster on specialized equipment than it can on standard computer systems.

Bitcoin Gold was not the first major hard fork of bitcoin. Bitcoin Cash forked off from the primary cryptocurrency on Aug. 1, 2017. On Nov. 15, 2018, a Bitcoin Cash hard fork split it into two currencies: Bitcoin Cash and Bitcoin SV.

Distribution, Protection, Transparency

Besides the goal of “re-decentralizing” bitcoin and making a more accessible digital asset for smaller miners that could be more fairly and efficiently distributed, Bitcoin Gold’s developers also focused on protection and transparency issues. Unlike other blockchains (including Bitcoin), Bitcoin Gold sought to increase anonymity by not publishing transaction details or wallet addresses. As a free open-source community project, decentralization and transparency in the Bitcoin Gold community are inherently expected. However, threats from hackers and other malicious entities are an ongoing concern.

In the world of virtual currencies, smaller proof-of-work blockchains like Bitcoin Gold are particularly susceptible to 51% attacks, where an attacker seeks to gain control of 51% or more of the blockchain’s computing power or hash rate. While Bitcoin Gold has claimed it has implemented additional safety and protective measures from the time of its launch—like full replay protection—in an effort to help secure its customers’ accounts and coins, the blockchain has endured three 51% attacks and multiple BTG wallet thefts.

The most recent 51% attacks occurred in January 2020. The first January 2020 attack netted attackers 1,900 BTG, or $19,000; in the second approximately 5,267 BTG or $53,00 was stolen. In the immediate aftermath of the May 2018 loss of 388,000 BTG, or roughly $18 million, the cryptocurrency exchange Bittrex chose to de-list the Bitcoin Gold (BTG) blockchain. This first incident required Bitcoin Gold to update its mining algorithm to Equihash-BTG.

History of Bitcoin Gold: Launch and Controversy

The legacy of Bitcoin Gold is one steeped in controversy from the beginning. On the same day of the October 2017 launch, BTG experienced a massive DDoS attack on its cloud site, and within days after the launch, miners accused one of the developers of Bitcoin Gold of having added in a 0.5% mining fee that was hidden from the mining community. There was also concern that Bitcoin Gold’s security measures were not as robust as they had initially claimed and these flaws could result in increased vulnerability to threats.

Similarly, the developers of Bitcoin Gold used what is called “post-mine” after the launch, which concerned crypto exchanges as they were considering listing BTG. This was the retroactive mining of 100,000 coins after the fork already took place. The way that this happened was through the rapid mining of about 8,000 blocks, the results of which were set aside as an “endowment” of sorts, to be used to grow and maintain the broader Bitcoin Gold network. About 5% of those 100,000 coins were set aside for each of the six primary team members as a bonus. The remaining 95,000 coins were set aside to support the growth of the BTG community’s ecosystem.

While initially skeptical, crypto exchange Bittrex eventually agreed to list Bitcoin Gold. Their biggest concern was that Bitcoin Gold did not have “fully formed consensus code; [an] implemented replay protection; adequate code for testing and auditing; publicly known code developers.” Similarly, they gave their users the following warning: “Bitcoin Gold codebase also contains a private premine of 8,000 blocks (100,000 BTG). Please be aware that if a market does open, there is a possibility of the developers selling their premined BTG on the open market.” Following the May 2018 51% attack, Bittrex requested more than 12,000 BTG (valued at $255,000 at the time), as compensation from Bitcoin Gold to make up for the loss sustained by the exchange. Bitcoin Gold did not compensate Bittrex, and the exchange delisted BTG.

At the time of the launch, all bitcoin owners were expected to receive Bitcoin Gold coins at the rate of one Bitcoin Gold token per one bitcoin token—a process known as air-dropping. Coinbase, one of the largest cryptocurrency exchanges in the world, was notably skeptical of Bitcoin Gold at launch time. Unlike Bittrex, Coinbase ultimately decided to keep BTG off its exchange. 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.”

Coinbase did not air-drop BTG to Bitcoin holders on its platform upon its release in October 2017 and this action resulted in a lawsuit filed against Coinbase by plaintiff Daniel Archer on March 27, 2018, claiming Coinbase had violated the terms of its contract agreement—specifically negligence, conversion, and breach of contract. The original ruling stated that Coinbase’s agreement with Archer contained no part requiring Coinbase to provide services for cryptocurrencies from third parties. In August 2020, the appellate court affirmed the original court’s summary judgment in favor of Coinbase.

Continuing the long-term downward trend of dwindling nodes as Bitcoin Gold continues to stay afloat, as of June 1, 2021, Bitcoin Gold has 89 reachable nodes. The highest concentration of nodes is in Germany (22 nodes), with the next highest levels being the United States (18), France (8), Canada (6), and the Netherlands (6).

Bitcoin Gold’s Availability on Exchanges

As the Bittrex and Coinbase examples have shown us, for all cryptocurrencies, one of the major factors which help to determine both short-term and long-term success is its availability on cryptocurrency exchanges. Users must be able to access the cryptocurrency on exchanges in order to make transactions.

According to the Bitcoin Gold website, as of June 1, 2021, the cryptocurrency was trading live on Bithumb, Bitfinex, Binance, HitBTC, Uphold, Exmo, Gate.io, BitBay, Huobi, Cex.io, Okex, Unocoin, Coinone, Koineks, Coinfeld, Coindirect, Zebpay, NiceHash, LATOKEN, Bione, p2p b2b, Folgory, WhiteBIT, Bitubu, Indodax, Vindax, Coinbit, Probit, Wazirx, BW, CoinDCX, VeBitcoin, and Huobi Global.

The cryptocurrency is also available through more than 20 wallet services, including Trezor Wallet, Ledger Wallet, Exodus, Coinomi, Guarda, Freewallet, BTGWallet, and Kasse. According to the website, the cryptocurrency has been listed on 40+ exchanges in 11 national currencies as of June 1, 2021.

40+ exchanges

The number of exchanges that Bitcoin Gold is listed on, as of May 2021.

Future of Bitcoin Gold

Over the long term, Bitcoin Gold will conduct research on smart contracts and blockchain democracy and develop a decentralized fiat-crypto brokerage network.

According to the 2021 BTG Roadmap, the primary development areas of focus include interoperability, applications, infrastructure, and the lightning network. BTG cites plans to work bi-directionally with other blockchains and ecosystems, indicating that the bridge to the Phala Network is in progress.

They note that they plan to shift from a Board-based governance structure to a modern DAO-based model. Updates to the core items in their tech stack are underway, and updates to some of these items—like their explorers and ElectrumG, are near completion. BTG notes that while transaction volumes and fees at the moment don’t necessitate a layer-2 lightning network solution just yet, it’s on their radar.

Bitcoin Gold FAQs

What Happened to Bitcoin Gold?

Bitcoin Gold was a hard fork of the original open-source cryptocurrency which took place on Oct. 24, 2017. As of June 1, 2021, Bitcoin Gold had a price of $58.98 with a 24-hour trading volume of around $38 million.

What Is the Difference Between Bitcoin and Bitcoin Gold?

Both Bitcoin and Bitcoin Gold use a proof-of-work algorithm. Bitcoin Gold’s algorithm, Equihash-BTG, however, does not disproportionally favor major mining operations on specialized equipment. Bitcoin miners use the SHA-256 hashing algorithm and define the hash value, and because proof of work is more difficult to demonstrate as hash targets change. As this becomes more challenging, the increase in computing power required for mining also increases—meaning that smaller miners have a disadvantage in terms of the computing power they can produce.

What Is BTG in Cryptocurrency?

BTG is the quote for Bitcoin Gold, a hard fork of the original bitcoin cryptocurrency.

What Is Bitcoin Gold Used For?

Bitcoin Gold is used for applications including smart contracts, open-source bridges for computing technology, and payments.

When Was the Bitcoin Hard Fork?

The bitcoin hard fork occurred on Oct. 24, 2017.

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