What Is Bitcoin Gold (BTG) and Why Was It Created?

Bitcoin stands 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 past few years. One such token 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)?


gold bitcoin coins on gold glitter surface

Bitcoin Gold (BTG) is a hard fork of Bitcoin created in November 2017. A hard fork occurs when a blockchain splits into 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, it needs its own unique blockchain. Therefore, Bitcoin and Bitcoin Gold both have separate blockchains.

But hard forks do not happen by chance. 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 re-decentralize Bitcoin. By 2017, Bitcoin’s consensus mechanism, proof of work, favored a small number of miners, so regular individuals and beginners didn’t stand much of a chance of getting in on the mining action. In this sense, the system was becoming a little too biased and centralized.


On top of this, very expensive hardware is needed to mine Bitcoin. Bitcoin mining hardware is known as an ASIC (Application-Specific Integration Circuits) miner and can cost thousands of dollars. Because of this, Bitcoin mining was a pretty exclusive venture that you could only get involved in if you had a big wad of cash to spare.

MAKEUSEOF VIDEO OF THE DAY

Therefore, Bitcoin Gold was designed so that it could not be mined by ASICs. Instead, it could be mined using GPUs (Graphics Processing Units), opening up the mining opportunity to regular individuals. While GPUs aren’t super cheap, they’re certainly a lot more affordable than ASIC miners in most cases. While you can technically mine Bitcoin using a GPU, it’s virtually impossible these days, which isn’t 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?


stack of gold bitcoins

One of the most integral differences between Bitcoin and Bitcoin Gold is the consensus mechanisms they use. Bitcoin uses the original proof of work mechanism (and has done since its creation in 2009), which involves solving complex mathematical problems through the mining process to keep the blockchain network safe from attacks.

Bitcoin Gold, on the other hand, uses the Equihash proof of work mechanism. In short, this mechanism makes it much harder to generate a proof than it is to verify one. Because of this, it is very difficult to build custom hardware in order to mine, which takes us back to the fact that ASIC miners cannot be used to mine on the BTG blockchain.

Given that Bitcoin Gold was created to combat the unfair mining issue, there aren’t a huge number of additional differences between the two tokens. But Bitcoin Gold does have 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 obtain. And there is another glaring issue associated with this crypto.


Bitcoin Gold’s Key Weakness

But Bitcoin Gold is not without flaws. Because it is a smaller blockchain using a form of PoW mechanism, it is far more susceptible to 51% attacks. A 51% attack involves a cybercriminal or group of cybercriminals controlling over 50% of the computing power of a network. 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 a number of these attacks over the past few years, including in 2018, 2019, and 2020. Therefore, it’s safe to say that it isn’t the most secure blockchain out there at the moment.

But this hasn’t stopped Bitcoin Gold from becoming a hugely popular crypto. The coin currently has a value of around $30 and a market cap of over half a billion dollars. So, it’s safe to say that it doesn’t look like the coin is going anywhere soon.

Bitcoin Gold Opens Crypto Mining to the Average Person

While the Bitcoin mining landscape is now rife with thoroughly 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 heaps of knowledge. Bitcoin Gold also has a solid position in the market and has a promising future as one of Bitcoin’s numerous hard fork derivatives.



bitcoin and bitcoin cash logo in front of coins

Bitcoin vs. Bitcoin Cash: What’s the Difference?

Read Next


About The Author