Not All That Glitters is Bitcoin: What is Really Bitcoin Gold?
Bitcoin Gold may not be what it promises to be. But why the need for another rogue blockchain?
There is a website with a message saying October 25 is the kickoff date for an entity called Bitcoin Gold. But would it have anything in common with Bitcoin except for the name?
Bitcoin Gold is also known as Bitcoin GPU- and it means exactly what it says, it would use graphic cards instead of ASIC to mine the new blockchain. And there is another significant difference- instead of SHA-256, the new blockchain will use the Equihash algorithm, taken from ZCash. The ICO for the new coin/blockchain was canceled, but there are expectations that the new blockchain would come with a pre-mine with low difficulty starting October 1st.
The creators of Bitcoin Gold do not describe themselves as a rebellious group of miners splitting off, in contrast to the Bitcoin Cash community. Their choice of words is that they are implementing the Bitcoin core idea on different hardware, to curb the unfair gains in the ASIC marketplace.
"We would not describe the Bitcoin Gold project as any sort of rebellion. In contrast to the hostile origins of Bitcoin Cash, Bitcoin Gold was not created with any motivation to "fire" the Core developers or split the Bitcoin community. We understand that the Bitcoin Core team is the leading source of security and innovation in the blockchain world, and we intend to support their outstanding work in a variety of ways. We do not claim that Bitcoin Gold is an "improved" protocol over Bitcoin. We would rather describe it as an implementation of the Bitcoin protocol on different mining hardware, with the same transaction history and coin distribution as Bitcoin."
In fact, the Bitcoin Gold team believes their hard fork is friendly to Bitcoin, and it will not be stealing hashing power from the old blockchain. In truth, Bitcoin Cash is drawing in miners as sometimes the blockchain is significantly more profitable to mine.
But user reactions vary- from a surprise that all Bitcoin holders would also automatically own Bitcoin Gold to downright criticisms that the project is a scam and has no clear vision.
Still, the battle is on between developer teams, mining monopolists and in the end, users. Just like the early days of Bitcoin, when altcoins tried to challenge its position, there is now a danger that hard forks, holding the complete history of the Bitcoin blockchain, would undermine the image and value of the original coin.
Currently, Bitcoin Cash mines under heightened difficulty and the mining advantage from a few days ago is gone. It is now 80% more profitable to mine the original Bitcoin chain.
No one knows if bringing a new coin or blockchain will make sense until they go live. So with Bitcoin Gold, the results may be positive for Bitcoin owners before the October 25 snapshot. But the presence of two more alternatives to Bitcoin in two months may start to affect the image of Bitcoin.
But Bitcoin has proven its strength in the event of a hard fork once, and the new chains will have to start and show their mettle- there is always risk that even under the name of Bitcoin, a chain may fail.