Before the dust has even settled on Bitcoin’s civil war, which saw an acrimonious disagreement about how Bitcoin should handle its scaling debate, the major digital currency could be splitting again.
Bitcoin Cash was threatened, laughed off, created, boomed, and them fizzled out as Bitcoin carried on its merry mooning way, now with more capacity because of SegWit. Bitcoin Cash was the alternative to SegWit where blocks were blown up to monstrous proportions.
Bitcoin Gold, as the new potential hard forking currency will be called, is now an attempt to wrest the lucrative mining component of Bitcoin out of the hands of the giant firms that have monopolised the creation of the digital currency.
The people’s fork?
The new fork, set to reach landfall on October 25, is aiming to democratize mining. Mining farms and pools hold all the cards within Bitcoin, both as a voting demographic and as manipulators of things like price and fees.
Bitcoin Gold wants to see at-home enthusiast miners back in control. The project was apparently co-founded by Jack Liao, CEO of Hong Kong-based Bitcoin mining company LightningASIC. LightningASIC also conveniently sells the hardware that this new market of miners will need.
This fork seems to be a reaction to the general hatred that is flung towards Chinese mining giant Bitmain who, along with their controversial leader Jihan Wu, had a big part in the creation of Bitcoin Cash.
It must also be noted that Bitcoin Gold is different from another fork that is scheduled for November: Segwit2x. The November fork is aimed at increasing the capacity of the network where as the Bitcoin Gold split is looking to cut more people in on the mining pie.
A change in the hash
It used to be that mining was totally open to anyone who felt like firing up the software on their home computer. However, over time, Bitcoin mining became relegated to expensive custom miners operated in giant factories to achieve economies of scale.
Bitcoin Gold is changing their proof of work algorithm to Equihash, something fans of Zcash will be familiar with. It’s a “memory-hard” algorithm, which means common home computer hardware like GPUs will be able to profitably mine Bitcoin Gold for the foreseeable future.
Bitcoin Gold is somewhat enigmatic at the moment, mostly because there is no technical information available anywhere. This is pretty strange, and quite disconcerting seeing as it is meant to go live this month.
Bitcoin Gold will also have the same address format as Bitcoin, and Bitcoin Cash, and this has already caused problems. There have been reports of people sending huge sums to wrong addresses – e.g. Bitcoin being sent to Bitcoin Cash wallets.
Finally, it should be noted that we use the word “fork” lightly. As Bitcoin Gold has essentially zero chance of replacing Bitcoin in the marketplace, it’s more of an air-drop than a chain split. Everybody that owns Bitcoin will also own Bitcoin Gold once the network goes live, but transactions on the Bitcoin Gold network won’t affect Bitcoin’s network, or vice versa.