Is it just me, or does the bitcoin community seem to be very divided? The main question this year has been on how to solve the various issues dogging bitcoin, but this question has become the source of contention. In August, one faction of the bitcoin community split to form bitcoin cash, which so far has been successful. However, the planned SegWit2x fork planned for November was suspended. Now bitcoin gold has just forked, and is a completely different cryptocurrency.
How is bitcoin gold different from other forks?
The main reason for the creation of bitcoin gold was to create a truly decentralized bitcoin network. At the moment, bitcoin mining is dominated by ASICs, which are dedicated integrated circuits (ICs) for bitcoin mining. Alright, let me just put that in layman’s terms. In order to mine bitcoin, a computer needs to solve complex mathematical formula in order to create a hash. The first computer on the bitcoin blockchain to solve the formula gets a reward.
Any computer with a dedicated graphics hardware is capable of solving this formula, but ASICs are designed specifically for this task. As a result, they are much faster than a typical PC. The problem is that ASICs are expensive, and several companies have made a monopoly by holding huge numbers of ASICs. Therefore, the rest of us with just our personal computers don’t stand a chance. Essentially, these ASICs have centralized bitcoin mining when it was supposed to be completely decentralized.
The group behind bitcoin gold have solved this problem by implementing a different method of solving the math formula. Instead of SHA256 used in bitcoin, bitcoin gold will use Equihash. This new proof-of-work formula will give everyone a chance to mine bitcoin even from their PC.
What does this mean for investors?
Just like the bitcoin cash fork, bitcoin gold too will copy bitcoin’s blockchain. That means anyone who had bitcoin before would also have an equal amount of bitcoin gold. The fork officially occurred on the 25th of October, but the cryptocurrency went live later in November. Today, it is trading at around $345 and has a market cap of $5.7 billion, placing it at number 6 among the list of cryptocurrencies on Coinmarketcap. The only problem is that it is still not available at all major exchanges, but it will soon be.
I believe bitcoin gold (BTG) will go the same way bitcoin cash did. Remember that bitcoin cash too did not have support initially, yet now it has a $26 billion market cap. In fact, this may be the best time to invest in bitcoin gold, as it still has the potential to rise to as much as $1,000 even before the end of the year.