- On October 25th, Bitcoin is undergoing a hard fork to split the coin into two – Bitcoin (BTC) and Bitcoin Gold (BTG)
- The new BTG branch will have the same transaction history of its parent BTC
- A more decentralized, democratic mining infrastructure is the ultimate goal of Bitcoin Gold
1. What is Bitcoin Gold?
At the predetermined block height of the Bitcoin blockchain, Bitcoin Gold miners will begin creating blocks with a new proof-of-work algorithm, and this will cause a bifurcation of the Bitcoin blockchain on October 25, 2017. The original Bitcoin (BTC) blockchain will continue unchanged, but a new branch of the blockchain will spin off from the original chain. This new blockchain will have the same transaction history as Bitcoin up until the fork, but then diverges from it. As a result of this process, a new crypto-currency named Bitcoin Gold will be created.
2. What is the purpose of Bitcoin Gold?
Though Bitcoin is theoretically a decentralized network, most of the mining power is heavily concentrated or centralized to very few hands. The idealistic vision of “one CPU one vote” of Satoshi Nakamoto has been replaced by a reality where the manufacture and distribution of mining equipment has become dominated by a very small number of entities. The creators behind Bitcoin Gold wants to make Bitcoin mining decentralized again. All of the specialized SHA256 mining equipment used to mine Bitcoin cannot be used for mining Bitcoin Gold due to the algorithmic change from SHA256 to Equihash.
Bitcoin Gold will provide an opportunity for countless new people around the world to participate in the mining process with widely-available consumer hardware that is manufactured and distributed by reputable mainstream corporations. A more decentralized, democratic mining infrastructure is more resilient and more in line with Satoshi’s original vision ~btcgpu.org
Since it is a hard fork, all Bitcoin holders who possess BTC private keys on October 25 (block 491 407) will receive Bitcoin Gold on the rate of 1 BTC = 1 BTG. Any secure Bitcoin wallet like trezor or ledger wallet that gives the user exclusive control of the private keys is a suitable location to store your coins prior to the October 25 fork. Wallets normally takes 2 week time to provide necessary technical support to the new coin. As we did last time for Bitcoin Cash hard fork, it is not advisable to keep the Bitcoins in exchanges as these events are prone to technical glitches.
4. If I hold BTC on an exchange at the time of the fork, will I get my free Bitcoin Gold?
When the Bitcoin Gold fork occurs, any exchange that is holding BTC on your behalf will also receive the corresponding BTG. While they should credit your account with the equal amount of BTG, there is no legal authority that can force them to do so. If you plan to hold your Bitcoin in exchanges like coinbase, poloniex etc, get in touch with their respective support team to clarity this.
BTG may list at $100- $200 range in the crypto currency exchanges. As I expected in August, many investors have sold their alt coins and bought Bitcoin to gather the free BTG coins. Once the coins are credited, there is a chance that, investors would sell BTG and move back to alt coins or add more BTC.
The strong rally happened in BTC last month may take a pause for some time, which is good for consolidation. My advise is, never trade with your BTC, but keep it safe in your private wallets for years to come. I would personally prefer to convert BTG to BTC, once it is available in the market. Let us wait and see how things span out. Happy investing!!